<PAGE>
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 September 25, 1997
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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Item 7 Exhibits.
The documents listed below are filed as Exhibits with reference to the
Registration Statement on Form S-3 (Registration No. 333-13307) and the
Registration Statement on Form S-3 (Registration No. 333-28649), which latter
Registration Statement constitutes Post-Effective Amendment No. 3 to the
former Registration Statement (collectively, the "Registration Statements")
of Northwest Airlines Corporation and Northwest Airlines, Inc. The
Registration Statements, the Preliminary Prospectus Supplement, dated
September 12, 1997, and the Prospectus Supplement, dated September 16, 1997
(filed with the Securities Exchange Commission pursuant to Rule 424(b)(2) on
September 18, 1997), to the Prospectus, dated July 2, 1997, relate to the
offering of Northwest Airlines, Inc.'s Pass Through Certificates, Series
1997-1.
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Schedule I hereto
lists those documents which are substantially identical to the documents
listed below and sets forth the material details in which such documents
differ from the corresponding document listed below.
1(a) Underwriting Agreement, dated as of September 16, 1997, by and among
Credit Suisse First Boston Corporation, Lehman Brothers Inc. and
Morgan Stanley & Co. Incorporated and Northwest Airlines,Inc. and
Northwest Airlines Corporation
4(a)(1) Trust Agreement [NW 1997 A], dated as of September 25, 1997, between
Finova Capital Corporation, as Owner Participant, and First Security
Bank, National Association, as Owner Trustee
4(a)(2) Trust Indenture and Security Agreement [NW 1997 A], dated as of
September 25, 1997, between First Security Bank, National Association,
as Owner Trustee, and State Street Bank and Trust Company, as
Indenture Trustee
4(a)(3) Lease Agreement [NW 1997 A], dated as of September 25, 1997, between
First Security Bank, National Association, as Lessor, and Northwest
Airlines, Inc., as Lessee
4(a)(4) Guarantee [NW 1997 A], dated as of September 25, 1997, from Northwest
Airlines Corporation
4(a)(5) Purchase Agreement Assignment [NW 1997 A], dated as of September 25,
1997, between Northwest Airlines, Inc., Assignor, and First Security
Bank, National Association, Assignee
4(a)(6) Consent and Agreement [NW 1997 A], dated as of September 25, 1997,
from Aero International (Regional), acting as agent for and on behalf
of British Aerospace (Operations) Limited
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2
4(b)(1) Trust Agreement [NW 1997 G], dated as of September 25, 1997, between
Northwest Airlines, Inc., as Trustor, and First Security Bank,
National Association, as Owner Trustee
4(b)(2) Trust Indenture and Security Agreement [NW 1997 G], dated as of
September 25, 1997, between First Security Bank, National Association,
as Owner Trustee, and State Street Bank and Trust Company, as
Indenture Trustee
4(b)(3) Guarantee [NW 1997 G], dated as of September 25, 1997, from Northwest
Airlines Corporation
4(c)(1) Trust Supplement No. 1997-1A, dated as of September 25, 1997, by and
among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines, Inc., and State Street Bank and Trust Company, Trustee
4(c)(2) Trust Supplement No. 1997-1B, dated as of September 25, 1997, by and
among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines, Inc., and State Street Bank and Trust Company, Trustee
4(c)(3) Trust Supplement No. 1997-1C, dated as of September 25, 1997, by and
among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines, Inc., and State Street Bank and Trust Company, Trustee
4(d)(1) Irrevocable Revolving Credit Agreement, Class A Certificates, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, as Borrower, and Royal
Bank of Canada, New York Branch, as Liquidity Provider
4(d)(2) Irrevocable Revolving Credit Agreement, Class B Certificates, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, as Borrower, and Royal
Bank of Canada, New York Branch, as Liquidity Provider
4(d)(3) Irrevocable Revolving Credit Agreement, Class C Certificates, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, as Borrower, and Royal
Bank of Canada, New York Branch, as Liquidity Provider
4(d)(4) Intercreditor Agreement, dated as of September 25, 1997, by and among
State Street Bank and Trust Company, as Trustee, Royal Bank of Canada,
as Liquidity Provider, and State Street Bank and Trust Company of
Connecticut, National Association, as Subordination Agent and Trustee
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3
4(e)(1) Indemnity Agreement, dated as of September 25, 1997, by and between
Credit Suisse First Boston Corporation and Northwest Airlines, Inc.
23(a)(1) Consent of Aircraft Information Services, Inc.
23(a)(2) Consent of BK Associates, Inc.
23(a)(3) Consent of Morten Beyer & Agnew, Inc.
23(a)(4) Consent of Bingham, Dana & Gould, LLP
99(a) Participation Agreement [NW 1997 A], dated as of September 25, 1997,
among Northwest Airlines, Inc., as Lessee, Finova Capital Corporation,
as Owner Participant, State Street Bank and Trust Company, as Pass
Through Trustee, First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but solely as
Owner Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, as Subordination Agent, and State Street Bank
and Trust Company, in its individual capacity and as Indenture Trustee
99(b) Participation Agreement [NW 1997 G], dated as of September 25, 1997,
among Northwest Airlines, Inc., as Lessee and Initial Owner
Participant, State Street Bank and Trust Company, as Pass Through
Trustee, First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but solely as
Owner Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, as Subordination Agent, and State Street Bank
and Trust Company, in its individual capacity and as Indenture Trustee
99(c) Schedule I
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4
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NORTHWEST AIRLINES CORPORATION
Dated: November 25, 1997 By: /s/ Douglas M. Steenland
--------------------------------
Name: Douglas M. Steenland
Title: Senior Vice President,
General Counsel and
Secretary
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5
Exhibit Exhibit Index
1(a) Underwriting Agreement, dated as of September 16, 1997, by and among
Credit Suisse First Boston Corporation, Lehman Brothers Inc. and
Morgan Stanley & Co. Incorporated and Northwest Airlines,Inc. and
Northwest Airlines Corporation
4(a)(1) Trust Agreement [NW 1997 A], dated as of September 25, 1997, between
Finova Capital Corporation, as Owner Participant, and First Security
Bank, National Association, as Owner Trustee
4(a)(2) Trust Indenture and Security Agreement [NW 1997 A], dated as of
September 25, 1997, between First Security Bank, National Association,
as Owner Trustee, and State Street Bank and Trust Company, as
Indenture Trustee
4(a)(3) Lease Agreement [NW 1997 A], dated as of September 25, 1997, between
First Security Bank, National Association, as Lessor, and Northwest
Airlines, Inc., as Lessee
4(a)(4) Guarantee [NW 1997 A], dated as of September 25, 1997, from Northwest
Airlines Corporation
4(a)(5) Purchase Agreement Assignment [NW 1997 A], dated as of September 25,
1997, between Northwest Airlines, Inc., Assignor, and First Security
Bank, National Association, Assignee
4(a)(6) Consent and Agreement [NW 1997 A], dated as of September 25, 1997,
from Aero International (Regional), acting as agent for and on behalf
of British Aerospace (operations) Limited
4(b)(1) Trust Agreement [NW 1997 G], dated as of September 25, 1997, between
Northwest Airlines, Inc., as Trustor, and First Security Bank,
National Association, as Owner Trustee
4(b)(2) Trust Indenture and Security Agreement [NW 1997 G], dated as of
September 25, 1997, between First Security Bank, National Association,
as Owner Trustee, and State Street Bank and Trust Company, as
Indenture Trustee
4(b)(3) Guarantee [NW 1997 G], dated as of September 25, 1997, from Northwest
Airlines Corporation
4(c)(1) Trust Supplement No. 1997-1A, dated as of September 25, 1997, by and
among Northwest Airlines Corporation, Guarantor, Northwest Airlines,
Inc., and State Street Bank and Trust Company, Trustee
4(c)(2) Trust Supplement No. 1997-1B, dated as of September 25, 1997, by and
among Northwest Airlines Corporation, as
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6
Guarantor, Northwest Airlines, Inc., and State Street Bank and Trust
Company, as Trustee
4(c)(3) Trust Supplement No. 1997-1C by, dated as of September 25, 1997, and
among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines, Inc., and State Street Bank and Trust Company, as Trustee
4(d)(1) Irrevocable Revolving Credit Agreement, Class A Certificate, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, Borrower, and Royal Bank
of Canada, as Liquidity Provider
4(d)(2) Irrevocable Revolving Credit Agreement, Class B Certificate, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, Borrower, and Royal Bank
of Canada, as Liquidity Provider
4(d)(3) Irrevocable Revolving Credit Agreement, Class C Certificates, dated as
of September 25, 1997, by and between State Street Bank and Trust
Company of Connecticut, National Association, as Borrower, and Royal
Bank of Canada, New York Branch, as Liquidity Provider
4(d)(4) Intercreditor Agreement, dated as of September 25, 1997, by and among
State Street Bank and Trust Company, as Trustee, Royal Bank of Canada,
as Liquidity Provider, and State Street Bank and Trust Company of
Connecticut, National Association, as Subordination Agent and Trustee
4(e)(1) Indemnity Agreement, dated as of September 25, 1997, by and between
Credit Suisse First Boston Corporation and Northwest Airlines, Inc.
23(a)(1) Letter Consent of Aircraft Information Services, Inc.
23(a)(2) Letter Consent of BK Associates, Inc.
23(a)(3) Letter of Consent of Morten Beyer & Agnew, Inc.
23(a)(4) Letter of Consent of Bingham, Dana & Gould LLP
99(a) Participation Agreement [NW 1997 A], dated as of September 25, 1997,
among Northwest Airlines, Inc., as Lessee, Finova Capital Corporation,
as Owner Participant, State Street Bank and Trust Company, as Pass
Through Trustee, First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but solely as
Owner Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, as Subordination Agent, and State
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7
Street Bank and Trust Company, in its individual capacity and as
Indenture Trustee
99(b) Participation Agreement [NW 1997 G], dated as of September 25, 1997,
among Northwest Airlines, Inc., as Lessee and Initial Owner
Participant, State Street Bank and Trust Company, as Pass Through
Trustee, First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but solely as
Owner Trustee, and State Street Bank and Trust Company of Connecticut,
National Association, as Subordination Agent, and State Street Bank
and Trust Company, in its individual capacity and as Indenture Trustee
99(c) Schedule I
<PAGE>
Exhibit 1(a)
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EXECUTION COPY
NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
Pass Through Certificates
Series 1997-1
UNDERWRITING AGREEMENT
Dated as of September 16, 1997
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<PAGE>
NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
Pass Through Certificates, Series 1997-1
UNDERWRITING AGREEMENT
Dated as of September 16, 1997
Credit Suisse First Boston Corporation
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
c/o Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Dear Sirs:
Northwest Airlines, Inc., a Minnesota corporation (the "Company"), in
connection with the financing of the debt portion of twelve aircraft leveraged
leases, proposes that State Street Bank and Trust Company, as trustee (the
"Trustee"), issue and sell to the underwriters named in Schedule B hereto its
pass through certificates in the aggregate principal amounts and with the
interest rates and final distribution dates set forth on Schedule A hereto (the
"Offered Certificates") on the terms and conditions stated herein. The
aggregate principal amount of Offered Certificates due on each such final
distribution date is referred to as a "Pass Through Certificate Designation".
The Offered Certificates will be issued pursuant to a Pass Through Trust
Agreement dated as of June 3, 1996 (the "Basic Agreement"), among Northwest
Airlines Corporation, a Delaware corporation (the "Guarantor"), the Company and
the Trustee, as supplemented with respect to each series of Offered Certificates
by a separate Pass Through Trust Supplement, to be dated as of September 25,
1997 (individually, a "Trust Supplement"), among the Guarantor, the Company and
the Trustee (the Basic Agreement as supplemented by each Trust Supplement being
referred to herein individually as a "Designated Agreement" and collectively as
the "Designated Agreements"). As used herein, unless the context otherwise
requires, the term "Underwriters" shall mean the firms named as Underwriters in
Schedule B and the term "you" shall mean Credit Suisse First Boston Corporation.
The Trust Supplements are related to the creation and administration of
Northwest Airlines Pass Through Trust Series 1997-1A (the "Class A Trust"),
Northwest Airlines Pass Through Trust Series 1997-1B (the "Class B Trust") and
Northwest Airlines Pass Through Trust Series 1997-1C (the "Class C Trust";
together with the Class A Trust and the Class B Trust, the "Trusts"). Certain
amounts of interest payable on the Offered Certificates to be
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2
issued by the Class A Trust, the Class B Trust and the Class C Trust will be
entitled to the benefits of a separate liquidity facility for each such
Trust. Royal Bank of Canada (the "Liquidity Provider") will enter into three
separate revolving credit agreements (each, a "Liquidity Facility") to be
dated as of September 25, 1997 for the benefit of the holders of the Offered
Certificates issued by the Class A Trust, the Class B Trust and the Class C
Trust, respectively. The Liquidity Provider and the holders of the Offered
Certificates will be entitled to the benefits of an Intercreditor Agreement
to be dated as of September 25, 1997 (the "Intercreditor Agreement") among
the Trusts, State Street Bank and Trust Company of Connecticut, National
Association, as Subordination Agent (the "Subordination Agent"), and the
Liquidity Provider.
The Guarantor and the Company have filed with the Securities and Exchange
Commission (the "Commission") two shelf registration statements on Form S-3
(File No. 333-28649 and File No. 333-13307) relating to certain classes of
securities (the "Second Registration Statement" and the "First Registration
Statement", respectively; the Second Registration Statement constitutes
Post-Effective Amendment No. 3 to the First Registration Statement; the Second
and the First Registration Statement, collectively, including the exhibits to
each thereof and the documents filed by the Guarantor with the Commission
pursuant to the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Exchange Act") that
are incorporated by reference therein, as amended at the date hereof, being
herein referred to as the "Registration Statements") and, in each case, the
offering thereof from time to time in accordance with Rule 415 of the Securities
Act of 1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Securities Act"). The Registration Statements
have been declared effective by the Commission. A prospectus supplement
reflecting the terms of the Offered Certificates, the terms of the offering
thereof and the other matters set forth therein, as further specified in Section
5(b) hereof, will be prepared and filed together with the basic prospectus
referred to below pursuant to Rule 424 under the Securities Act (such prospectus
supplement, in the form first filed on or after the date hereof pursuant to Rule
424, being herein referred to as the "Prospectus Supplement" and any such
prospectus supplement in the form or forms filed prior to the filing of the
Prospectus Supplement being herein referred to as a "Preliminary Prospectus
Supplement"). The basic prospectus included in the Second Registration
Statement relating to all offerings of pass through certificates under the
Second Registration Statement, as supplemented by the Prospectus Supplement, and
including the documents incorporated by reference therein, is herein called the
"Prospectus", except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to such basic prospectus
as so amended or supplemented and as supplemented by the Prospectus Supplement,
in either case including the documents filed by the Guarantor with the
Commission pursuant to the Exchange Act that are incorporated by reference
therein. Any reference herein to the terms "amendment" or "supplement" with
respect to the Second Registration Statement, the Prospectus, any Preliminary
Prospectus Supplement or any preliminary prospectus shall be deemed to refer to
and include any documents filed with the Commission under the Exchange Act after
the date hereof, the date the Prospectus is filed
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3
with the Commission, or the date of such Preliminary Prospectus Supplement or
preliminary prospectus, as the case may be, and incorporated therein by
reference pursuant to Item 12 of Form S-3 under the Securities Act.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings specified therefor in the Designated Agreements or in the Indentures
referred to in the Designated Agreements; provided that as used in this
Agreement, the term "Operative Documents" shall include the Designated
Agreements.
Section 1. Representations and Warranties. The Guarantor and the Company
represent and warrant to and agree with each Underwriter that:
(a) The Guarantor and the Company meet the requirements for use of
Form S-3 under the Securities Act; the Registration Statements have become
effective; on the effective date of each Registration Statement, on the
effective date of the most recent post-effective amendment thereto, if any,
and on the date of the filing by the Guarantor of any annual report on Form
10-K after the original effective date of each Registration Statement, each
Registration Statement and any amendments and supplements thereto complied
in all material respects with the requirements of the Securities Act and
neither Registration Statement contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; on the date hereof
and on the Closing Date (as defined below), neither the Prospectus nor any
amendments thereof and supplements thereto, includes or will include an
untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Guarantor or the Company by or on
behalf of any Underwriter expressly for use in the Prospectus or to
statements or omissions in that part of the Registration Statements which
shall constitute the Statement of Eligibility of the Trustee under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), on
Form T-1.
(b) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were or hereafter are filed with the Commission, complied and will comply
in all material respects with the requirements of the Exchange Act.
(c) Ernst & Young LLP, who have reported upon the audited
consolidated financial statements and the financial statement schedules, if
any, incorporated by reference in the Registration Statements, are
independent public accountants within the meaning of the Securities Act.
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4
(d) This Agreement has been duly authorized, executed and delivered
by the Guarantor and the Company.
(e) The consolidated financial statements included or incorporated by
reference in the Registration Statements present fairly the consolidated
financial position of the Guarantor and its consolidated subsidiaries as of
the dates indicated and the consolidated results of operations and cash
flows or changes in financial position of the Guarantor and its
consolidated subsidiaries for the periods specified. Except as stated
therein, such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The financial statement schedules, if
any, included or incorporated by reference in the Registration Statements
present fairly the information required to be stated therein.
(f) Each of the Guarantor and the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of its incorporation with corporate power and authority under such
laws to own, lease and operate its properties and conduct its business as
described in the Prospectus and to perform its obligations under this
Agreement and the Operative Documents to which it is, or is to be, a party;
and each of the Guarantor and the Company is duly qualified to transact
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or transacts
business of a type, that would make such qualification necessary, except to
the extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the condition (financial or other),
business, prospects or results of operations of the Guarantor and its
subsidiaries, considered as one enterprise (a "Material Adverse Effect").
(g) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code) and is an air
carrier operating under a certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more
of cargo. There is in force with respect to the Company an air carrier
operating certificate issued pursuant to Part 121 of the regulations under
the sections of Title 49, United States Code, relating to aviation
(the "Federal Aviation Act"). All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable and are owned by the Guarantor, indirectly
through NWA Inc., a Delaware corporation, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind.
(h) The Operative Documents to which the Guarantor and/or the Company
is, or is to be, a party, have each been duly authorized by the Guarantor
or the Company, as the case may be, are or will be substantially in the
form heretofore supplied to you and, when duly executed and delivered by
the Guarantor or the
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5
Company, as the case may be, will constitute valid and binding
obligations of the Guarantor or the Company, as the case may be,
except as limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing. The Basic Agreement as executed is
substantially in the form filed as an exhibit to the Registration
Statements and has been duly qualified under the Trust Indenture Act. On
the respective Delivery Dates, the related Leases and other Operative
Documents to which the Guarantor and/or the Company is, or is to be, a
party will constitute the valid and binding obligations of the Guarantor
and/or the Company, as the case may be, except as limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing. The Offered
Certificates, the Equipment Notes, the Indentures, the Designated
Agreements and the Leases and other Operative Documents to which the
Guarantor and/or the Company is, or is to be, a party will conform in all
material respects to the descriptions thereof in the Prospectus.
(i) The Offered Certificates, when duly executed, authenticated and
delivered by the Trustee in accordance with the terms of the Designated
Agreements and this Agreement, will be duly issued under the Designated
Agreement and will constitute valid and binding obligations of the Trustee,
except as limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the holders thereof will be entitled to
the benefits of the Designated Agreements.
(j) The Equipment Notes to be issued under each Indenture, when duly
executed and delivered by the related Owner Trustee and duly authenticated
by the Indenture Trustee in accordance with the terms of such Indenture,
will be duly issued under such Indenture and will constitute the valid and
binding obligations of such Owner Trustee and the holders thereof will be
entitled to the benefits of such Indenture, except as limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding
in equity or at law) and an implied covenant of good faith and fair
dealing.
(k) Except as disclosed in the Prospectus, since the respective dates
as of which information is given in the Prospectus, there has been no
material adverse change in the condition (financial or other), business,
properties or results of operations of the Guarantor and its subsidiaries
considered as one enterprise.
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6
(l) Neither the Guarantor nor the Company is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a Material Adverse Effect.
The execution and delivery by the Guarantor and/or the Company of this
Agreement and the Operative Documents to which the Guarantor and/or the
Company is, or is to be, a party, the consummation by the Guarantor and the
Company of the transactions contemplated in this Agreement and such
Operative Documents, and compliance by the Guarantor and the Company with
the terms of this Agreement and such Operative Documents do not and will
not result in any violation of the charter or by-laws of the Guarantor or
the Company, and do not and will not result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance (other than Permitted
Liens) upon any property or assets of the Guarantor or the Company under
(A) any indenture, mortgage, loan agreement, note, lease or other agreement
or instrument included or incorporated by reference as an exhibit to the
Guarantor's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, the Guarantor's Quarterly Reports on Form 10-Q for the quarterly
periods ended on March 31, 1997 and June 30, 1997 or included as an exhibit
to the Registration Statements, to which the Guarantor or the Company is a
party or by which either may be bound or to which any of their respective
properties may be subject or (B) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Guarantor or the Company or any of their respective properties other than
the securities or Blue Sky or similar laws of the various states and
foreign jurisdictions (except, in the case of either clause (A) or (B), for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect.
(m) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality or
court, domestic or foreign, is required for the valid authorization,
issuance, sale and delivery of the Offered Certificates and the Equipment
Notes, the valid authorization, execution, delivery and performance by the
Guarantor and/or the Company of this Agreement and the Operative Documents
to which the Guarantor and/or the Company is, or is to be, a party, or the
consummation by the Guarantor or the Company of the transactions
contemplated by this Agreement and such Operative Documents, except such as
are required under the Securities Act, the Trust Indenture Act and the
securities or Blue Sky or similar laws of the various states and of foreign
jurisdictions and except for filings or recordings with the Federal
Aviation Administration (the "FAA") and under the Uniform Commercial Code
as is in effect in Utah and Minnesota, which filings or recordings shall
have been made, or duly presented for filing, on or prior to the Closing
Date.
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7
(n) Except as disclosed in the Prospectus, there is no action, suit
or proceedings before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the
Guarantor or the Company, threatened against the Guarantor or the Company
that is required to be disclosed in the Prospectus or that could reasonably
be expected to result in a Material Adverse Effect or that could reasonably
be expected to materially and adversely affect the consummation of the
transactions contemplated by this Agreement and the Participation
Agreements; the aggregate of all pending legal or governmental proceedings
to which the Guarantor or the Company is a party or which affect any of its
properties that are not described in the Prospectus, including ordinary
routine litigation incidental to its business, would not reasonably be
expected to have a Material Adverse Effect.
(o) There are no contracts or documents of a character required to be
described in the Registration Statements or the Prospectus or to be filed
as exhibits to the Registration Statements that are not described and filed
as required.
(p) The Guarantor and its subsidiaries possess adequate certificates,
authorizations and permits issued by appropriate governmental agencies or
bodies necessary to conduct, in all material respects, the business now
operated by them and have not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Guarantor or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
Any certificate signed by a duly authorized officer of the Guarantor or the
Company and delivered to an Underwriter or to counsel for the Underwriters in
connection with this Agreement or the offering of the Offered Certificates shall
be deemed a representation and warranty by the Guarantor or the Company, as the
case may be, to the Underwriters as to the matters covered thereby.
Section 2. Purchase and Sale.
(a) Subject to the terms and conditions set forth herein and in
reliance upon the representations and warranties herein contained, the
Guarantor and the Company agree to cause the Trustee to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Trustee, at a purchase price of 100% of the principal
amount thereof, the aggregate principal amount of Offered Certificates of
each Pass Through Certificate Designation set forth opposite the name of
such Underwriter in Schedule B.
(b) The Guarantor and the Company are advised by you that the
Underwriters propose to make a public offering of the Offered Certificates
as soon after this Agreement has been entered into as in your judgment is
advisable. The
<PAGE>
8
Guarantor and the Company are further advised by you that the
Offered Certificates are to be offered to the public initially at 100%
of their principal amount -- the public offering price -- plus accrued
interest, if any, and to certain dealers selected by the Underwriters at
concessions not in excess of the concessions set forth in the Prospectus,
and that the Underwriters may allow, and such dealers may reallow,
concessions not in excess of the concessions set forth in the Prospectus to
certain other dealers.
(c) As compensation to the Underwriters for their respective
commitments and obligations hereunder in respect of the Offered
Certificates, including their respective undertakings to distribute the
Offered Certificates, each Owner Trustee will pay to the Underwriters in
aggregate an amount equal to 0.90% of the aggregate principal amount of
each Pass Through Certificate Designation (to the extent that such
Designation relates to Equipment Notes to be issued by such Owner Trustee)
set forth in Schedule B; provided that if any Owner Trustee fails to pay
such amounts when due, the Company will pay such amounts. Such payment
shall be made simultaneously with the payment by the Underwriters to the
Trustee of the purchase price of the Offered Certificates as specified in
Section 2(a) hereof. Payment of such compensation shall be made by Federal
funds check or other immediately available funds.
Section 3. Delivery of and Payment for the Offered Certificates.
(a) Delivery of and payment for the Offered Certificates shall be
made at the offices of Simpson Thacher & Bartlett at 425 Lexington Avenue,
New York, New York 10017-3954 at 10:00 A.M. on September 25, 1997 or such
other date, time and place as may be agreed upon by the Company, the
Guarantor and you (such date and time of delivery and payment for the
Offered Certificates being herein called the "Closing Date"). Delivery of
the Offered Certificates shall be made to your account at The Depository
Trust Company for the respective accounts of the several Underwriters
against payment by the Underwriters of the purchase price thereof to or
upon the order of the Trustee by wire transfer. The Offered Certificates
shall be registered in the name of Cede & Co. or in such other names, and
in such denominations as you may request in writing at least two full
business days in advance of the Closing Date.
(b) The Company agrees to have the Offered Certificates available for
inspection and checking by you in New York, New York not later than 1:00
P.M. on the business day prior to the Closing Date.
(c) It is understood that each Underwriter has authorized you for its
account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Offered Certificates that it has agreed to
purchase. You, individually and not as a representative, may (but shall
not be obligated to) make payment of the purchase
<PAGE>
9
price for the Offered Certificates to be purchased by any Underwriter
whose check or checks shall not have been received by the Closing Date.
Section 4. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Offered Certificates
pursuant to this Agreement are subject to the following conditions:
(a) On the Closing Date, no stop order suspending the effectiveness
of either Registration Statement shall have been issued under the
Securities Act and no proceedings therefor shall have been instituted or
threatened by the Commission.
(b) On the Closing Date, you shall have received opinions of Simpson
Thacher & Bartlett and Cadwalader, Wickersham & Taft, as counsel for the
Guarantor and the Company, each dated the Closing Date, in form and
substance satisfactory to you, the Guarantor and the Company and
substantially to the effect, taken together, set forth in Exhibit A hereto.
(c) On the Closing Date, you shall have received an opinion of the
General Counsel of the Guarantor and the Company, dated the Closing Date,
substantially to the effect set forth in Exhibit B hereto.
(d) On the Closing Date, you shall have received an opinion of
Bingham, Dana & Gould LLP, as counsel for the Trustee, substantially to the
effect set forth in Exhibit C hereto.
(e) On the Closing Date, you shall have received an opinion of
Shearman & Sterling, as counsel for the Underwriters, dated as of the
Closing Date, with respect to the issuance and sale of the offered
Certificates, the Registration Statements, the Prospectus and other related
matters as the Underwriters may reasonably require.
(f) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change in the condition (financial or other),
business, properties, results of operations or prospects of the Guarantor
and its subsidiaries considered as one enterprise that, in your judgment,
is so material and adverse that it makes it impracticable or inadvisable to
proceed with the completion of the public offering or the sale of and
payment for the Offered Certificates.
(g) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by the President or a Senior or Executive Vice
President of each of the Guarantor and the Company, to the effect set forth
in paragraph (f) above and to the effect that the representations and
warranties of the Guarantor and the Company contained in this Agreement and
in each of the Participation Agreements and the Operative Documents to
which the Guarantor and/or the Company, as the case may be, is a party
shall be true and correct as of the Closing Date (except to the
<PAGE>
10
extent that they relate solely to an earlier date in which case they
shall be accurate as of such earlier date) and that the Guarantor and the
Company shall have performed all of their respective obligations to be
performed hereunder on or prior to the Closing Date.
(h) On the Closing Date, you shall have received the letters
specified in Exhibit D at the date hereof and on the Closing Date.
(i) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading in the
rating accorded any of the Guarantor's or the Company's securities,
including the Offered Certificates, by any "nationally recognized
statistical rating organization", as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act, or any public announcement that
any such organization has under surveillance or review its ratings of any
such securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating).
(j) The Guarantor and the Company shall have furnished to you and to
counsel for the Underwriters, in form and substance satisfactory to you and
to them, such other documents, certificates and opinions as such counsel
may reasonably request in order to pass upon the matters referred to in
Section 4(e) and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements, the performance of any
covenant by the Guarantor or the Company theretofore to be performed, or
the compliance with any of the conditions herein contained.
(k) Each of the Appraisers shall have furnished to the Underwriters a
letter from such Appraiser, addressed to the Guarantor and the Company and
dated the Closing Date, confirming that such Appraiser and each of its
directors and officers (i) is not an affiliate of the Guarantor, the
Company or any of its affiliates, (ii) does not have any substantial
interest, direct or indirect, in the Guarantor, the Company or any of its
affiliates and (iii) is not connected with the Guarantor, the Company or
any of its affiliates as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
(l) On the Closing Date, the Offered Certificates shall be rated "A",
in the case of the Offered Certificates of the Class A Trust, "BBB", in the
case of the Offered Certificates of the Class B Trust and "BBB-", in the
case of the Offered Certificates of the Class C Trust, by Standard & Poor's
Ratings Service; and "A3", in the case of the Offered Certificates of the
Class A Trust, "Baa2", in the case of the Offered Certificates of the
Class B Trust and "Baa3", in the case of the Offered Certificates of the
Class C Trust, by Moody's Investors Services, Inc.
<PAGE>
11
The Guarantor and the Company agree to furnish, promptly after the Closing
Date and the applicable Delivery Date, to the Underwriters a copy of each
opinion required to be delivered under the applicable Participation Agreement
addressed to the Underwriters and of such other documents furnished in
connection with the fulfillment of the conditions precedent therein as the
Underwriters or counsel for the Underwriters may reasonably request.
Section 5. Certain Covenants of the Company. The Guarantor and the
Company covenant with each Underwriter as follows:
(a) To furnish to you one copy (certified by a duly authorized
officer of the Company) and as many conformed copies of each Registration
Statement (as originally filed) and of all amendments thereto, whether
filed before or after such Registration Statement became effective, as many
copies of all exhibits and documents filed therewith or incorporated by
reference therein (through the end of the period mentioned in paragraph (d)
below) and one signed and as many conformed copies of all consents and
certificates of experts as you may reasonably request and, if requested by
you, will furnish to you, for each of the Underwriters, one conformed copy
of the Registration Statements (as originally filed) and of each amendment
thereto (including documents incorporated by reference into the Prospectus
but without exhibits).
(b) Promptly following the execution of this Agreement, the Guarantor
and the Company will prepare a Prospectus Supplement that complies with the
Securities Act and that sets forth the principal amount of the Offered
Certificates and their terms not otherwise specified in the Preliminary
Prospectus Supplement or the basic prospectus included in the Second
Registration Statement, the name of each Underwriter participating in the
offering and the principal amount of the Offered Certificates that each
severally has agreed to purchase, the name of each Underwriter, if any,
acting as representative of the Underwriters in connection with the
offering, the price at which the Offered Certificates are to be purchased
by the Underwriters from the Company, any initial public offering price,
any selling concession and reallowance and any delayed delivery
arrangements, and such other information as you, the Guarantor and the
Company deem appropriate in connection with the offering of the Offered
Certificates. The Guarantor and the Company will timely transmit copies of
the Prospectus Supplement to the Commission for filing pursuant to Rule 424
under the Securities Act.
(c) Before amending or supplementing the Registration Statements or
the Prospectus, to furnish each Underwriter a copy of each such proposed
amendment or supplement, and to file no such proposed amendment or
supplement to which you reasonably object; provided that the foregoing
shall not prevent the Guarantor from filing reports required to be filed by
it pursuant to the Exchange Act, provided further that the Guarantor shall
have provided you with a copy of any such report prior to its filing with
the Commission.
<PAGE>
12
(d) If, during such period after the first date of the public
offering of the Offered Certificates as the Prospectus is required by law
to be delivered in connection with sales by an Underwriter or dealer, any
event shall occur as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriters or counsel for the Guarantor and
the Company, to amend the Registration Statements or amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary, in the reasonable opinion of either such
counsel, to amend the Registration Statements or amend or supplement the
Prospectus to comply with law, forthwith to prepare and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and addresses
you will furnish to the Company) to which the Offered Certificates may have
been sold by you on behalf of the Underwriters and to any other dealers
upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Registration Statements or the
Prospectus, as so amended or supplemented, will comply with law and to
cause such amendments or supplements to be filed promptly with the
Commission.
(e) During the period mentioned in paragraph (d) above, to notify you
immediately, (i) of the effectiveness of any amendment to the Registration
Statements, (ii) of the transmittal to the Commission for filing of any
supplement to the Prospectus or any document that would as a result thereof
be incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statements,
the Prospectus or the Prospectus Supplement, (iv) of any request by the
Commission for any amendment to the Registration Statements or any
supplement to the Prospectus or for additional information relating thereto
or to any document incorporated by reference in the Prospectus and (v) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statements, of the suspension of the
qualification of the Offered Certificates for offering or sale in any
jurisdiction, or of the institution or threatening of any proceeding for
any of such purposes; and to use every reasonable effort to prevent the
issuance of any such stop order or of any order suspending such
qualification and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(f) To use their respective reasonable efforts, in cooperation with
the Underwriters, to qualify the Offered Certificates for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, to maintain such qualifications in effect for so long
as required for the distribution of such Offered Certificates and to pay
all expenses (including filing fees and fees and disbursements of counsel)
in connection with such qualification and with (i) the review (if any) of
the offering of the Offered Certificates by the National Association of
Securities Dealers, Inc., (ii) the determination of the eligibility of the
Offered Certificates for investment under the laws of such jurisdictions as
you may designate and (iii) the
<PAGE>
13
preparation of any Blue Sky or Legal Investment Memorandum; provided,
however, that neither the Guarantor nor the Company shall be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(g) To make generally available to the Guarantor's security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Guarantor (in form
complying with the provisions of Rule 158 of the Securities Act), covering
(i) a period of 12 months beginning after the effective date of the Second
Registration Statement and any post-effective amendment thereof but not
later than the first day of the Guarantor's fiscal quarter next following
such effective date and (ii) a period of 12 months beginning after the date
of this Agreement but not later than the first day of the Guarantor's
fiscal quarter next following the date of this Agreement.
(h) For a period of five years after the Closing Date, to make
available upon request to the Underwriters, copies of all annual reports,
quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the holders of Offered Certificates or
the Guarantor to its security holders generally; provided that at such time
the Guarantor has securities registered under Section 12(b) or 12(g) of the
Exchange Act.
(i) Between the date of this Agreement and the Closing Date, neither
the Guarantor nor the Company will without your prior written consent
offer, sell, or enter into any agreement to sell, any public debt
securities registered under the Securities Act (other than the Offered
Certificates) or any debt securities which may be resold in a transaction
exempt from the registration requirements of the Securities Act in reliance
on Rule 144A thereunder and which are marketed through the use of a
disclosure document containing substantially the same information as a
prospectus for similar debt securities registered under the Securities Act.
(j) The Guarantor, during the period when a prospectus relating to
the Offered Certificates is required to be delivered under the Securities
Act, will, subject to Section 5(c), file promptly all documents required to
be filed with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act.
(k) To comply to the best of their abilities with the Securities Act,
the Exchange Act and the Trust Indenture Act so as to permit the completion
of the distribution of the Offered Certificates as contemplated in this
Agreement and in the Prospectus.
<PAGE>
14
Section 6. Payment of Expenses. The Guarantor and the Company will pay or
cause to be paid all costs and expenses incident to the performance of their
obligations under this Agreement, including, without limitation, (a) the
preparation, printing and filing of the Registration Statements (including
financial statements and exhibits), as originally filed and as amended, the
preliminary prospectuses and the Prospectus and any amendments or supplements
thereto, and the cost of furnishing copies thereof to the Underwriters, (b) the
printing or processing and distribution of this Agreement, the Offered
Certificates, the Operative Documents, the Blue Sky Survey and any Legal
Investment Survey, (c) the delivery of the Offered Certificates, (d) the fees
and disbursements of counsel and accountants for the Guarantor and the Company,
(e) the qualification of the Offered Certificates under the applicable
securities laws in accordance with Section 5(f), including filing fees and
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the Blue Sky Survey, (f) any fees charged by
rating agencies for rating the Offered Certificates (including annual
surveillance fees related to the Offered Certificates as long as they are
outstanding), (g) the fees and expenses of the Trustee, including the reasonable
fees and disbursements of counsel for the Trustee, in connection with the
Offered Certificates and the Operative Documents, (h) the fees and disbursements
of counsel for the Underwriters, (i) all fees and expenses relating to
appraisals of the Aircraft and (j) all other reasonable out-of-pocket expenses
incurred by the Underwriters in connection with the transactions contemplated by
this Agreement. The Guarantor and the Company will also cause to be paid all
expenses incident to the performance of its obligations under the Leases and the
Indentures and each of the other agreements and instruments referred to in the
Indentures and the Participation Agreements.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 8, the Guarantor and the Company shall reimburse the
Underwriters for all their reasonable out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriters.
Section 7. Indemnification and Contribution.
(a) The Guarantor and the Company, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred by any Underwriter or any
such controlling person in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statements or
any amendment thereof, any preliminary prospectus or the Prospectus (as
amended or supplemented if the Guarantor or the Company shall have
furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements
<PAGE>
15
therein not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to
any Underwriter furnished to the Guarantor or the Company in writing by
such Underwriter through you expressly for use therein; provided that
the Company shall not be liable in the case of any matter covered by
this Section 7(a) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such act or
failure to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct; provided further
that such indemnity with respect to any untrue statement or alleged
untrue statement or omission or alleged omission contained in any
preliminary prospectus shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the
Offered Certificates which are the subject thereof if such person did
not receive a copy of the Prospectus at or prior to the confirmation of
the sale of such Offered Certificates to such person in any case where
such delivery is required by the Securities Act and the untrue statement
or omission of a material fact contained in such preliminary prospectus
was corrected in such subsequent Prospectus, unless such failure to
deliver the Prospectus was a result of noncompliance by the Guarantor
and the Company with their delivery requirements set forth in Section
5(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Guarantor and the Company, each of their directors,
each of their officers who signed the Registration Statements and each
person, if any, who controls the Guarantor or the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the
Guarantor and the Company to such Underwriter, but only with reference to
information relating to such Underwriter furnished to the Guarantor or the
Company in writing by such Underwriter through you expressly for use in the
Registration Statements, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either of the two preceding paragraphs, such person
(the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing. An
indemnifying party may participate at its own expense in the defense of
such action. If it so elects within a reasonable time after receipt of
such notice, an indemnifying party, jointly with any other indemnifying
parties receiving such notice, may, except as provided in the immediately
following sentence, assume the defense of such action, with counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding,
<PAGE>
16
any indemnified party shall have the right to retain its own counsel, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect
of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm (in addition to any
local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by Credit Suisse First Boston Corporation, in
the case of parties indemnified pursuant to paragraph (a) above, and by
the Guarantor or the Company, in the case of parties indemnified pursuant
to paragraph (b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement
or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the Guarantor and the Company on the one
hand and the Underwriters on the other hand from the offering of the
Offered Certificates or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Guarantor and the Company on the one hand
and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The relative
benefits received by the Guarantor and the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the
Offered Certificates shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Offered
Certificates (before deducting expenses) received by the Trusts and the
total underwriting discounts and commissions received by the Underwriters,
in each case as
<PAGE>
17
set forth in the table on the cover of the Prospectus, bear
to the aggregate public offering price of the Offered Certificates. The
relative fault of the Guarantor and the Company on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Guarantor or the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the respective principal
amounts of Offered Certificates they have purchased hereunder, and not
joint.
(e) The Guarantor, the Company and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Offered Certificates underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 7 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations and warranties of the Guarantor and the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or by or on behalf of the Guarantor or Company,
its officers or directors or any person controlling the Guarantor or the
Company and (iii) acceptance of and payment for any of the Offered
Certificates.
Section 8. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, by notice given to the Company, if (a)
after the
<PAGE>
18
execution and delivery of this Agreement and prior to the Closing Date
(i) trading generally shall have been suspended or materially limited on or by
the New York Stock Exchange, (ii) trading of any securities of the Guarantor or
the Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities, or
(iv) there shall have occurred any outbreak or escalation of hostilities
involving the United States or any calamity or crisis that, in your judgment, is
material and adverse and (b) in the case of any of the events specified in
clauses (a)(i) through (iv), such event singly or together with any other such
event makes it, in your reasonable judgment, impracticable to market the Offered
Certificates on the terms and in the manner contemplated in the Prospectus.
Section 9. Default. If, on the Closing Date any one or more of the
Underwriters shall fail or refuse to purchase Offered Certificates that it has
or they have agreed to purchase hereunder on such date, and the aggregate
principal amount of Offered Certificates which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Offered Certificates to be purchased on
such date, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Offered Certificates specified to be
purchased by them in Schedule A bears to the aggregate principal amount of
Offered Certificates specified to be purchased by all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Offered Certificates which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the principal amount of Offered Certificates that any Underwriter has agreed to
purchase pursuant to Section 2 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such principal amount of Offered Certificates
without the written consent of such Underwriter. If on the Closing Date any
Underwriter or Underwriters shall fail or refuse to purchase Offered
Certificates and the aggregate principal amount of Offered Certificates with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Offered Certificates to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Offered Certificates are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter, the Guarantor or the Company, except that the Guarantor and the
Company will continue to be liable for the payment of expenses to the extent set
forth in Section 6. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Guarantor or the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Guarantor or the
<PAGE>
19
Company shall be unable to perform its obligations under this Agreement,
the Company will reimburse the Underwriters or such Underwriters as have
so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) reasonably incurred by such Underwriters
in connection with this Agreement or the offering contemplated hereunder.
Section 10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
-----------------------------
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Guarantor, the Company and each
Underwriter in accordance with its terms.
Very truly yours,
NORTHWEST AIRLINES, INC.
By: Joseph E. Francht, Jr.
----------------------
Name: Jospeh E. Francht, Jr.
Title: Senior Vice Presdient-Finance &
Treasurer
NORTHWEST AIRLINES
CORPORATION
By: Joseph E. Francht, Jr.
----------------------
Name: Jospeh E. Francht, Jr.
Title: Senior Vice Presdient-Finance &
Treasurer
<PAGE>
Accepted as of the date first
above written:
Credit Suisse First Boston Corporation
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
By: CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Thomas L. Smith
--------------------
Name: Thomas L. Smith
Title: Director
<PAGE>
EXHIBIT A
Form of Opinions of
Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft
(i) The Guarantor has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of the State of
Delaware and has full corporate power and authority to conduct its business
as described in the Registration Statements and Prospectus;
(ii) Assuming that the Offered Certificates have been duly authorized
and validly executed, authenticated, issued and delivered by the Trustee
pursuant to the respective Designated Agreements, the Offered Certificates
constitute valid and binding obligations of the Trustee enforceable against
the Trustee in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally, by general principles
of equity and by an implied covenant of good faith and fair dealing; and
the holders of the Offered Certificates are entitled to the benefits of the
respective Designated Agreements;
(iii) The Offered Certificates and the Operative Documents conform
as to legal matters in all material respects to the descriptions thereof,
if any, contained in the Prospectus, and the description of the Offered
Certificates conforms in all material respects to the rights set forth in
the instruments defining the same;
(iv) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality,
regulatory body or authority or court is required for the valid
authorization, issuance and delivery of the Offered Certificates, the valid
authorization, execution, delivery and performance by the Guarantor and the
Company of this Agreement and the Operative Documents to which the
Guarantor and/or the Company is, or is to be, a party, or the consummation
by the Guarantor or the Company of the transactions contemplated by this
Agreement and such Operative Documents, except such as are required under
the Securities Act, the Trust Indenture Act and the securities or Blue Sky
laws of the various states and except for any filings or recordings with
the FAA (as to which such counsel need express no opinion);
(v) Each of the Registration Statements has become effective under
the Securities Act; any required filing of the Prospectus or any supplement
thereto pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); the Basic Agreement has been duly
qualified under the Trust Indenture Act and, to the knowledge of such
counsel, no stop order suspending the effectiveness of either of the
Registration Statements has been issued and no proceedings for that purpose
have been instituted or threatened;
A-1
<PAGE>
(vi) The Registration Statements, the Prospectus and each amendment
thereof or supplement thereto (except for the financial statements and
other financial data included or incorporated by reference therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act and the
Designated Agreements conform in all material respects to the requirements
of the Trust Indenture Act and the applicable rules and regulations
thereunder;
(vii) This Agreement has been duly authorized, executed and
delivered by the Guarantor and the Company;
(viii) The Designated Agreements have each been duly authorized,
executed and delivered by the Guarantor and/or the Company, as the case may
be, and each is a valid and binding obligation of the Guarantor and/or the
Company, as the case may be, enforceable against the Guarantor and/or the
Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally, by general principles
of equity and by an implied covenant of good faith and fair dealing;
(ix) The Leases and other Operative Documents to which the Guarantor
and/or the Company is, or is to be, a party have been duly authorized and,
on the respective Delivery Dates, the related Leases and other Operative
Documents to which the Guarantor and/or the Company is, or is to be, a
party, upon due execution and delivery by the Guarantor and/or the Company,
as the case may be, will each be a valid and binding obligation of the
Guarantor and/or the Company enforceable against the Guarantor and/or the
Company, as the case may be, in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally, by general principles of equity and by an implied covenant of
good faith and fair dealing and, except, in the case of each Lease, as
limited by applicable laws which may affect the remedies provided in such
Lease, which laws, however, do not in such counsel's opinion make the
remedies provided in such Lease inadequate for the practical realization of
the rights and benefits provided thereby;
(x) The statements set forth under the headings "Description of the
Certificates", "Description of the Liquidity Facilities", "Description of
the Intercreditor Agreement" and "Description of the Equipment Notes" in
the Second Registration Statement and the Prospectus, insofar as such
statements purport to summarize certain provisions of the Offered
Certificates, the Designated Agreements, the Liquidity Facilities, the
Intercreditor Agreement, the Equipment Notes and the other Operative
Documents provide a fair summary of such provisions. The statements in
the Second Registration Statement and Prospectus under the headings
"Certain United States Federal Income Tax Consequences" and "ERISA
Considerations", insofar as they purport to constitute summaries of the
terms of federal statutes and rules and regulations
A-2
<PAGE>
thereunder, constitute accurate summaries of the terms of such statutes,
rules and regulations in all material respects;
(xi) To such counsel's knowledge, there are no pending or threatened
legal or governmental proceedings required to be described in the
Prospectus which are not described as required;
(xii) The Trusts created by the Designated Agreements would not be
classified as an association taxable as a corporation for federal income
tax purposes, but rather, would be classified as a grantor trust under
subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and each Certificate Owner would be treated as the owner of a pro
rata undivided interest in each of the Equipment Notes or any other
property held in such Trust;
(xiii) Upon consummation of the transactions contemplated by the
Participation Agreements on the respective Delivery Dates, each Owner
Trustee, as lessor under the related Lease, and the Indenture Trustee, as
assignee of the Owner Trustee's rights under such Lease pursuant to the
Indenture corresponding to such Lease, is or will be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Aircraft initially delivered under such Lease and subjected to the related
Indenture; and Section 1110 of the Bankruptcy Code conforms in all material
respects to the description thereof contained in "Description of the
Equipment Notes - Remedies" in the Prospectus;
(xiv) The Company 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. Although counsel is not aware
of any judicial authority, none of the Trusts is required to be registered
under the Investment Company Act of 1940, as amended;
(xv) Upon consummation of the transactions contemplated by the
Participation Agreements on the Closing Date, assuming due authorization,
execution and delivery by the related Owner Trustee and due authentication
by the Indenture Trustee, the Equipment Notes will constitute valid and
binding obligations of such Owner Trustee, enforceable against such Owner
Trustee in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally, by general principles
of equity and by an implied covenant of good faith and fair dealing; and
the holders of the Equipment Notes will be entitled to the benefits of the
respective Indentures;
(xvi) Assuming due authorization, execution and delivery of the
Designated Agreements by the Trustee, each Designated Agreement constitutes
the valid and binding obligation of the Trustee, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar
A-3
<PAGE>
laws affecting enforcement of creditors' rights generally and by general
principles of equity;
(xvii) Except for (i) any registration, filing or recording that
may be required under the Federal Aviation Act (as to which such counsel
need express no opinion), and (ii) the filing of Uniform Commercial Code
("UCC") financing statements (and subject to the timely filing in the
future of continuation statements with respect thereto) contemplated by the
Operative Documents, no further registration, filing or recording of any
document is necessary under the laws of the United States of America or the
State of New York to create and perfect the security interest in the
Airframe, the Engines and each of the Leases in favor of the Indenture
Trustee created by the applicable Indenture. Such counsel notes that under
Section 9-103(3) of the Uniform Commercial Code as in effect in the State
of New York (the "New York UCC"), the necessity for the filing of any such
financing statements is governed by the laws of the jurisdiction where the
debtor is located (which such counsel understands in this case to be the
State of Utah); and
(xviii) Each Indenture creates for the benefit of the holders of the
Equipment Notes issued thereunder the security interest it purports to
create in the property, rights and privileges of the Owner Trustee
described in the Granting Clause thereof to the extent that the New York
UCC applies to a security interest in such property;
and to such further effect with respect to other legal matters relating to this
Agreement, the Participation Agreements, the Designated Agreements and the
Leases and other Operative Documents and the sale of the Certificates hereunder
as counsel for the Underwriters may reasonably request.
Such opinion shall also state that, in connection with the preparation of
the Registration Statements and the Prospectus, such counsel have examined
various documents and other papers, including the documents incorporated by
reference in the Registration Statements and the Prospectus, and participated in
conferences with representatives of the Guarantor and the Company and their
independent accountants and with representatives of the Underwriters and their
counsel, at which conferences the contents of the Registration Statements and
the Prospectus and related matters were discussed. Such opinion may state that,
except with respect to the matters set forth in paragraphs (iii), (x), and
(xiii) above, such counsel have not verified, are not passing upon and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statements or the Prospectus, or the
documents incorporated by reference therein, and have not made an independent
investigation of facts for the purpose of rendering such opinion. Such opinion
shall state, however, that, in the course of such examination and during the
above-mentioned conferences, no facts came to such counsel's attention that
cause them to believe (A) that either Registration Statement or any amendment
thereto (except for the financial statements and other financial data included
therein or omitted therefrom and the Statement of Eligibility and Qualification
of the Trustee on Form T-1, as to which such counsel need express no
A-4
<PAGE>
opinion), at the time such Registration Statement or any such amendment
became effective or on the date of the filing by the Guarantor of its most
recent Annual Report on Form 10-K after the original effective date of such
Registration Statement, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (B) that the Prospectus or any
amendment or supplement thereto (except for the financial statements and
other financial data included therein or omitted therefrom, as to which such
counsel need express no opinion), at the time the Prospectus Supplement was
issued, at the time any such amended or supplemented prospectus was issued or
at the Closing Date, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading or (C) that the documents incorporated by reference
in the Prospectus (except for the financial statements and other financial
data included therein or omitted therefrom, as to which such counsel express
no opinion), as of the dates they were filed with the Commission, included an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
In such opinion, such counsel may assume that each of the parties to each
of the applicable documents, other than the Guarantor and the Company, has full
power, authority and legal right to enter into such documents and that each such
document has been duly authorized, executed and delivered by each of such
parties. In addition, such counsel may rely upon the opinions of counsel for
the Owner Trustee, counsel for the Trustee and the Indenture Trustee, and
special counsel for Aviation Act matters and may state that their opinion is
limited to matters governed by the laws of the State of New York, the corporate
law of the State of Delaware and the federal law of the United States.
A-5
<PAGE>
EXHIBIT B
Form of Opinion of the General Counsel
of the Guarantor and the Company
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectus and to
perform its obligations under this Agreement, the Designated Agreements and
the Operative Documents to which the Company is, or is to be, a party;
(ii) Each of the Guarantor and the Company is duly qualified to
transact business as a foreign corporation and is in good standing in each
other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a Material Adverse Effect (as defined in the Agreement);
(iii) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code) and is an air
carrier operating under a certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more
of cargo; there is in force with respect to the Company an air carrier
operating certificate issued pursuant to Part 121 of the regulations under
the Federal Aviation Act; all of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable and are owned by the Guarantor, indirectly through NWA
Inc., a Delaware corporation, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind;
(iv) To the best of such counsel's knowledge, there are no statutes or
regulations, or any pending or threatened legal or governmental
proceedings, required to be described in the Prospectus that are not
described as required, nor any contracts or documents of a character
required to be described or referred to in the Registration Statements or
the Prospectus or to be filed as exhibits to the Registration Statements
that are not described, referred to or filed as required;
(v) The execution and delivery by the Guarantor and/or the Company,
as the case may be, of this Agreement and the Operative Documents to which
the Guarantor and/or the Company, as the case may be, is a party, the
issuance and sale of the Offered Certificates, the consummation by the
Guarantor and/or the Company, as the case may be, of the transactions
contemplated in this Agreement and such Operative Documents and compliance
by the Guarantor and/or the Company, as the case may be, with the terms
hereof and thereof do not and will not result in any violation of the
B-1
<PAGE>
charter or by-laws of the Guarantor or the Company, and do not and will not
result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge
or encumbrance (except for Permitted Liens) upon any property or assets of
the Guarantor or the Company under (A) any indenture, mortgage, loan
agreement, note, lease or other agreement or instrument included or
incorporated by reference as an exhibit to the Guarantor's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, the Guarantor's
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
1997 and June 30, 1997 or included as an exhibit to the Second Registration
Statement, to which the Guarantor or the Company is a party or by which it
may be bound or to which any of its properties may be subject (except for
such breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect, (B) any existing law, rule or regulation
applicable to the Guarantor or the Company (other than the securities or
Blue Sky laws of the various states, as to which such counsel need express
no opinion), or (C) any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, known to such
counsel having jurisdiction over the Guarantor or the Company or any of
their respective properties;
(vi) This Agreement has been duly authorized, executed and delivered
by the Company; and
(vii) The documents incorporated by reference in the Prospectus
(except for the financial statements and schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to
which such counsel need express no opinion), as of the dates they were
filed with the Commission, complied as to form in all material respects
with the requirements of the Exchange Act.
In addition, counsel shall state that such counsel or lawyers on his staff
have participated in the preparation of the Registration Statements, the
Prospectus and the documents incorporated by reference therein and nothing has
come to such counsel's attention that leads him to believe that the Registration
Statements (including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3) at the time such Registration Statements became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus (including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3) as of the
date of this Agreement or at the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that such
counsel need express no opinion with respect to the financial statements,
schedules and other financial data included or incorporated by reference in the
Registration Statements or Prospectus or the Statement of Qualification on Form
T-1.
B-2
<PAGE>
EXHIBIT C
Form of Opinion of
Bingham, Dana & Gould LLP
(i) State Street Bank and Trust Company ("State Street") is a trust
company duly organized and validly existing in good standing under the laws
of the Commonwealth of Massachusetts and, in its individual capacity or as
trustee, has the full corporate power and authority to execute, deliver and
perform its obligations under each Designated Agreement and the other
Operative Documents to which it is a party; State Street Bank and Trust
Company of Connecticut, National Association ("State Street Connecticut"),
is a national banking association in good standing under the laws of the
State of Connecticut and, in its individual capacity or as Subordination
Agent, has the full corporate power and authority to execute, deliver and
perform its obligations under the Intercreditor Agreement and the other
Operative Documents to which it is a party; and each of State Street and
State Street Connecticut is a "citizen of the United States" as defined in
49 U.S.C. Section 40102;
(ii) The execution, delivery and performance by State Street, the
Indenture Trustee, the Trustee, State Street Connecticut or the
Subordination Agent, as the case may be, of the Designated Agreements and
the other Operative Documents to which it is a party has been duly
authorized by all necessary corporate action on the part of State Street,
the Indenture Trustee, the Trustee, State Street Connecticut or the
Subordination Agent, as the case may be, and the Designated Agreements and
the other Operative Documents to which it is a party constitute the valid
and binding obligations of State Street, the Indenture Trustee, the
Trustee, State Street Connecticut or the Subordination Agent, as the case
may be, enforceable against State Street, the Indenture Trustee, the
Trustee, State Street Connecticut or the Subordination Agent, as the case
may be, in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting enforcement of creditors' rights generally, and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law);
(iii) The Offered Certificates have been duly authorized and
validly executed, authenticated, issued and delivered by the Trustee
pursuant to the respective Designated Agreements; and the holders of the
Offered Certificates are entitled to the benefits of the related Designated
Agreements;
(iv) The authorization, execution, delivery and performance by State
Street, the Indenture Trustee, the Trustee, State Street Connecticut or the
Subordination Agent, as the case may be, of the Designated Agreements and
the other Operative Documents to which it is or will be a party and the
Offered Certificates and the consummation of
C-1
<PAGE>
the transactions therein contemplated and compliance with the terms
thereof and issuance of the Offered Certificates thereunder do not and
will not result in the violation of the provisions of the Articles of
Association or By-Laws of State Street or State Street Connecticut, and
do not and will not conflict with, or result in a breach of any terms or
provisions of, or constitute a default under, or result in the creation
or the imposition of any lien, charge or encumbrance upon any property or
assets of State Street or State Street Connecticut under any indenture,
mortgage or other agreement or instrument known to such counsel to which
State Street or State Street Connecticut is a party or by which it or any
of its property is bound, or any Massachusetts or Connecticut (as
applicable) or Federal law, rule or regulation governing State Street's
or State Street Connecticut's banking or trust powers, or of any
judgment, order or decree known to such counsel to be applicable to State
Street or State Street Connecticut, of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction
of State Street or State Street Connecticut or their respective properties;
(v) No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect
of, any Federal or state governmental authority or agency pursuant to any
Federal or Connecticut or Massachusetts (as applicable) law governing the
banking or trust powers of State Street or State Street Connecticut is
required for the authorization, execution, delivery and performance by
State Street, the Indenture Trustee, the Trustee, State Street Connecticut
or the Subordination Agent of the Designated Agreements and the other
Operative Documents to which it is or will be a party or the consummation
of any of the transactions by State Street, the Indenture Trustee, the
Trustee, State Street Connecticut or the Subordination Agent contemplated
thereby or the issuance of the Offered Certificates under the Designated
Agreements (except as shall have been duly obtained, given or taken); and
such authorization, execution, delivery, performance, consummation and
issuance do not conflict with or result in a breach of the provisions of
any such law;
(vi) There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts, the State of
Connecticut or any political subdivision of either such State in connection
with the execution and delivery by State Street, the Indenture Trustee, the
Trustee, State Street Connecticut or the Subordination Agent, as the case
may be, of the Designated Agreements and the other Operative Documents or
in connection with the issuance, execution and delivery of the Offered
Certificates by the Trustee pursuant to the Designated Agreements;
(vii) The statements in the Registration Statements and in the
Prospectus under the caption "Certain Massachusetts and Connecticut Taxes"
to the extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared and reviewed by such counsel and are
correct in all material respects;
C-2
<PAGE>
(viii) To such counsel's knowledge, there are no proceedings
pending or threatened against or affecting State Street in any court or
before any governmental authority, agency, arbitration board or tribunal
which, if adversely determined, individually or in the aggregate, would
materially and adversely affect any Trust or question the right, power and
authority of State Street, the Indenture Trustee, the Trustee, State Street
Connecticut or the Subordination Agent, as the case may be, to enter into
or perform its obligation under the Operative Documents; and
(ix) Each of the Equipment Notes to be delivered to and
registered in the name of the Subordination Agent pursuant to the
Participation Agreements shall be held by the Subordination Agent as the
trustee of the Trustee under each Trust on behalf of the Certificateholders
of such Trust.
C-3
<PAGE>
EXHIBIT D
Matters to be covered by Letter or Letters of
Independent Auditors
Ernst & Young LLP shall have furnished to the Underwriters letters, dated
as of the date of this Agreement and as of the Closing Date, in form and
substance satisfactory to the Underwriters, confirming that they are independent
auditors with respect to Northwest Airlines Corporation (NWA Corp.) within the
meaning of the Securities Act and stating (or confirming a prior letter) in
effect that:
(a) In their opinion, the consolidated financial statements of NWA
Corp. and its subsidiaries, and the supporting schedules, included or
incorporated by reference in the Second Registration Statement and the
Prospectus and audited by them comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations thereunder.
(b) On the basis of a reading of the unaudited consolidated financial
statements of NWA Corp. and its subsidiaries contained in the Quarterly
Report of NWA Corp. on Form 10-Q for the quarter ended June 30, 1997
incorporated by reference in the Second Registration Statement and the
Prospectus, carrying out certain specified procedures (but not an audit in
accordance with generally accepted auditing standards), a reading of the
minutes of the meetings of the directors of NWA Corp. and inquiries of
certain officials of NWA Corp. and its subsidiaries who have responsibility
for financial and accounting matters of NWA Corp. and its subsidiaries, as
to transactions and events subsequent to the date of the most recent
audited consolidated financial statements incorporated by reference in the
Second Registration Statement and the Prospectus, nothing came to their
attention that caused them to believe that:
(A) any material modifications should be made to the unaudited
consolidated financial statements of NWA Corp. and its subsidiaries
included or incorporated by reference in the Second Registration
Statement and the Prospectus for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements of NWA Corp. and its subsidiaries incorporated by
reference in the Second Registration Statement and the Prospectus or
that such unaudited consolidated financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the Exchange Act and the
published instructions, rules and regulations thereunder;
D-1
<PAGE>
(B) the unaudited capsule information of NWA Corp. and its
subsidiaries, if any, included or incorporated by reference in the
Second Registration Statement and the Prospectus does not agree with
the amounts set forth in the unaudited consolidated financial
statements of NWA Corp. from which it was derived or was not
determined on a basis substantially consistent with that of the
corresponding financial information in the latest audited financial
statements of NWA Corp. included or incorporated by reference in the
Second Registration Statement and the Prospectus;
(C) (I) as of the latest date as of which NWA Corp. and its
subsidiaries have monthly financial statements, there was any decrease
in the capital stock or additional paid-in capital, or increase in
long-term indebtedness of NWA Corp. and its subsidiaries, or any
decrease in retained earnings, as compared with the amounts shown in
the most recent consolidated statement of financial condition of NWA
Corp. and its subsidiaries included or incorporated by reference in
the Second Registration Statement and the Prospectus or (II) with
respect to the period subsequent to the date of the most recent
financial statements included or incorporated by reference in the
Second Registration Statement and the Prospectus and extending through
the latest date as of which NWA Corp. and its subsidiaries have
monthly financial statements, there was a consolidated net loss; or
(D) as of specified date not more than five business days prior
to the date of the letter, there was any decrease in the capital stock
or additional paid-in capital, or increase in long-term indebtedness
of NWA Corp. and its subsidiaries as compared with the amounts shown
in the most recent consolidated statement of financial condition of
NWA Corp. and its subsidiaries included in the Second Registration
Statement and the Prospectus;
except in all instances for increases or decreases set forth in such
letter, in which case the letter shall be accompanied by an explanation by
NWA Corp. as to the significance thereof, unless said explanation is not
deemed necessary by the Underwriters.
(c) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is expressed in dollars, or
percentages derived from dollar amounts, and has been obtained from the
general accounting records of NWA Corp.) set forth in the Second
Registration Statement, as amended, and the Prospectus, as amended or
supplemented, and in Exhibit 12 to the Second Registration Statement,
including specified information, if any, included or incorporated from NWA
Corp.'s Annual Report on Form 10-K incorporated therein or specified
information, if any, included or incorporated from any of NWA Corp.'s
Quarterly Reports on Form 10-Q or its Current Reports on Form 8-K
incorporated therein, agrees with the accounting records
D-2
<PAGE>
of NWA Corp. and
its subsidiaries or computations made therefrom, excluding any questions of
legal interpretation.
D-3
<PAGE>
SCHEDULE A
Pass Through Aggregate Final
Certificate Principal Interest Distribution
Designation Amounts Rate Date
------------ ------------ -------- ---------------
1997-1A $125,914,000 7.068% January 2, 2016
1997-1B 46,433,000 7.248% January 2, 2013
1997-1C 23,462,000 7.039% January 2, 2007
<PAGE>
SCHEDULE B
Underwriters 1997 - 1A 1997 - 1B 1997 - 1C
------------ ----------- ----------- ----------
Credit Suisse First Boston Corporation $41,972,000 $15,479,000 $7,822,000
11 Madison Avenue
New York, NY 10010
Notice to: Transactions Advisory Group
Lehman Brothers Inc. $41,971,000 $15,477,000 $7,820,000
3 World Financial Center
New York, NY 10285
Notice to: Kirk L. Meighan
Morgan Stanley & Co. Incorporated $41,971,000 $15,477,000 $7,820,000
1585 Broadway
New York, NY 10036
Notice to: Gerald Pascuicco
Underwriting fees, discounts, commissions
or other compensation: $1,762,281
<PAGE>
Exhibit 4(a)(1)
==============================================================================
TRUST AGREEMENT
[NW 1997 A]
Dated as of September 25, 1997
between
FINOVA CAPITAL CORPORATION,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
=============================================================================
<PAGE>
TRUST AGREEMENT
[NW 1997 A]
This TRUST AGREEMENT [NW 1997 A] dated as of September 25, 1997
between FINOVA CAPITAL CORPORATION, a Delaware corporation (the "Original Owner
Participant"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "FSB") 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 1997 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>
"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 Residual
Agreement, 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>
"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;
(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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<PAGE>
(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 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
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<PAGE>
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.
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):
-5-
<PAGE>
(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 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
-6-
<PAGE>
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 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
-7-
<PAGE>
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 FSB 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 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.
-8-
<PAGE>
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. FSB 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.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. FSB 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. FSB 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.
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<PAGE>
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
FSB 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 FSB, 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 FSB 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 FSB 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 FSB in
its individual capacity or by the Owner Trustee and except that FSB 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
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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 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.
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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 FSB 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 FSB in its individual capacity on or
measured by any compensation received by FSB 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 FSB 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 FSB in
its individual capacity hereunder, except
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(a) in the case of willful misconduct or gross negligence on the part of the
Owner Trustee or FSB 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 FSB in its individual
capacity (or from the failure of FSB 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 FSB 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 FSB 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 FSB in its individual capacity in the disbursement of funds. The
indemnities contained in this Section 7.01 extend to FSB 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 FSB
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, FSB 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 FSB 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.
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
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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.
(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
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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 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;
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(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 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
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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. 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,
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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 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
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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.
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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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.
FINOVA CAPITAL CORPORATION
BY s/[Vice President of Owner Participant]
---------------------------------------
Title: Vice President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY s/Greg A. Hawley
---------------------------------------
Title: Vice President
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==========================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 A]
Dated as of September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Indenture Trustee,
Indenture Trustee
==========================================================================
SECURED CERTIFICATES COVERING
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION MARK N501XJ
LEASED BY NORTHWEST AIRLINES, INC.
==========================================================================
<PAGE>
TABLE OF CONTENTS
Page
GRANTING CLAUSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 1.02. Reference to Other Documents . . . . . . . . . . . . . . . . 12
ARTICLE II THE SECURED CERTIFICATES . . . . . . . . . . . . . . . . . . 12
SECTION 2.01. Form of Secured Certificates . . . . . . . . . . . . . . . . 12
SECTION 2.02. Issuance and Terms of Secured Certificates . . . . . . . . . 18
SECTION 2.03. Payments from Trust Indenture Estate Only. . . . . . . . . . 20
SECTION 2.04. Method of Payment. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.05. Application of Payments. . . . . . . . . . . . . . . . . . . 24
SECTION 2.06. Termination of Interest in Trust Indenture Estate. . . . . . 25
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates. 25
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates. . 26
SECTION 2.09. Payment of Expenses on Transfer; Cancellation. . . . . . . . 27
SECTION 2.10. Mandatory Redemptions of Secured Certificates. . . . . . . . 27
SECTION 2.11. Voluntary Redemptions of Secured Certificates. . . . . . . . 28
SECTION 2.12. Redemptions; Notice of Redemption. . . . . . . . . . . . . . 28
SECTION 2.13. Assumption of Secured Certificates by Lessee . . . . . . . . 29
SECTION 2.14. Option to Purchase Secured Certificates. . . . . . . . . . . 29
SECTION 2.15. Subordination. . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.16. No Make-Whole Amount . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE
TRUST INDENTURE ESTATE . . . . . . . . . . . . . . . . . . . 31
SECTION 3.01. Basic Rent Distribution. . . . . . . . . . . . . . . . . . . 31
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing. . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.03. Payments After Event of Default. . . . . . . . . . . . . . . 34
SECTION 3.04. Certain Payments . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.05. Other Payments . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.06. Payments to Owner Trustee. . . . . . . . . . . . . . . . . . 37
SECTION 3.07. Application of Payments Under Guarantee. . . . . . . . . . . 38
ARTICLE IV COVENANTS OF OWNER TRUSTEE, EVENTS OF DEFAULT, REMEDIES OF
INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.01. Covenants of Owner Trustee . . . . . . . . . . . . . . . . . 38
SECTION 4.02. Event of Default . . . . . . . . . . . . . . . . . . . . . . 39
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Page
SECTION 4.03. Certain Rights . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.04. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.05. Return of Aircraft, Etc. . . . . . . . . . . . . . . . . . . 45
SECTION 4.06. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.07. Discontinuance of Proceedings. . . . . . . . . . . . . . . . 46
SECTION 4.08. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 47
SECTION 4.09. Appointment of Receiver. . . . . . . . . . . . . . . . . . . 47
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of
Sale, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.11. Rights of Certificate Holders to Receive Payment . . . . . . 48
ARTICLE V DUTIES OF THE INDENTURE TRUSTEE. . . . . . . . . . . . . . . 48
SECTION 5.01. Notice of Event of Default . . . . . . . . . . . . . . . . . 48
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations . . 49
SECTION 5.03. Indemnification. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 5.06. Replacement Airframes and Replacement Engines. . . . . . . . 52
SECTION 5.07. Indenture Supplements for Replacements . . . . . . . . . . . 56
SECTION 5.08. Effect of Replacement. . . . . . . . . . . . . . . . . . . . 56
SECTION 5.09. Investment of Amounts Held by Indenture Trustee. . . . . . . 56
ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE. . . . . . . . . 57
SECTION 6.01. Acceptance of Trusts and Duties. . . . . . . . . . . . . . . 57
SECTION 6.02. Absence of Duties. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.04. No Segregation of Monies; No Interest. . . . . . . . . . . . 59
SECTION 6.05. Reliance; Agreements; Advice of Counsel. . . . . . . . . . . 59
SECTION 6.06. Capacity in Which Acting . . . . . . . . . . . . . . . . . . 60
SECTION 6.07. Compensation . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.08. Instructions from Certificate Holders. . . . . . . . . . . . 60
ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE. . . . 61
SECTION 7.01. Scope of Indemnification . . . . . . . . . . . . . . . . . . 61
ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES. . . . . . . . . . . . . . . 62
SECTION 8.01. Notice of Successor Owner Trustee. . . . . . . . . . . . . . 62
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.03. Appointment of Additional and Separate Trustees. . . . . . . 63
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Page
ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND
OTHER DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.01. Instructions of Majority; Limitations. . . . . . . . . . . . 65
SECTION 9.02. Trustees Protected . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.03. Documents Mailed to Certificate Holders. . . . . . . . . . . 67
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement . . . . . . . . . . . . . 67
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.01. Termination of Trust Indenture. . . . . . . . . . . . . . . 68
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding. . . . . . 68
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and
Certificate Holders. . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.05. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.06. Severability . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.07. No Oral Modification or Continuing Waivers . . . . . . . . . 70
SECTION 10.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . 70
SECTION 10.09. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.10. Normal Commercial Relations. . . . . . . . . . . . . . . . . 70
SECTION 10.11. Governing Law; Counterpart Form. . . . . . . . . . . . . . . 71
SECTION 10.12. Voting By Certificate Holders . . . . . . . . . . . . . . . 71
SECTION 10.13. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.14 No Action Contrary to Lessee's Rights Under the Lease . . . . 71
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
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<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 A]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 A], dated as of September
25, 1997 ("Trust Indenture") between FIRST SECURITY BANK, 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
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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, the parties desire by this Trust Indenture, among other things,
(i) to provide for the issuance by the Owner Trustee to the Pass Through
Trustees (or their designee) of the Secured Certificates evidencing the
participation of the Pass Through Trustees in the payment of Lessor's Cost for
the Aircraft, as provided in the Participation Agreement 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>
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 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 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 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 hereof, the Owner Trustee is delivering
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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<PAGE>
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 recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security
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<PAGE>
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.
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<PAGE>
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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"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
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<PAGE>
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 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 1997 A], dated as
of September 25, 1997, entered into by the Owner Trustee and Lessee concurrently
with the execution and delivery hereof, 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,
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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, the FAA Bill of Sale and the Bill of Sale.
"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) 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
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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.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1997 A], dated as of September 25, 1997, among the Owner Trustee,
the Subordination Agent, the Indenture Trustee, Lessee, the Guarantor, the Owner
Participant and the Purchasers 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, 1998 (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
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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 Trust
Indenture and Security Agreement [NW 1997 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.
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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, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1997 A] DATED AS OF SEPTEMBER 25, 1997.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BRITISH AEROSPACE AVRO 146-RJ85 AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N501XJ.
No.____ Date: [______,__]
$__________________
INTEREST RATE MATURITY DATE
[________]
[________,_______]
FIRST SECURITY BANK, 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 1997 A], dated as of September
25, 1997, 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
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unpaid interest shall be due and payable in semi-annual installments commencing
January 2, 1998, 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 1997 A], dated as of September 25, 1997,
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 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.
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<PAGE>
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 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.
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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
[6~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>
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,
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,
not in its individual capacity but
solely 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 hereof, each 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.
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, 1998, 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
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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.
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 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
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<PAGE>
after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing,
Indentures, Interest Drawing and Investment Earnings.
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 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
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<PAGE>
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
[6~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, 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
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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
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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 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
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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
[6~ 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
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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 made thereon. The Owner Trustee shall not
be required to
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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(k), 8(l), 8(q), 8(r), 8(t), 8(ee), 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 Purchasers 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.
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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.
(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.
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.
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(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.
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
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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 180 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.
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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. No Make-Whole Amount.
Notwithstanding the provisions of Section 2.10(b), Section 2.11,
Section 2.13 and any other provision of this Trust Indenture, no Make-Whole
Amount shall be payable in connection with the redemption or purchase of the
Secured Certificates of any Series if such redemption or purchase occurs on or
after the Make-Whole Termination Date for such Series.
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
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by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly
distributed in the following order of priority:
First, 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,
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
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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;
(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
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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
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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 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:
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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):
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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 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
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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
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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
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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
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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
[6~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
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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 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
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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
[6~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
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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.
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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 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,
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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 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
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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.
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(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
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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);
(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
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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
an 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.
(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.
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(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.
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.
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 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 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.
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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 which 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, 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
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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. 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
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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 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
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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.
(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
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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.
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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 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
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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, modifications
and changes do not and would not affect the time of, or
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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 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.
-62-
<PAGE>
(c) At any time after the date hereof, 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.
-62-
<PAGE>
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
[6~Indenture Trustee.
-63-
<PAGE>
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.
-64-
<PAGE>
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.
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.
-65-
<PAGE>
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.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.
-66-
<PAGE>
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee,
Owner Trustee
By: /s/Greg A. Hawley
------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee,
Indenture Trustee
By: /s/Donald E. Smith
-------------------------------
Name: Donald E. Smith
Title: Vice President
-67-
<PAGE>
============================
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
============================
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 A]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 A], dated
_______ __, _____ (herein called this "Trust Indenture Supplement") of FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee (herein called the "Owner Trustee") under that certain Trust
Agreement [NW 1997 A] dated as of September 25, 1997 (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 TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 A], dated
as of September 25, 1997 (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>
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 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>
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>
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,
NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee, Owner Trustee
By:
-------------------------------
Name:
Title:
EXHIBIT A-4
<PAGE>
SCHEDULE I
Principal AmountInterest Rate
------------------- -------------------
Series A $10,481,250.00 7.068%
Series B $4,387,500.00 7.248%
[6~Series C $1,931,250.00 7.039%
SCHEDULE I-1
<PAGE>
Secured Certificates Amortization
SERIES A
--------
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
SCHEDULE I-2
<PAGE>
SERIES B
--------
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
SCHEDULE I-3
<PAGE>
SERIES C
--------
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
SCHEDULE I-4
<PAGE>
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.
1997-1A, dated as of September 25, 1997.
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.
1997-1B, dated as of September 25, 1997.
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.
1997-1C, dated as of September 25, 1997.
SCHEDULE II-1
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N501XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 3.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 3.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 3.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 3.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 3.000000000%
January 2, 2003......................................... 3.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.000000000%
January 2, 2007......................................... 3.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 4.000000000%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.000000000%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.000000000%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.000000000%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 13.231872439%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 14.209156446%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 15.149007609%
July 2, 2014............................................ 0.097666309%
January 2, 2015......................................... 11.312297197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 0.000000000%
</TABLE>
<PAGE>
Secured Certificates Amortization SERIES B
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
2
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N501XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
3
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N502XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- --------------------------------------------------------- ----------------
<S> <C>
January 2, 1998.......................................... 0.000000000%
July 2, 1998............................................. 3.000000000%
January 2, 1999.......................................... 0.000000000%
July 2, 1999............................................. 3.000000000%
January 2, 2000.......................................... 0.000000000%
July 2, 2000............................................. 3.000000000%
January 2, 2001.......................................... 0.000000000%
July 2, 2001............................................. 3.000000000%
January 2, 2002.......................................... 0.000000000%
July 2, 2002............................................. 3.000000000%
January 2, 2003.......................................... 3.000000000%
July 2, 2003............................................. 0.000000000%
January 2, 2004.......................................... 0.000000000%
July 2, 2004............................................. 3.000000000%
January 2, 2005.......................................... 0.000000000%
July 2, 2005............................................. 3.000000000%
January 2, 2006.......................................... 0.000000000%
July 2, 2006............................................. 3.000000000%
January 2, 2007.......................................... 3.000000000%
July 2, 2007............................................. 0.000000000%
January 2, 2008.......................................... 4.000000000%
July 2, 2008............................................. 0.000000000%
January 2, 2009.......................................... 4.000000000%
July 2, 2009............................................. 0.000000000%
January 2, 2010.......................................... 4.000000000%
July 2, 2010............................................. 0.000000000%
January 2, 2011.......................................... 4.000000000%
July 2, 2011............................................. 0.000000000%
January 2, 2012.......................................... 13.231872439%
July 2, 2012............................................. 0.000000000%
January 2, 2013.......................................... 14.209156446%
July 2, 2013............................................. 0.000000000%
January 2, 2014.......................................... 15.149007609%
July 2, 2014............................................. 0.097666309%
January 2, 2015.......................................... 11.312297197%
July 2, 2015............................................. 0.000000000%
January 2, 2016.......................................... 0.000000000%
</TABLE>
4
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N502XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
5
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N502XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
6
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N503XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 3.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 3.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 3.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 3.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 3.000000000%
January 2, 2003......................................... 3.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.000000000%
January 2, 2007......................................... 3.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 4.000000000%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.000000000%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.000000000%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.000000000%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 13.231872439%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 14.209156446%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 15.149007609%
July 2, 2014............................................ 0.097666309%
January 2, 2015......................................... 11.312297197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 0.000000000%
</TABLE>
7
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N503XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
8
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N503XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
9
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N504XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 3.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 3.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 3.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 3.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 3.000000000%
January 2, 2003......................................... 3.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.000000000%
January 2, 2007......................................... 3.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 4.000000000%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.000000000%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.000000000%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.000000000%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 13.231872439%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 14.209156446%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 15.149007609%
July 2, 2014............................................ 0.097666309%
January 2, 2015......................................... 11.312297197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 0.000000000%
</TABLE>
10
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N504XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
11
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N504XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
12
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N505XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 3.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 3.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 3.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 3.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 3.000000000%
January 2, 2003......................................... 3.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.000000000%
January 2, 2007......................................... 3.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 4.000000000%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.000000000%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.000000000%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.000000000%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 13.231872439%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 14.209156446%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 15.149007609%
July 2, 2014............................................ 0.097666309%
January 2, 2015......................................... 11.312297197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 0.000000000%
</TABLE>
13
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N505XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
14
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N505XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
15
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N506XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 3.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 3.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 3.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 3.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 3.000000000%
January 2, 2003......................................... 3.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.000000000%
January 2, 2007......................................... 3.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 4.000000000%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.000000000%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.000000000%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.000000000%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 13.231872439%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 14.209156446%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 15.149007609%
July 2, 2014............................................ 0.097666309%
January 2, 2015......................................... 11.312297197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 0.000000000%
</TABLE>
16
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N506XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 1.398939259%
July 2, 1998............................................ 2.507043647%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 4.333333333%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 4.333333333%
January 2, 2001......................................... 4.333333333%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.540654587%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.367600456%
July 2, 2005............................................ 0.185762051%
January 2, 2006......................................... 15.179384843%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 5.360020513%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 5.642902792%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 12.068950199%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 17.852670313%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 19.896071339%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
17
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N506XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 24.479265243%
July 2, 2002............................................ 6.906888803%
January 2, 2003......................................... 29.745852686%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.747721942%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 12.120271327%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
18
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N507XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 1.246205008%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.054241085%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.054241085%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.054241085%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 3.054241085%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 3.054241085%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 3.054241085%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 3.054241085%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.054241085%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 3.054241085%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.072321447%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.072321447%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.072321447%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 3.805858960%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 13.760740838%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 14.768981219%
July 2, 2014............................................ 0.000000000%
January 2, 2015......................................... 15.851094703%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 10.861985164%
</TABLE>
19
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N507XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 2.119719967%
July 2, 2007............................................ 12.282386647%
January 2, 2008......................................... 12.362453116%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 8.210574376%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 16.719370342%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 18.832606936%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 29.472888616%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
20
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N507XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 11.628442583%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.318978140%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 4.692831514%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.163142629%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 7.736968511%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 9.421596837%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 11.224827507%
July 2, 2005............................................ 29.027199379%
January 2, 2006......................................... 16.786012900%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
</TABLE>
21
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N508XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 1.049144502%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.060335737%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.060335737%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.060335737%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 3.060335737%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 3.060335737%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 3.060335737%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 3.060335737%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.060335737%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 3.060335737%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.080447649%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.080447649%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.080447649%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 3.144094949%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 13.676153498%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 14.678196275%
July 2, 2014............................................ 0.000000000%
January 2, 2015......................................... 15.753657986%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 11.914388208%
</TABLE>
22
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N508XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 24.740567508%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 8.227875831%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 16.848418507%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 18.231516643%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 31.951621512%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 0.000000000%
</TABLE>
23
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N508XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 12.724891325%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.366752558%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 4.743971061%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 6.217882145%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 7.795562031%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 9.484315597%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 11.291961948%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 39.125603349%
July 2, 2006............................................ 5.249059986%
January 2, 2007......................................... 0.000000000%
</TABLE>
24
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N509XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 2.251000274%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.023164937%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.023164937%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.023164937%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 3.023164937%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 3.023164937%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 3.023164937%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 3.023164937%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.023164937%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 3.023164937%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.030886583%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.030886583%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.030886583%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 4.030886583%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 8.161012987%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 14.342147564%
July 2, 2014............................................ 0.000000000%
January 2, 2015......................................... 15.392987197%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 16.520821214%
</TABLE>
25
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N509XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.537309076%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 3.777064223%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.777064223%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 15.110372218%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 7.209710211%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 7.903989724%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 21.089591209%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 25.082312375%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 15.512586742%
</TABLE>
26
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N509XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 1.642476768%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 1.814496970%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.064198485%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 4.419946970%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 5.871046970%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 29.273835354%
July 2, 2004............................................ 28.573058586%
January 2, 2005......................................... 12.849827778%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 9.124674242%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.366437879%
</TABLE>
27
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N510XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 2.178338682%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.025412206%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.025412206%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.025412206%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 3.025412206%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 3.025412206%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 3.025412206%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 3.025412206%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.025412206%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 3.025412206%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 4.033882941%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.033882941%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.033882941%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 4.033882941%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 8.353687195%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 14.294949072%
July 2, 2014............................................ 0.000000000%
January 2, 2015......................................... 15.342330474%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 16.466452962%
</TABLE>
28
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N510XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 2.362486835%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 3.854112350%
July 2, 2007............................................ 0.000000000%
January 2, 2008......................................... 15.366539050%
July 2, 2008............................................ 0.000000000%
January 2, 2009......................................... 7.302248415%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 7.930587586%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 22.643849700%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 25.442464804%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 15.097711260%
</TABLE>
29
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N510XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.746727322%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 1.716359888%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 2.952210700%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 4.300112421%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 5.742775231%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 26.225362027%
July 2, 2004............................................ 31.159060641%
January 2, 2005......................................... 13.632652790%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 11.543248042%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 1.981490937%
</TABLE>
30
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N511XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 2.067647067%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.028835661%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.028835661%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.028835661%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 1.486374704%
July 2, 2003............................................ 1.542460957%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.028835661%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.028835661%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.028835661%
January 2, 2007......................................... 0.000000000%
July 2, 2007............................................ 3.028835661%
January 2, 2008......................................... 0.000000000%
July 2, 2008............................................ 3.028835661%
January 2, 2009......................................... 4.038447548%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 4.038447548%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.038447548%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 12.421406833%
July 2, 2013............................................ 0.000000000%
July 2, 2014............................................ 0.000000000%
January 2, 2015......................................... 15.353095920%
July 2, 2015............................................ 0.000000000%
January 2, 2016......................................... 16.478007081%
</TABLE>
31
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N511XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.588477274%
January 2, 2007......................................... 0.000000000%
July 2, 2007............................................ 3.924139055%
January 2, 2008......................................... 0.000000000%
July 2, 2008............................................ 3.924139055%
January 2, 2009......................................... 18.236878152%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 8.900408541%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 23.223599727%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 38.397579294%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 2.804778901%
</TABLE>
32
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N511XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.465117702%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 1.897228854%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.139722805%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 4.500859110%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 14.169451568%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 15.672158293%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 45.617182137%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 13.949401268%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.588878264%
</TABLE>
33
<PAGE>
Secured Certificates Amortization SERIES A Aircraft: N512XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 1.811245347%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 3.036765605%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.036765605%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 3.036765605%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 2.729088146%
July 2, 2003............................................ 0.307677459%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 3.036765605%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 3.036765605%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 3.036765605%
January 2, 2007......................................... 0.000000000%
July 2, 2007............................................ 3.036765605%
January 2, 2008......................................... 0.000000000%
July 2, 2008............................................ 3.036765605%
January 2, 2009......................................... 2.932927508%
July 2, 2009............................................ 1.116093299%
January 2, 2010......................................... 4.049020807%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 4.049020807%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 0.000000000%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 12.564016207%
July 2, 2013............................................ 0.000000000%
January 2, 2014......................................... 0.000000000%
July 2, 2014............................................ 14.308298144%
January 2, 2015......................................... 0.000000000%
July 2, 2015............................................ 15.356657657%
January 2, 2016......................................... 16.481829782%
</TABLE>
34
<PAGE>
Secured Certificates Amortization SERIES B Aircraft: N512XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.000000000%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 0.000000000%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 0.000000000%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 0.000000000%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 0.000000000%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 0.000000000%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 0.000000000%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 0.000000000%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.000000000%
July 2, 2007............................................ 3.671776868%
January 2, 2008......................................... 0.000000000%
July 2, 2008............................................ 4.545558289%
January 2, 2009......................................... 17.353268142%
July 2, 2009............................................ 0.000000000%
January 2, 2010......................................... 10.054126255%
July 2, 2010............................................ 0.000000000%
January 2, 2011......................................... 23.343039370%
July 2, 2011............................................ 0.000000000%
January 2, 2012......................................... 38.644240325%
July 2, 2012............................................ 0.000000000%
January 2, 2013......................................... 2.387990750%
</TABLE>
35
<PAGE>
Secured Certificates Amortization SERIES C Aircraft: N512XJ
<TABLE>
<CAPTION>
PERCENTAGE OF
PAYMENT PRINCIPAL AMOUNT
DATE TO BE PAID
- -------------------------------------------------------- ----------------
<S> <C>
January 2, 1998......................................... 0.000000000%
July 2, 1998............................................ 0.000000000%
January 2, 1999......................................... 0.524072338%
July 2, 1999............................................ 0.000000000%
January 2, 2000......................................... 1.840243639%
July 2, 2000............................................ 0.000000000%
January 2, 2001......................................... 3.071277538%
July 2, 2001............................................ 0.000000000%
January 2, 2002......................................... 4.427577951%
July 2, 2002............................................ 0.000000000%
January 2, 2003......................................... 7.512819317%
July 2, 2003............................................ 0.000000000%
January 2, 2004......................................... 21.971591339%
July 2, 2004............................................ 0.000000000%
January 2, 2005......................................... 45.104043757%
July 2, 2005............................................ 0.000000000%
January 2, 2006......................................... 15.074940818%
July 2, 2006............................................ 0.000000000%
January 2, 2007......................................... 0.473433303%
</TABLE>
36
<PAGE>
Exhibit 4(a)(3)
- -----------------------------------------------------------------------------
LEASE AGREEMENT
[NW 1997 A]
Dated as of
September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
AND
NORTHWEST AIRLINES, INC.,
Lessee
One British Aerospace Avro 146-RJ85A Aircraft
- -----------------------------------------------------------------------------
As set forth in Section 20 hereof, Lessor has assigned to the Indenture
Trustee (as defined herein) certain of its right, title and interest in and to
this Lease. To the extent, if any, that this Lease constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the original
executed counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
thereof.
<PAGE>
TABLE OF CONTENTS TO LEASE AGREEMENT
Page
SECTION 1. Definitions.....................................................1
SECTION 2. Acceptance and Lease...........................................16
SECTION 3. Term and Rent..................................................16
(a) Basic Term................................................16
(b) [Intentionally Omitted]...................................16
(c) Basic Rent................................................16
(d) Adjustments to Basic Rent.................................17
(e) Supplemental Rent.........................................18
(f) Payments in General.......................................19
(g) Prepayment of Certain Rent Payments.......................20
SECTION 4. Lessor's Representations and Warranties........................21
SECTION 5. Return of the Aircraft.........................................22
(a) Condition Upon Return.....................................22
(b) Return of the Engines.....................................23
(c) Fuel; Manuals.............................................23
(d) Storage Upon Return.......................................23
SECTION 6. Liens..........................................................24
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia............................................24
(a) Registration and Maintenance..............................24
(b) Possession and Subleases..................................26
(c) Insignia..................................................30
SECTION 8. Replacement and Pooling of Parts; Alterations, Modifications
and Additions..................................................30
(a) Replacement of Parts......................................30
(b) Pooling of Parts..........................................31
(c) Alterations, Modifications and Additions..................31
SECTION 9. Voluntary Termination..........................................32
(a) Termination Event.........................................32
(b) [Intentionally Omitted]...................................33
(c) Optional Sale of the Aircraft.............................33
(i)
<PAGE>
(d) Termination as to Engines.................................35
SECTION 10. Loss, Destruction, Requisition, etc............................35
(a) Event of Loss with Respect to the Aircraft................35
(b) Event of Loss with Respect to an Engine...................37
(c) Application of Payments from Governmental Authorities
for Requisition of Title, etc.............................38
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of the
Aircraft..................................................39
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the
Aircraft..................................................40
(f) Application of Payments During Existence of Event of
Default...................................................40
SECTION 11. Insurance......................................................40
(a) Public Liability and Property Damage Insurance............40
(b) Insurance Against Loss or Damage to the Aircraft..........42
(c) Reports, etc..............................................44
(d) Self-Insurance............................................45
(e) Additional Insurance by Lessor and Lessee.................45
(f) Indemnification by Government in Lieu of Insurance........46
(g) Application of Payments During Existence of an Event of
Default...................................................46
SECTION 12. Inspection.....................................................46
SECTION 13. Assignment.....................................................47
SECTION 14. Events of Default..............................................47
SECTION 15. Remedies.......................................................49
SECTION 16. Lessee's Cooperation Concerning Certain Matters................52
SECTION 17. Notices........................................................53
SECTION 18. No Set-Off, Counterclaim, etc..................................54
SECTION 19. Renewal Options; Purchase Options; Valuation...................55
(a) Renewal Options...........................................55
(b) Purchase Options..........................................56
(c) Valuation.................................................56
(d) Special Purchase Option...................................57
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates...................................................58
SECTION 21. Lessor's Right to Perform for Lessee...........................58
(ii)
<PAGE>
SECTION 22. Investment of Security Funds; Liability of Lessor Limited......59
(a) Investment of Security Funds..............................59
(b) Liability of Lessor Limited...............................59
SECTION 23. Service of Process.............................................59
SECTION 24. Miscellaneous..................................................60
SECTION 25. Successor Trustee..............................................60
SECTION 26. Covenant of Quiet Enjoyment....................................60
(iii)
<PAGE>
EXHIBITS
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Excess Amount, Lessor's Cost
and Special Purchase Price Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation and Indemnification Verification
EXHIBIT F - Schedule of Domiciles of Permitted Sublessees
EXHIBIT G - Return Conditions
EXHIBIT H - Return Conditions (EBT)
(iv)
<PAGE>
LEASE AGREEMENT
[NW 1997 A]
This LEASE AGREEMENT [NW 1997 A], dated as of September 25, 1997,
between FIRST SECURITY BANK, 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 1997 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
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 British Aerospace Avro 146-RJ85A
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
<PAGE>
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.
"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 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 Delivery
Date and ending on July 2, 2017, 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
the City of New York, New York; Boston, Massachusetts; 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 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
-2-
<PAGE>
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.
"Commitment" means the commitment of a Pass Through Trustee 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 1997
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.
"Contract Rights" means all of Lessee's right, title and interest
in and to Part H and Part J of the Manufacturer Support Agreement, as
and to the extent that the same relate to the warranties with respect
to the Aircraft, including, without limitation, (a) all claims for
damages in respect of the Aircraft arising as a result of any default
by the Manufacturer under Part H or Part J of the Manufacturer Support
Agreement, including, without limitation, all warranty, service life
policy and indemnity provisions in Part H and Part J of the
Manufacturer Support Agreement in respect of the Aircraft and all
claims thereunder and (b) any and all rights of Lessee to compel
performance of the terms of Part H and Part J of the Manufacturer
Support Agreement in support thereof.
"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, 2004, or such earlier date as this
Lease may be terminated in accordance with the provisions hereof.
-3-
<PAGE>
"Dollars" and "$" means the lawful currency of the United States
of America.
"Engine" means (i) each of the four AlliedSignal LF507 type
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 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.
"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 (or any Sublessee) 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 (or any Sublessee) 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 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
(or any Sublessee), prior to the
-4-
<PAGE>
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 such
Sublessee), 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 the entire U.S. registered fleet of British Aerospace
Avro 146-RJ85A aircraft of Lessee (or any Sublessee) and Lessee (or a
Sublessee), 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 (or such Sublessee), 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 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 a Lease Period 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 such Lease Period Date.
"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.
-5-
<PAGE>
"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).
"Guarantee" means the Guarantee [NW 1997 A], dated as of the date
hereof, 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.
"Half-Life Adjustment" has the meaning specified in Exhibit H
hereto.
"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" 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)
-6-
<PAGE>
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.
"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Lease Agreement [NW 1997 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 periods throughout
the Basic Term and any Renewal Term ending on a Lease Period Date, the
first such period commencing on and including the Delivery Date.
"Lease Period Date" means January 2, 1998 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,
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, National Association, in
its individual
-7-
<PAGE>
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, 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, 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, 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, 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, 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.
"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 Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity
Provider under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
-8-
<PAGE>
"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 set
forth in the Trust Indenture.
"Make-Whole Amount" has the meaning assigned to that term in the
Trust Indenture.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and
its successors and assigns.
"Manufacturer Documents" means the Purchase Agreement, the
Residual Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and
Lessee.
"Mortgage" means the Mortgage and Security Agreement (N501XJ),
dated as of April 25, 1997, between Lessee and First Union National
Bank (f/k/a First Union National Bank of North Carolina).
"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 7.25 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 Residual Agreement, 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
-9-
<PAGE>
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 Residual Agreement, 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 1997 A], dated as of the date hereof, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination
Agent, 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.
"Pass Through Certificates" means the pass through certificates
to be issued by the Pass Through Trustee in connection with the
Overall 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 Participation Agreement.
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"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 (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.
"Predecessor Lease" means the Lease Agreement (N501XJ), dated as
of April 25, 1997, between Lessee and Mesaba Aviation Inc.
"Prepaid Rent" has the meaning assigned in Section 3(g) hereof.
"Purchase Agreement" means the Sale and Purchase Agreement, dated
as of February 5, 1997, between the Manufacturer and Lessee relating
to the purchase by Lessee of the Aircraft (including the Manufacturer
Support Agreement), 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 1997 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.
"Purchasers" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"Reimbursement Amount" has the meaning set forth in Section 3(g)
hereof.
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"Related Indemnitee Group" means, with respect to any Indemnitee,
any officer, director, servant, employee, agent or Affiliate thereof.
"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.
"Residual Agreement" means the Residual Value Agreement (N501XJ),
dated as of September 25, 1997, among the Manufacturer, the Owner
Participant and the Owner Trustee.
"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 July 2, 2017, 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). "Stipulated Loss Value" as
of any date after July 2, 2017 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 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.
"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.
"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than 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
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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 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.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1997 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.
"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 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, 2017, 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).
"Transaction Expenses" means: all of the reasonable
out-of-pocket costs, fees and expenses incurred by the Owner Trustee,
the Pass Through Trustee, the
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Subordination Agent and the Indenture Trustee in connection with the
transactions contemplated by the Participation 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)
including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements 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)
Shearman & Sterling, special counsel for the Underwriters, and
(D) Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma;
(2) the initial fees and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture;
(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 fees and expenses with respect to the appraisal of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of Todd
& Levi LLP, 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 fees, expenses and
disbursements of David, Hagner, Kuney & Davison, 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;
(8) the fees, expenses and disbursements of Simpson Thacher
& Bartlett and Cadwalader, Wickersham & Taft, special counsel for
Lessee;
(9) the costs of filing and recording documents with the
FAA and filing Uniform Commercial Code statements in the United
States;
(10) the reasonable fees, expenses and disbursements of
Powell, Goldstein, Frazer & Murphy, special counsel to the
Liquidity Provider; and
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(11) the reasonable fees, expenses and disbursements of
Vedder, Price, Kaufman & Kammholz, special counsel to the
Manufacturer.
"Trust Agreement" means that certain Trust Agreement [NW 1997 A],
dated as of the date hereof, between the Owner Participant and First
Security Bank, 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 Agreement and Indenture Supplement" or "Trust Supplement"
means a supplement to the Trust Agreement and the Trust Indenture,
substantially in the form of Exhibit A to the Trust Indenture.
"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 1997 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 Indenture Estate" has the meaning assigned to that term in
the Trust Indenture.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of September 16, 1997, among Lessee, the Guarantor
and the several underwriters named therein.
"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)
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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) Basic Term. The Basic Term shall
commence on the Delivery Date and end on July 2, 2017, 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 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 Delivery Date or applicable Lease Period
Date, as the case may be, specified in Exhibit B hereto.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs other than
on September 25, 1997, or (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are
determined to be other than 1.37% 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 December 30,
1997, 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.
In such recalculation there will be no change in the amortization
of the Secured Certificates.
(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 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
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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.
(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 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
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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) and 4.07 of
Rev. Proc. 75-28 and with one or more of any "safe harbors" from
characterization of this Lease as a "disqualified leaseback or
long-term agreement" set forth in Section 467 of the Code (or any
proposed, temporary or final regulations thereunder applicable to
this Lease) or, if no "safe harbor" exists, made in a manner to
avoid characterization of this Lease as a "disqualified leaseback
or long-term agreement" within the meaning of Section 467 of the
Code 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 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 Section 2.10(b) or Section 2.11 of the Trust
Indenture. 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, 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
1997 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 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.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW
1997 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). Lessor hereby
directs and Lessee agrees that 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
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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 any Lease Period Date from Lessor an amount equal to the Excess Amount
for such date, Lessee shall on the Delivery Date, prepay on such Lease Period
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 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
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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. 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, 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 which 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 in default pursuant to
Section 15 hereof) it will not,
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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 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 AlliedSignal LF507 type engines or
four 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 all 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 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 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 (a) Exhibit G, in the event
such return occurs other than at the termination of this Lease on July 2, 2017,
or (b) Exhibit H, in the event such return occurs at the termination of this
Lease on July 2, 2017; provided that if a Half-Life Adjustment is required to be
calculated pursuant to the terms of Exhibit H, if the Half-Life Adjustment is a
positive number Lessee shall pay Lessor the Half-Life Adjustment and if the
Half-Life Adjustment is a negative number Lessor shall pay Lessee the Half-Life
Adjustment; provided, further, that Lessor shall only be required to make such
payment if the Owner Participant shall have irrevocably exercised its option
pursuant to Section 2 of the Residual Agreement.
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
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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 which 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
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purpose Liens which 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, 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, 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 sixty (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 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 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 British
Aerospace Avro 146-RJ85A 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
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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
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) 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
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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 (or, except with
respect to clause (x) below, any Sublessee) 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, if a Sublease is then
in effect, by 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
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<PAGE>
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
(x) 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
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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 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
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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, 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
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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 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
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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 $200,000. 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
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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 commercially reasonable
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
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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 which 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 sales 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 Make-Whole 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 which 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 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 (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 Make-Whole 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 Make-Whole 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
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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.
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) an earlier Business Day irrevocably specified fifteen (15)
days in advance by notice from Lessee to Lessor and the Indenture
Trustee (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 or an airframe or an airframe and one
or more engines, as the case may be;
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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
which 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 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
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which 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 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 AlliedSignal LF507 type 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 all 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 which 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
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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 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.
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(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 Exhibits G and H) 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 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
evidencing the transfer, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens which 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)
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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, if a Sublease is then in
effect, if and to the extent maintained by 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
(or, if a Sublease is then in effect, by Sublessee) 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 (or,
if a Sublease is then in effect, by Sublessee) 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
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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 (or, if a
Sublease is then in effect, by Sublessee) 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 (or, if a Sublease is then in
effect, by Sublessee) 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, by 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
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aircraft owned or operated by Lessee (or, if a Sublease is then in effect, by
Sublessee) 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 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
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(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 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
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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 or operated
by Lessee (or, if a Sublease is then in effect, by Sublessee) 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, 1998, a report, signed by Aon Risk Services, Inc., Aon Risk
Services of Minnesota, Inc. 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 exercise by Lessor or the
Indenture Trustee, as the case may be, of
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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.
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.
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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) 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; 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 Basic Rent or
Stipulated Loss Value within ten (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 (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, in clauses (i)(B) and (ii) of the first sentence of second
paragraph of Exhibit G and in the proviso contained in the last
sentence of the first paragraph of Section 5(a)) 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 two hundred seventy (270) 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 for representations or warranties
contained in the Pass Through Trust Agreement or the Underwriting
Agreement (as defined in the Participation 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 (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
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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 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
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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 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 Delivery 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
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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 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
(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
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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 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
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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 1998, 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 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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(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). 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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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) or 14(e) 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
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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 which 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 the party giving the notice or, if such appraisers cannot agree on
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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, 2014 (or, if January 2,
2014 is not a Business Day, the Business Day immediately succeeding January 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 2.13
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 (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 which 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
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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 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
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<PAGE>
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 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,
-56-
<PAGE>
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 (or any Sublessee'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.
-57-
<PAGE>
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,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY: s/Greg A. Hawley
----------------------
Title: Vice President
NORTHWEST AIRLINES, INC.,
Lessee
BY: s/Mark D. Powers
--------------------
Title: Vice President-Finance
and Assistant Treasurer
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on the 25 day of September, 1997.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY: s/Donald E. Smith
---------------------
Title: Vice President
-Signature Page-
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1997 A]
LEASE SUPPLEMENT No.
[NW 1997 A]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement [NW 1997 A], dated as of September
25, 1997, 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 1997 A], dated as of September 25, 1997, relating to one British
Aerospace Avro 146-RJ85A 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 British Aerospace Avro 146-RJ85A 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>
(i) Airframe: FAA Registration No. ______; manufacturer's serial no.
_____; and
(ii) Engines: four (4) AlliedSignal LF507 type engines bearing,
respectively, manufacturer's serial nos. LFO______, LFO______,
LFO______ and LFO______ (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 ____________, 201_.
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 British
Aerospace (Operations) Limited, or any subcontractor or supplier of British
Aerospace (Operations) Limited, 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>
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,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
Lessor
By
______________________
Title: Vice President
NORTHWEST AIRLINES, INC.,
Lessee
By
______________________________
Title: Vice President-Finance
and Assistant Treasurer
(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: Vice President
_______________________________________________________________
(1) This language contained in the original counterpart only.
EXHIBIT A-PAGE 3
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1997 A]
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 and Excess Amount:
Excess Amount Basic Rent
Lease Period (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
____________ _______________ _______________
* Denotes payment in arrears from preceding Lease Period Date (or Delivery
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>
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.
Excess Amount Basic Rent
Lease Period (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
____________ _______________ ______________
* Denotes payment in arrears from preceding Lease Period Date (or
Delivery 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>
BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft: $21,000,000
Special Purchase Price: 50.96059% of Lessor's Cost.
EXHIBIT B-PAGE 3
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1997 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>
EXHIBIT D
to
Lease Agreement
[NW 1997 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>
EXHIBIT E
to
Lease Agreement
[NW 1997 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.
1. Any recalculation of Basic Rent, Excess Amounts, 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 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. 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
Amounts, 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
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, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages as of the Delivery Date.
<PAGE>
EXHIBIT F
to
Lease Agreement
[NW 1997 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>
EXHIBIT G
to
Lease Agreement
[NW 1997 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.
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
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) 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) shall
have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return, and (v) shall be in Lessee's or such
Sublessee's passenger configuration and the interior of the Airframe shall be
clean in accordance with Lessee's customary standards for a "between flights"
cleaning. In the event the FAA 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 Section 5 of the
Lease, unless it shall previously or concurrently have applied for such an
extension with respect to all British Aerospace Avro 146-RJ85A aircraft in its
fleet affected by such directive. In addition, if at the time of return the
Aircraft is not being maintained on a continuous maintenance program, the
landing gear, APU
<PAGE>
and hard time component on the Airframe will have at least 25% life remaining
to the next scheduled maintenance visit.
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) 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 (i) 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) 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 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.
EXHIBIT G-PAGE 2
<PAGE>
EXHIBIT H
to
Lease Agreement
[NW 1997 A]
RETURN CONDITIONS (EBT)
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, the
following return conditions apply to a return of the Airframe upon the
termination of the Lease on July 2, 2017:
1. Definitions. Capitalized terms used in this Exhibit H without
other definition have the respective meanings ascribed thereto in the Lease
Agreement [NW 1997 A], dated as of September 25, 1997, as amended from time to
time (the "Lease"), between First Security Bank, National Association, not in
its individual capacity but solely as Owner Trustee, and Northwest Airlines,
Inc. In addition, the following capitalized terms shall have the respective
meanings set forth below:
"Aircraft Documentation" means all logs, manuals, certificates, data
and inspection, modification, repair, and overhaul records which are required to
be maintained with respect to the Aircraft under the Maintenance Program or by
the Relevant Aviation Authority.
"APU" means the Sundstrand Model APIC 10000 auxiliary power unit
originally installed on the Aircraft on the Delivery Date or any auxiliary power
unit of a comparable or improved model substituted for such originally installed
auxiliary power unit.
"BFE" means the equipment described in Annex II to the Residual
Agreement, or any equivalent replacement equipment that may from time to time be
substituted for any such BFE.
"Country of Registration" means the country in which the Aircraft is
registered on the date the Aircraft is returned under the Lease at the end of
the Basic Term, which shall be one of the United States, the United Kingdom,
Japan, Canada or the Netherlands.
"HSI" means with respect to an Engine or the APU a hot section
inspection of such Engine or APU in accordance with the Maintenance Program.
"Maintenance Planning Document" means the Manufacturer's maintenance
planning document for Avro 146-RJ85 aircraft as in effect on the date the
Aircraft is returned under the Lease.
<PAGE>
"Maintenance Program" means the maintenance program for the Aircraft
required to be maintained pursuant to Section 7(a)(I) of the Lease, as in effect
on the date the Aircraft is returned under the Lease at the end of the Basic
Term.
"Manufacturer" means, with respect to the Airframe, British Aerospace
(Operations) Limited, and its successors and assigns, and, with respect to the
Engines, AlliedSignal Engines, a division of AlliedSignal.
"MRB" means the Maintenance Review Board for British Aerospace Avro
146-RJ85 aircraft.
"Operator" means the operator of the Aircraft immediately prior to the
date the Aircraft is returned under the Lease.
"Relevant Aviation Authority" means the civil aviation authority of
the Country of Registration.
"Structural Repair Manual" means the Manufacturer's structural repair
manual for Avro 146-RJ85 aircraft as in effect on the date the Aircraft is
returned under the Lease.
2. Aircraft Return Conditions on July 2, 2017.
(a) General Conditions. On the date the Aircraft is returned under
the Lease, the Aircraft shall be in compliance with the conditions set forth
below, ordinary wear and tear excepted:
(i) The Aircraft shall be registered in a Country of
Registration.
(ii) The Aircraft shall be airworthy, possess a currently valid
standard certificate of airworthiness, transport category, issued by the
Relevant Aviation Authority and be eligible for commercial passenger
transportation in the Country of Registration.
(iii) The Aircraft shall be fully equipped with four Engines
and the APU.
(iv) All maintenance required by the Maintenance Program to have
been performed on or prior to the date the Aircraft is returned under the
Lease shall have been accomplished. The Airframe, each Engine, the APU and
the landing gear shall be serviceable and free from all known defects and
discrepancies outside the limits of the Maintenance Program other than fair
wear and tear not affecting airworthiness. All major dents and abrasions,
scab patches and loose or pulled rivets shall be within the prescribed
limits referred to in the Structural Repair Manual or the Maintenance
Program.
(v) All mandatory modifications to the Aircraft required to be
made on or prior to the date the Aircraft is returned under the Lease by
the Relevant Aviation
EXHIBIT H-PAGE 2
<PAGE>
Authority shall have been made, provided that if an inspection program is
permitted as an alternative to a mandatory modification and the Aircraft is
in compliance with such inspection program, then such mandatory
modification shall not be required. All Manufacturer's Mandatory Service
Bulletins and Airworthiness Directives issued by the Relevant Aviation
Authority and, in either case, applicable to the Aircraft, which are in
force on the date the Aircraft is returned under the Lease and which
require termination within six months of the date the Aircraft is returned
under the Lease shall have been accomplished on the Aircraft.
(vi) Brakes and tires shall be serviceable and in good
condition. The landing gear and wheel wells shall be clean, free of
leaks and in good repair as required to be serviceable in accordance
with the Maintenance Program. The fuel system shall be in compliance
with the Maintenance Program. Except for BFE, the cockpit, all calendar
lifed emergency equipment, toilets and galley areas and the interior
shall be in serviceable condition and shall meet applicable fire
resistance regulations issued by the Relevant Aviation Authority in
effect on the date the Aircraft is returned under the Lease.
(vii) The Aircraft shall be clean by the Operator's normal
operating conditions. The Aircraft shall have all of the Operator's
exterior logos removed.
(b) Life Remaining. On the date the Aircraft is returned under the
Lease at the end of the Basic Term, the Aircraft shall comply with the following
additional requirements:
(i) The Engines shall have on average a minimum of one-half HSI
period remaining in accordance with MRB limits current on the date the
Aircraft is returned under the Lease, provided that in the event the
Engines do not have an average of at least one-half HSI period remaining in
accordance with such MRB limits, an Engine HSI Half-Life Adjustment under
clause (c)(i) shall be made in lieu of meeting such condition, provided,
however, that in no event shall any Engine have less than one-quarter HSI
period remaining in accordance with such MRB limits or have any defects or
discrepancies outside of the limits set forth in the Maintenance Planning
Document.
(ii) Engine life limited parts shall have on average at least
half-life remaining to their respective scheduled replacement in accordance
with the Engine Manufacturer's published life limited part replacement
schedule current on the date the Aircraft is returned under the Lease,
provided that in the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, an Engine life limited part Half-Life Adjustment under clause
(c)(ii) shall be made in lieu of meeting such condition, provided, however,
that in no event shall any Engine life limited part have less than
one-quarter life remaining to its scheduled replacement in accordance with
the Engine Manufacturer's published life limited part replacement schedule
current on the date the Aircraft is returned under the Lease.
EXHIBIT H-PAGE 3
<PAGE>
(iii) The APU shall have remaining at least half of any
applicable HSI period remaining on the date the Aircraft is returned under
the Lease in accordance with the then current MRB standards, provided that
in the event the APU does not have at least half of any applicable HSI
period remaining, an APU Half-Life Adjustment under clause (c)(iii) shall
be made in lieu of meeting such condition.
(iv) The landing gear shall have at least half-life remaining to
the next landing gear overhaul according to MRB requirements current on the
date the Aircraft is returned under the Lease, provided that in the event
the landing gear does not have at least half-life remaining to such next
landing gear overhaul, a landing gear Half-Life Adjustment under clause
(c)(iv) shall be made in lieu of meeting such condition.
(v) The Aircraft's next sequential block C check (which C check
shall include full fault rectification) shall have been completed
immediately prior to the date the Aircraft is returned under the Lease,
provided that in the event the Aircraft has at least 25% of the time
remaining until its next scheduled sequential block C check, a C check
Half-Life Adjustment under clause (c)(v) shall be made in lieu of such
block C check. If the Maintenance Program permits a block C check to be
performed in phases, all phases of such block C check shall have been
performed in order to align such block C check with the BAe/Avro "block
type" Maintenance Planning Document schedule.
(vi) The Airframe shall have a minimum of half-time remaining
until its next scheduled major structural inspections, provided that in the
event the Aircraft has at least 25% of the time remaining until its next
scheduled major structural inspection, but less than half-time, a
structural inspection Half-Life Adjustment under the first sentence of
clause (c)(vi) shall be made in lieu of meeting such condition and in the
event the Aircraft has more than 75% of the time remaining until its next
scheduled major structural inspection, a structural inspection Half-Life
Adjustment under the second sentence of clause (c)(vi) shall be made.
For purposes of determining whether the foregoing requirements have been
satisfied:
(x) to the extent the Maintenance Program provides that a part
or component (for purposes of this clause (x) and clause (y) below, the
term "part or component" may include the entire Airframe, an entire Engine,
the APU or the landing gear) is maintained on a continuous or on condition
maintenance program with no fixed overhaul or major repair required in
accordance with the Manufacturer's requirements, such part or component
shall be deemed to have half-life or half-time (as the case may be)
remaining; and
(y) in the event that a part or component is subject to a power
by the hour program, or the equivalent, on terms and conditions acceptable
to Lessor, and provided that such program is fully assignable with no
material buy-in fees and for a sufficient term remaining to provide the
equivalent of half-life remaining on the affected part or component, such
part or component shall be deemed to have half-life remaining.
EXHIBIT H-PAGE 4
<PAGE>
(c) Half-Life Adjustment. The Half-Life Adjustment shall equal the
sum of the Engine HSI Half-Life Adjustment, the Engine life limited parts
Half-Life Adjustment, the APU Half-Life Adjustment, the landing gear Half-Life
Adjustment, the C check Half-Life Adjustment and the structural inspection
Half-Life Adjustment (which shall be added if calculated pursuant to the first
sentence of clause (vi) below and subtracted if calculated pursuant to the
second sentence of clause (vi) below), each as calculated as set forth below:
(i) In the event that the Engines do not have an average of at
least a half HSI period remaining in accordance with MRB limits current on
the date the Aircraft is returned under the Lease, the Engine HSI Half-Life
Adjustment shall be an amount computed by multiplying (A) four by (B) the
cost (as evidenced by industry norms) of performing an HSI for engines of
the same type as the Engines by (C) a fraction, of which (x) the numerator
shall be the excess of 50% of the HSI period in accordance with such MRB
limits over the actual average amount of the HSI period remaining and (y)
the denominator shall be the HSI period.
(ii) In the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, the Engine life limited parts Half-Life Adjustment shall be an
amount computed by multiplying (A) four by (B) the average cost (as
evidenced by industry norms) of scheduled replacements of life limited
parts for engines of the same type as the Engines by (C) a fraction, of
which (x) the numerator shall be the excess of 50% of the life remaining to
scheduled replacement over the actual average remaining life to scheduled
replacement and (y) the denominator shall be the life between scheduled
replacements of Engine life limited parts.
(iii) In the event the APU does not have at least half of any
applicable HSI period remaining, the APU Half-Life Adjustment shall be an
amount computed by multiplying (A) the average cost (as evidenced by
industry norms) of an HSI for auxiliary power units of the same type as the
APU by (B) a fraction, of which (x) the numerator shall be the excess of
50% of the HSI period over the actual amount of the HSI period remaining
and (y) the denominator shall be the entire HSI period.
(iv) In the event the landing gear does not have at least
half-life remaining to such next scheduled landing gear overhaul, the
landing gear Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
landing gear overhaul for landing gear of the same type as the landing gear
installed on the Aircraft by (B) a fraction, of which (x) the numerator
shall be the excess of 50% of the period between landing gear overhauls
over the actual period remaining to the next scheduled landing gear
overhaul and (y) the denominator shall be the period between scheduled
landing gear overhauls.
(v) In the event the Aircraft's next sequential block C check
(which C check shall include the full fault rectification) shall not have
been completed immediately prior to the date the Aircraft is returned under
the Lease, the C check Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as
EXHIBIT H-PAGE 5
<PAGE>
evidenced by industry norms) of a block C check (including full fault
rectification) for aircraft of the same type as the Aircraft by (B) a
fraction, of which (x) the numerator shall be the excess of period between
sequential block C checks over the actual period remaining to the
sequential block C check and (y) the denominator shall be the period
between sequential block C checks.
(vi) In the event the Aircraft has less than half-time remaining
until its next scheduled major structural inspection, the structural
inspection Half-Life Adjustment shall be an amount computed by multiplying
(A) the average cost (as evidenced by industry norms) of a scheduled major
structural inspection for aircraft of the same type as the Aircraft by (B)
a fraction, of which (x) the numerator shall be the excess of 50% of the
period between scheduled major structural inspections over the actual
period remaining to the next scheduled major structural inspection and (y)
the denominator shall be the period between scheduled major structural
inspections. In the event the Aircraft has more than 75% of the time
remaining until its next scheduled major structural inspection, the
structural inspection Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
scheduled major structural inspection for aircraft of the same type as the
Aircraft by (B) a fraction, of which (x) the numerator shall be the excess
of the actual period remaining to the next scheduled structural inspection
over 75% of the period between scheduled major structural inspection and
(y) the denominator shall be the period between scheduled major structural
inspections.
(d) Aircraft Documentation. On July 2, 2017, the Aircraft shall be
returned with all Aircraft Documentation. The Aircraft Documentation shall be
current as of the date the Aircraft is returned under the Lease and in full
compliance with the requirements of the Relevant Aviation Authority. In the
event that the Maintenance Program deviates from the Maintenance Planning
Document, the Aircraft Documentation shall include a document which shall
cross-reference all deviations. The Aircraft Documentation shall document all
repairs to the Aircraft with appropriate references to the Structural Repair
Manual and a repair scheme approved by the Manufacturer or the Relevant Aviation
Authority.
EXHIBIT H-PAGE 6
<PAGE>
Exhibit 4(a)(4)
- -------------------------------------------------------------------------------
GUARANTEE
[NW 1997 A]
Dated as of September 25, 1997
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
------------------------------
Page
----
1. Guarantee................................................................2
2. No Implied Third Party Beneficiaries.....................................4
3. Waiver; No Set-off; Reinstatement; Subrogation...........................4
4. Amendments, Etc..........................................................5
5. Payments.................................................................5
6. Assignment of Guarantee..................................................5
7. Jurisdictional Matters...................................................5
8. Integration; Counterparts; Successors and Assigns; Headings..............6
9. Notices..................................................................6
10. No Waivers...............................................................6
11. Survival.................................................................6
12. Severability.............................................................6
13. Governing Law............................................................6
14. Enforcement Expenses.....................................................7
15. Termination..............................................................7
16. No Guarantee of Secured Certificates.....................................7
<PAGE>
GUARANTEE
[NW 1997 A]
This GUARANTEE [NW 1997 A], dated as of September 25, 1997 (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 1997 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, 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)
British Aerospace Avro 146-RJ85A aircraft, together with four (4) Allied
Signal LF507 type 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 1997 A], dated
as of the date hereof (as amended, modified or supplemented from time to
time, the "Participation Agreement"), among the Lessee, the Parties and
certain other entities; 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 1997 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 Documents and the transactions and the other documents
contemplated thereby, and does hereby irrevocably and
<PAGE>
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
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
-2-
<PAGE>
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
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
-3-
<PAGE>
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. 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
-4-
<PAGE>
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. 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.
8. 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.
-5-
<PAGE>
9. Notices. All requests, notices or other communications hereunder
shall be in writing, addressed as follows:
If to the Guarantor:
to the address or telecopy number set forth in the
Participation Agreement
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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
-6-
<PAGE>
15. 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.
16. 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.
-7-
<PAGE>
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: s/Mark D. Powers
------------------------------
Name: Mark D. Powers
Title: Vice President-Finance
and Assistant Treasurer
Accepted as of the above date:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By: /s/Greg A. Hawley
----------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By: /s/Donald E. Smith
----------------------
Name: Donald E. Smith
Title: Vice President
-8-
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW 1997 A]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
___________________, as Owner Participant
<PAGE>
Exhibit 4(a)(5)
- -------------------------------------------------------------------------------
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 A]
Dated as of September 25, 1997
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
_______________
One British Aerospace Avro 146-RJ85A Aircraft
U.S. Registration No. N501XJ
Manufacturer's Serial No. E2208
- -------------------------------------------------------------------------------
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 A]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 A], dated as of September
25, 1997 between NORTHWEST AIRLINES, INC., a Minnesota corporation ("Assignor"),
and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee ("Assignee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has agreed
to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement [NW
1997 A], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "Lease"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) Notwithstanding the foregoing, if and so long as (A) the Aircraft
shall be subject to the Lease and (B) the Manufacturer shall not have received
notice from the Indenture Trustee or the Owner Trustee that an Event of Default
under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to
<PAGE>
exercise in Assignor's own name such rights and claims as Assignee may have
with respect to the Contract Rights as and to the extent the same relate to
the Aircraft and, subject to paragraph 3(c) hereof, to retain any recovery or
benefit resulting from the enforcement of the Contract Rights as and to the
extent the same relate to the Aircraft, and (2) Assignee shall, at Assignor's
expense, cooperate with Assignor and take such actions as Assignor reasonably
deems necessary to enable Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "Manufacturer Payment"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to Assignee in accordance with the terms of the
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<PAGE>
Lease, be returned to Assignor promptly after all Events of Default under the
Lease have been cured or waived.
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 13850 McLearen Road,
Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703) 736-4255)
and three Business Days shall have elapsed from the date of actual receipt by
the Manufacturer and, in acting in accordance with the terms and conditions of
the Purchase Agreement and this Assignment, the Manufacturer may rely
conclusively upon any such notice.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding:
(i) Assignor shall at all times remain liable to the Manufacturer under the
Purchase Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any
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<PAGE>
respect the Manufacturer's contract rights thereunder, except as provided in
the Consent and Agreement attached hereto.
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement 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 Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee 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 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, 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 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
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<PAGE>
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL 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 ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. Unless the context otherwise require, the
following terms shall have the following meanings for all purposes of this
Assignment and shall be equally applicable to both the singular and the
plural forms of the terms herein defined:
"Aircraft" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"Contract Rights" means all of Assignor's right, title and
interest in and to Part H and Part J of the Manufacturer Support
Agreement, as and to the extent that the same relate to the warranties
with respect to the Aircraft, including, without limitation, (a) all
claims for damages in respect of the Aircraft arising as a result of
any default by the Manufacturer under Part H or Part J of the
Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and
Part J of the Manufacturer Support Agreement in respect of the
Aircraft and all claims thereunder and (b) any and all rights of
Assignor to compel performance of the terms of Part H and Part J of
the Manufacturer Support Agreement in support thereof.
"Engine" means each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the Lease Supplement.
"Lease" means the Lease Agreement [NW 1997 A], dated as of
September 25, 1997, between Assignor and Assignee.
"Lease Supplement" means a Lease Supplement substantially in
the form of Exhibit A to the Lease, entered into between Assignor and
Assignee on the date the Aircraft is leased by Assignee to Assignor
and accepted by Assignor under the Lease.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and
its successors and assigns.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and
Assignor.
"Operative Documents" shall have the meaning specified in the
Lease.
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<PAGE>
"Purchase Agreement" means the Sale and Purchase Agreement,
dated as of February 5, 1997, between the Manufacturer and Assignor
relating to the purchase by Assignor of the Aircraft (including the
Manufacturer Support Agreement), 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.
"Sublessee" shall have the meaning specified in the Lease,
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment 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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By: /s/Mark D. Powers
-----------------------------------
Title: Vice President-Finance
and Assistant Treasurer
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By: /s/Greg A. Hawley
-----------------------------------
Title: Vice President
The undersigned, not in its individual capacity but solely as Indenture
Trustee for the benefit of the holders of Secured Certificates and as assignee
of, and holder of a security interest in and to the foregoing Purchase Agreement
Assignment and the Purchase Agreement pursuant to such Purchase Agreement
Assignment, agrees to the terms of the foregoing Purchase Agreement Assignment
and agrees that its rights and remedies under such Purchase Agreement Assignment
shall be subject to the terms and conditions thereof, and of the Purchase
Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By: /s/Donald E. Smith
-------------------------------------
Title: Vice President
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<PAGE>
Exhibit 4(a)(6)
CONSENT AND AGREEMENT
[NW 1997 A]
The undersigned, AERO INTERNATIONAL (REGIONAL), a Societe par Actions
Simplifee, whose registered office is situated at 1, Allee Pierre Nadot,
31712 Blagnac Cedex, France, acting as agent for and on behalf of British
Aerospace (Operations) Limited, a limited company incorporated under the laws
of England and Wales, hereby acknowledges notice of, and consents to all of
the terms of, the foregoing Purchase Agreement Assignment [NW 1997 A] dated
as of September 25, 1997 between Northwest Airlines, Inc. (the "Assignor"),
and First Security Bank, National Association, not in its individual capacity
but solely as Owner Trustee (the "Assignee") (herein called the "Purchase
Agreement Assignment," the defined terms therein or by reference therein
being hereinafter used with the same meaning) and hereby confirms to the
Assignor and the Assignee, and agrees, that: (i) all representations,
warranties, indemnities and agreements of the Manufacturer under the Purchase
Agreement with respect to the Contract Rights, to the extent assigned by the
Assignor to the Assignee, shall inure to the benefit of the Assignee to the
same extent as if originally named the "Buyer" therein, subject to the terms
and conditions of the Purchase Agreement Assignment; (ii) the Assignee shall
not be liable for any of the obligations or duties of the Assignor under the
Purchase Agreement, nor shall the Purchase Agreement Assignment give rise to
any duties or obligations whatsoever on the part of the Assignee owing to the
Manufacturer, except for the Assignee's agreement in the Purchase Agreement
Assignment to the effect that in exercising any rights under the Purchase
Agreement or in making any claim with respect to the Contract Rights, the
terms and conditions of the Purchase Agreement relating to the Aircraft shall
apply to, and be binding upon, the Assignee to the same extent as the
Assignor, and with respect to such agreement the Manufacturer agrees that,
anything contained in the Purchase Agreement and the Purchase Agreement
Assignment to the contrary notwithstanding, so long as the Manufacturer shall
not have received written notice that an Event of Default has occurred and is
continuing, the Assignee shall not have any responsibility to the
Manufacturer for failure to comply with any of the terms of the Purchase
Agreement with respect to the Contract Rights as and to the extent the same
relate to the Aircraft while under lease to the Assignor; provided that no
person other than the Manufacturer shall have any rights against the Assignee
with respect to the undertaking and agreement set forth in this clause (ii);
(iii) the Manufacturer acknowledges the lease of the Aircraft by the Assignee
to the Assignor under the Lease and acknowledges advance notice of the
Purchase Agreement Assignment pursuant to Clause 24.1 of the Purchase
Agreement; and (iv) so long as the Aircraft is subject to the Lease, the
Manufacturer will continue to pay to the Assignor all payments which the
Manufacturer may be required to make in respect of the Aircraft under the
Purchase Agreement unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Assignee by facsimile
addressed to Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn: SVP Commercial (telecopy 011 33 5 6221 6321)
with a copy to Aero International (Regional) Marketing Inc., 13850 McLearen
Road, Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703)
736-4255) and three Business Days shall have elapsed from the date of actual
receipt by the Manufacturer, that an Event of Default under the Lease has
occurred and is continuing,
<PAGE>
whereupon the Manufacturer will not be required to make further inquiry into
the content of such notice and thereafter (until the Manufacturer shall have
received notice in writing from the Assignee or the Indenture Trustee sent or
addressed as aforesaid that no Event of Default under the Lease exists or
that such Event of Default under the Lease has been cured or waived)
Manufacturer shall make any and all payments which it may be required to make
in respect of the Aircraft under the Purchase Agreement (to the extent that
the right to receive such payments has been assigned under the Purchase
Agreement Assignment) directly to the Indenture Trustee at the account of the
Indenture Trustee at State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9903-943-0 Northwest/NW 1997 A, Attention: Corporate Trust Department,
Reference: Northwest/NW 1997 A, or (if written notice has been given to the
Manufacturer by the Assignee in the manner aforesaid that the Trust Indenture
is no longer in effect in accordance with its terms and all amounts due and
payable under the Secured Certificates have been paid in full) to the
Assignee at the account of the Assignee at First Security Bank, 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 1997 A.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a limited company incorporated under the Companies Act of
1985 duly organized and validly existing under the laws of England and Wales,
(B) the execution, delivery and performance of the Purchase Agreement and
this Consent and Agreement have been duly authorized by all necessary
corporate action on the part of the Manufacturer, do not require any approval
of the stockholders of the Manufacturer, trustee or holders of any
indebtedness or obligations of the Manufacturer (other than any such approval
or consent as has been obtained) and neither the execution and delivery of
the Purchase Agreement or this Consent and Agreement by the Manufacturer, nor
the performance by the Manufacturer of its obligations under the Purchase
Agreement or the Consent and Agreement contravenes any law, governmental rule
or regulation applicable to the Manufacturer, and (C) neither the execution
and delivery by the Manufacturer of the Purchase Agreement or the Consent and
Agreement, nor the performance by the Manufacturer 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 (other than
those which have been obtained).
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<PAGE>
Dated as of September 25, 1997
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British Aerospace
(Operations) Limited
By s/Simon Dowler
---------------------------------------
Title:
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<PAGE>
Exhibit 4(b)(1)
- -------------------------------------------------------------------------------
TRUST AGREEMENT
[NW 1997 G]
Dated as of September 25, 1997
between
NORTHWEST AIRLINES, INC.,
Trustor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
- -------------------------------------------------------------------------------
<PAGE>
TRUST AGREEMENT
[NW 1997 G]
This TRUST AGREEMENT [NW 1997 G] dated as of September 25, 1997 between
NORTHWEST AIRLINES, INC., a Minnesota corporation (the "Original Trustor"), and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association (in
its individual capacity, "FSB") 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");
WHEREAS, the Trustor desires to create a trust for the purpose of issuing
Secured Certificates, the proceeds of which issuance shall initially be held by
the Indenture Trustee on behalf of the Owner Trustee in the Collateral Account
and released, subject to the proviso to Section 1(d) of the Participation
Agreement, on the Delivery Date in order to finance a portion of Lessor's Cost
of the Aircraft, to acquire the Aircraft from Lessee on the Delivery Date, to
lease the Aircraft to Lessee on the Delivery Date and to receive the benefits
herein provided;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSB and the Trustor agree as follows:
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 Appendix A to the
Participation Agreement 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 1997 G], to be dated as of
the Delivery Date, and to be entered into by the Owner Trustee and Lessee on the
Delivery Date, as said Lease Agreement may from time to time be supplemented or
amended, or the
<PAGE>
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"
shall have in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its
permitted successors and assigns.
"Ownership Interest" means, in the case of each Trustor, 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 Trustor" means any corporation to which the Original Trustor or
any transferee from the Original Trustor or any Subsequent Trustor shall have
transferred at any time after the Delivery Date all of the undivided right,
title and interest originally held by the Original Trustor 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 a Trustor 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 Residual Agreement, 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 Trustor, 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 Trustor, 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,
-2-
<PAGE>
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 Engine included in the property of the Owner Trustee covered by this
Trust Agreement.
"Trustor" means the Original Trustor and each Subsequent Trustor to the
extent that the same shall, at the relevant time, have an Ownership Interest.
ARTICLE II
AUTHORIZATION AND DIRECTIONS;
DECLARATION OF TRUST
SECTION 2.01. Authorization and Direction to Owner Trustee. The Trustor
hereby authorizes and directs the Owner Trustee:
(a) to execute and deliver as and when specified in Sections 4(a) of the
Participation Agreement each of the other 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 Trustor
to the Owner Trustee for execution and delivery and to enter into and perform
the transactions contemplated thereby;
(b) to execute and deliver from time to time the Secured Certificates in
the manner and subject to the terms and conditions provided in the Participation
Agreement and the Trust Indenture;
(c) to execute and deliver each other document referred to in the
Operative Documents to which the Owner Trustee is a party or which the Owner
Trustee is required to deliver pursuant to the Operative Documents;
(d) subject to the terms of this Agreement, to perform the obligations and
duties and, upon instruction of the Trustor, exercise the rights of the Owner
Trustee under the Operative Documents; and
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<PAGE>
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the directions
of the Trustor, as the Trustor may deem necessary or advisable in connection
with the Certificate Closing Date and the Delivery Date and the transactions
contemplated hereby, the taking of any such action by the Owner Trustee in the
presence of the Trustor or its counsel to evidence, conclusively, the direction
of the Trustor.
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 Trustor, subject, however, to the provisions of and the
Lien created by the Trust Indenture and, when executed and delivered, to the
provisions of the Lease.
ARTICLE III
[Reserved]
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 Trustor.
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<PAGE>
(c) Certain Distributions to Trustor. All amounts from time to time
distributable by the Indenture Trustee to the Trustor pursuant to the Trust
Indenture shall, if paid to the Owner Trustee, be distributed by the Owner
Trustee to the Trustor 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.
(e) The Trustor and the Owner Trustee acknowledge that the proceeds from
the sale of the Secured Certificates to be effected on the Certificate Closing
Date are to be held by the Indenture Trustee in the Collateral Account in the
manner specified in the Trust Indenture for application as provided therein and
in Section 1(d) of the Participation Agreement.
SECTION 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to the Trustor pursuant to this
Article IV by transferring by wire transfer the amount to be distributed to such
account or accounts of the Trustor as the Trustor may designate from time to
time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner
Trustee will, if so requested by the Trustor in writing, pay any or all amounts
payable to the Trustor pursuant to this Article IV either (i) by crediting such
amount or amounts to an account or accounts maintained by the Trustor 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 Trustor at such address as the Trustor 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 an Indenture Event of Default (or an event which with the passage
of time or the giving of notice or both would constitute an Indenture Event of
Default) the Owner Trustee shall give to the Trustor 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
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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 Indenture Event of Default or other event
as the Owner Trustee shall be directed in writing by the Trustor. If the Owner
Trustee shall not have received instructions as above provided within twenty
(20) days after the mailing of such notice to the Trustor, 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 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 Trustor. For all purposes of this Trust Agreement and the
other Operative Documents, in the absence of actual knowledge by an officer of
FSB in the Corporate Trust Department, the Owner Trustee shall not be deemed to
have knowledge of an Indenture Event of Default or other event referred to in
this Section 5.01 unless notified in writing by the Indenture Trustee, the
Trustor 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 Trustor, 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 Trustor"); (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 Operative Documents to be
satisfactory to the Owner Trustee, it being understood that without written
instructions of the Trustor, 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,
deliver the Aircraft to the Trustor 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 Trustor, 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 Trustor shall have directed the Owner Trustee to take any such action or
refrain from taking any action, the Trustor agrees to furnish such indemnity as
shall be required and, in addition, to the extent not otherwise paid pursuant to
the provisions 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
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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 Trustor
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.
FSB 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 2.01(b) hereof upon the satisfaction, to the satisfaction of special
counsel for the Owner Trustee, of all the applicable conditions precedent
specified 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 Trustor
pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. FSB 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. FSB 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
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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 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 FSB 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 FSB, 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
Trustor 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, or (ii) 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. Notwithstanding the
foregoing, the Owner Trustee will furnish to the Indenture Trustee and the
Trustor, 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 any Operative Document.
SECTION 6.03. No Representations or Warranties as to Certain Matters.
NEITHER THE OWNER TRUSTEE NOR FSB 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, 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 FSB in its individual capacity or by the Owner Trustee and
except that FSB in its individual capacity hereby represents and warrants that
this Trust Agreement has been, and (assuming due authorization, execution and
delivery by the Original Trustor 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
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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. 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 Trustor 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 Trustor 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
Trustor, 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.
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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
Trustor 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 Trustor shall be responsible for causing to be
prepared and filed all income tax returns required to be filed by the Trustor.
The Owner Trustee shall be responsible for causing to be prepared, at the
request and expense of the Trustor, all income tax returns required to be filed
with respect to the trust created hereby and shall execute and file such
returns. The Trustor or the Owner Trustee, as the case may be, upon request,
will furnish the Owner Trustee or the Trustor, as the case may be, with all such
information as may be reasonably required from the Trustor 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 TRUSTOR
SECTION 7.01. Trustor to Indemnify Owner Trustee. The Trustor 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 FSB 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
FSB in its individual capacity on or measured by any compensation received by
FSB 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 FSB in its individual
capacity (whether or not also indemnified against by Lessee 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
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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 FSB in its
individual capacity hereunder, except (a) in the case of willful misconduct or
gross negligence on the part of the Owner Trustee or FSB 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 FSB
in its individual capacity (or from the failure of FSB 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 FSB in its
individual capacity only, 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 FSB 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 FSB in its individual capacity
in the disbursement of funds. The indemnities contained in this Section 7.01
extend to FSB 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 FSB 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, FSB 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 Trustor or others, but
without releasing any of them from their respective agreements of reimbursement;
and to secure the same FSB 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 Trustor. 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 TRUSTOR'S INTEREST
SECTION 8.01. Transfer of Interests. The Original Trustor may, on the
Delivery Date (or, if earlier, the Transfer Date), assign, convey or otherwise
transfer its Beneficial Interest to an institutional investor to enable the
Owner Trustee to purchase the Aircraft pursuant to Section 1(d) of the
Participation 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
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(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 Trustor, 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 Trustor 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 Trustor may appoint a successor Owner Trustee
by an instrument signed by the Trustor. 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 Trustor, 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 Trustor 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.
(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.
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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 Trustor or the Owner Trustee, or the Owner Trustee shall have
been directed to do so by the Trustor, the Owner Trustee and the Trustor 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 Trustor, 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 Trustor; and the Trustor 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,
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 Trustor, 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 Trustor during the
occurrence of an Indenture
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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 Trustor; and the Trustor 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
Trustor. 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 Trustor, 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.
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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 Trustor, but the failure of the Owner Trustee to mail such
conformed copy shall not impair or affect the validity of such document.
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. Trustor Has No Legal Title in Trust Estate. The Trustor
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 Trustor
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 Trustor to an accounting or to the transfer of legal title to any part of
the Trust Estate.
SECTION 11.03. Trust Agreement for Benefit of Certain Parties Only. 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 Trustor 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 Trustor.
SECTION 11.04. 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
11.04(a). Unless otherwise specified in a notice sent or delivered in
accordance with
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the foregoing provisions of this Section 11.04(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 Trustor, 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 Trustor, addressed to
such Subsequent Trustor at such address as such Subsequent Trustor 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, 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, 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 11.05. 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 11.06. 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 11.07. 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 11.08. 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 Trustor, its successors and, to the extent
permitted by Article VIII hereof, its assigns. Any request, notice, direction,
consent, waiver or other
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instrument or action by the Trustor shall bind its successors and assigns. Any
Trustor which shall cease to have any Ownership Interest shall thereupon cease
to be a party hereto or a Trustor for any reason and shall have no further
obligations hereunder.
SECTION 11.09. 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 11.10. 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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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.
NORTHWEST AIRLINES, INC.
BY s/Mark D. Powers
------------------------------------
Title: Vice President-Finance
and Assistant Treasurer
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY s/Greg A. Hawley
------------------------------------
Title: Vice President
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<PAGE>
EXHIBIT 4(b)(2)
[NW 1997 G]
Dated as of September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Indenture Trustee,
SECURED CERTIFICATES COVERING
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION MARK N507XJ
<PAGE>
TABLE OF CONTENTS
Page
GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions ............................................... 6
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates ............................. 6
SECTION 2.02. Issuance and Terms of Secured Certificates ............... 12
SECTION 2.03. Payments from Trust Indenture Estate Only ................. 14
SECTION 2.04. Method of Payment ......................................... 16
SECTION 2.05. Application of Payments ................................... 18
SECTION 2.06. Termination of Interest in Trust Indenture Estate ......... 19
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates ............................................ 19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates . 20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation ............. 21
SECTION 2.10. Mandatory Redemptions of Secured Certificates ............. 21
SECTION 2.11. Voluntary Redemptions of Secured Certificates ............. 22
SECTION 2.12. Redemptions; Notice of Redemption ........................ 22
SECTION 2.13. Assumption of Secured Certificates by Lessee ............. 23
SECTION 2.14. Option to Purchase Secured Certificates .................. 24
SECTION 2.15. Subordination ............................................. 25
SECTION 2.16. Establishment of Collateral Account ....................... 25
SECTION 2.17. Investment of Funds on Deposit in the Collateral Account .. 26
SECTION 2.18. Release of Debt Portion and Lien on the Collateral Account
and the Liquid Collateral on Delivery Date ............. 27
SECTION 2.19. Release of Collateral Account ............................ 27
SECTION 2.20. Reoptimization ........................................... 27
SECTION 2.21. No Make-Whole Amount ...................................... 28
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
SECTION 3.01. Rent Distribution ........................................ 28
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SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing ........................................... 29
SECTION 3.03. After Event of Default ................................... 30
SECTION 3.04. Certain Payments ........................................ 32
SECTION 3.05. Other Payments .......................................... 32
SECTION 3.06. Payments to Owner Trustee ............................... 33
SECTION 3.07. Application of Payments Under Guarantee ................. 33
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF
INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee .............................. 33
SECTION 4.02. Event of Default ........................................ 34
SECTION 4.03. Certain Rights ......................................... 36
SECTION 4.04. Remedies ................................................ 37
SECTION 4.05. Return of Aircraft, Etc ................................. 40
SECTION 4.06. Remedies Cumulative .................................... 41
SECTION 4.07. Discontinuance of Proceedings .......................... 41
SECTION 4.08. Waiver of Past Defaults ................................. 41
SECTION 4.09. Appointment of Receiver .................................. 42
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of
Sale, Etc .............................................. 42
SECTION 4.11. Rights of Certificate Holders to Receive Payment ......... 42
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default .............................. 42
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations ........................................... 43
SECTION 5.03. Indemnification ......................................... 45
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions .......................................... 46
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions .......................................... 46
SECTION 5.06. Replacement Airframes and Replacement Engines ........... 46
SECTION 5.07. Indenture Supplements for Replacements .................. 49
SECTION 5.08. Effect of Replacement .................................... 50
SECTION 5.09. Investment of Amounts Held by Indenture Trustee ......... 50
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties ......................... 50
SECTION 6.02. Absence of Duties ....................................... 51
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents ............................................. 51
SECTION 6.04. No Segregation of Monies; No Interest ................... 52
SECTION 6.05. Reliance; Agreements; Advice of Counsel ................. 52
SECTION 6.06. Capacity in Which Acting ................................ 53
SECTION 6.07. Compensation ............................................ 53
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SECTION 6.08. Instructions from Certificate Holders ................... 53
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification ................................ 54
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee ....................... 54
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor ............................................. 55
SECTION 8.03. Appointment of Additional and Separate Trustees ......... 56
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations ................... 58
SECTION 9.02. Trustees Protected ...................................... 60
SECTION 9.03. Documents Mailed to Certificate Holders ................. 60
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement .................... 60
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture ......................... 60
SECTION 10.02. No Legal Title to Trust Indenture Estate in Certificate
Holders .............................................. 61
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding ....... 61
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Certificate
Holders .............................................. 61
SECTION 10.05. Notices ................................................ 61
SECTION 10.06. Severability ........................................... 62
SECTION 10.07. No Oral Modification or Continuing Waivers ............. 62
SECTION 10.08. Successors and Assigns ................................. 62
SECTION 10.09. Headings ............................................... 62
SECTION 10.10. Normal Commercial Relations ............................ 62
SECTION 10.11. Governing Law; Counterpart Form ........................ 62
SECTION 10.12. Voting by Certificate Holders .......................... 63
SECTION 10.13. Bankruptcy .............................................. 63
SECTION 10.14. No Action Contrary to Lessee's Rights Under the Lease .. 63
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EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 G]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 G], dated as
of September 25, 1997 ("Trust Indenture") between FIRST SECURITY BANK,
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 Initial 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
Initial 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, the parties desire by this Trust Indenture, among other things,
(i) to provide for the issuance by the Owner Trustee to the Pass Through
Trustees (or their designee) of the Secured Certificates evidencing the
participation of the Pass Through Trustees in the payment of Lessor's Cost
for the Aircraft, as provided in the Participation Agreement 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 of the
Owner Trustee's right, title and interest in and to the Liquid Collateral and
after the Delivery Date 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
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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.
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 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
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) the Collateral Account, the Liquid Collateral
and all other moneys and securities (including Cash
Equivalents) now or hereafter paid or deposited or
required to be
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paid or deposited to or with the Indenture Trustee by or
for the account of the Owner Trustee pursuant to any term
of any Operative Document, except the Tax Indemnity
Agreement, and held or required to be held by the
Indenture Trustee hereunder;
(6) 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;
(7) 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;
(8) 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
(9) 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 hereof, the Owner Trustee is delivering
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 (9) 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
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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.
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
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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 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
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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. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth in Annex
A hereto for all purposes of this Trust Indenture.
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, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1997 G] DATED AS OF SEPTEMBER 25, 1997.
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N507XJ.
No. ____ Date: [______, __]
$__________________
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INTEREST RATE MATURITY DATE
[________]
[________, _______]
FIRST SECURITY BANK, 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 1997 G], dated as of
September 25, 1997, 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,
1998, 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 1997 G], dated as of September 25, 1997,
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
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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
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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]
[Series A and Series B Secured Certificates](1), 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.]*(*)
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(1) 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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The Owner Trustee shall have the right, on the Reoptimization Date, to
modify Schedule I attached hereto subject to the terms and conditions set
forth in Section 1(c)(ii) of the Participation Agreement. To give effect to
the foregoing the Indenture Trustee shall execute an amendment to this Trust
Indenture which shall set forth the new schedule of principal payments and
Schedule I attached hereto shall be amended accordingly. The Indenture
Trustee shall deliver such amendments to the Subordination Agent on behalf of
the Pass Through Trustee for each of the Pass Through Trusts. To the extent
that such amendment of this Trust Indenture occurs later than the Delivery
Date, this Trust Indenture, as amended, shall, if required, be duly filed for
recordation with the FAA.
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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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,
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,
not in its individual capacity,
but solely as Indenture Trustee
By _________________________________
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Payment Date Percentage of
Principal Amount
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 hereof, each 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. 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, 1998, 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
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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.
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 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
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after the Closing Date: Cash Collateral Account, Equipment Notes, Final
Drawing, Indentures, Interest Drawing and Investment Earnings.
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 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
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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, 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
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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
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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 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 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
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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;
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.
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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 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
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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(k), 8(l), 8(q), 8(r), 8(t), 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 Purchasers 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.
(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.
(c) If the Manufacturer Delivery has not occurred on or prior to the
Prepayment Date, 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, as contemplated by Section
2.19 and Section 18(c) of the Participation Agreement.
(d) If (i) the Manufacturer Delivery shall have occurred, (ii) the
Delivery Date shall not have occurred on or prior to the Cut-Off Date and
(iii) Lessee shall not have assumed the Secured Certificates by the
Determination Date, 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, as contemplated by
Section 2.19 and Section 18(d) of the Participation Agreement.
(e) If (i) a Triggering Event shall have occurred on or prior to the
Prepayment Date, (ii) the Delivery Date shall not have occurred and (iii)
Lessee shall not have assumed the Secured Certificates, 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, as contemplated by Section 2.19 and Section 18(e) of the
Participation Agreement.
(f) With respect to Series C Secured Certificates only, the Series C
Secured Certificates shall be redeemed in part 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, as provided in Section 1(c)(ii) of the
Participation Agreement.
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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. In the case of a
redemption of the Secured Certificates pursuant to Section 2.10(c) above, the
Secured Certificates shall be redeemed on the 15th day following the
Prepayment Date. In the case of a redemption of the Secured Certificates
pursuant to Section 2.10(d) above, the Secured Certificates shall be redeemed
on the 15th day following the Determination Date. In the case of a
redemption of the Secured Certificates pursuant to Section 2.10(e) above, the
Secured Certificates shall be redeemed on the 15th day following the date of
occurrence of the applicable Triggering Event. In the case of a redemption
of the Series C Secured Certificates pursuant to Section 2.10(f) above, the
amount of such Series C Secured Certificates to be redeemed shall be redeemed
on the Reoptimization Date.
(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
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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 1(e)(i) or 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.
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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 180 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 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.
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(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. Establishment of Collateral Account. (a) The Indenture
Trustee shall, pursuant to the Collateral Account Control Agreement,
establish, or cause to be established, with, State Street Bank and Trust
Company, who shall represent and warrant that it is a financial intermediary
(as defined in Section 8-313(4) of the Massachusetts Uniform Commercial
Code), in its name as secured party hereunder an Eligible Deposit Account
entitled "State Street Bank and Trust Company, as secured party under the
Trust Indenture and Security Agreement [NW 1997 G] dated as of September 25,
1997, with the Owner Trustee referred to therein".
(b) If at any time the Collateral Account ceases to be an Eligible
Deposit Account, the Indenture Trustee shall within two (2) Business Days,
establish a new Collateral Account meeting the conditions specified in the
definition of Eligible Deposit Account, and shall transfer any cash or any
investments in the Collateral Account to such new Collateral Account.
(c) The Indenture Trustee shall have exclusive dominion and control of
the Collateral Account and all funds therein, and shall make withdrawals from
the Collateral Account only in accordance with this Trust Indenture.
(d) The Collateral Account Control Agreement shall require State Street
Bank and Trust Company to send confirmation to the Indenture Trustee and
Lessee that it has credited the Cash Equivalents to the Collateral Account
and to make appropriate entries on its books identifying the Cash Equivalents
as pledged to the Indenture Trustee.
SECTION 2.17. Investment of Funds on Deposit in the Collateral Account.
(a) Funds deposited in the Collateral Account shall be invested and
reinvested by the Indenture Trustee, subject to Section 18 of the
Participation Agreement, at the risk of the Owner Trustee, in Cash
Equivalents selected by Lessee and approved by the Indenture Trustee for the
account of the Owner Trustee in accordance with Section 2.17(b) below;
provided, however, that if Cash Equivalents meeting the requirements of
Section 2.17(b) are not available on any day on which funds are to be
invested as contemplated by the preceding provisions of this Section 2.17(a),
the Indenture Trustee may leave such funds in the Collateral Account
uninvested until the earliest of (i) the date on which an appropriate Cash
Equivalent becomes available, (ii) the Delivery Date, (iii) the date of
assumption by Lessee of the Secured Certificates and (iv) the date of
redemption of the Secured Certificates pursuant to Section 2.10(c), (d) or
(e) hereof. The Indenture Trustee shall maintain possession of the
negotiable instruments or securities, if any, evidencing such Cash
Equivalents and, in the case of any Cash Equivalents in book-entry form, such
Cash Equivalents shall be credited to an account of the Indenture Trustee or
a financial intermediary with the applicable Federal Reserve Bank; provided,
however, if the account is credited to the financial intermediary, the
financial intermediary shall make written confirmation thereof to the
Indenture Trustee and make an appropriate entry on its books identifying the
Cash Equivalents as
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pledged to the Indenture Trustee. All proceeds of and any income, interest
and other payments and distributions on or with respect to any Cash
Equivalents shall be deposited in or credited to the Collateral Account and
thereafter shall be held, invested and applied by the Indenture Trustee in
accordance with this Trust Indenture. The Indenture Trustee shall promptly
notify the Owner Trustee and Lessee of any Losses.
(b) On the Certificate Closing Date, the Indenture Trustee shall invest
the amount deposited in the Collateral Account pursuant to Section 1(a) of
the Participation Agreement in Cash Equivalents selected by Lessee and
approved by the Indenture Trustee for the account of the Owner Trustee which
mature on or prior to May 31, 1998. If the Delivery Date is postponed
pursuant to Section 1(d)(ii)) or Section 1(e) of the Participation Agreement,
the proceeds of the Cash Equivalents referred to in the preceding sentence
may be invested in Cash Equivalents which mature on the rescheduled Delivery
Date. If no Delivery Date occurs, then any Cash Equivalent shall mature no
later than the 15th day after the Cut-Off Date.
(c) If for any reason the Indenture Trustee shall be required to make
any distributions of the Liquid Collateral prior to the maturity date of any
Cash Equivalent, the Indenture Trustee shall cause the same to be sold in
accordance with standard commercial practices, and Lessee, for the account of
the Owner Trustee, shall forthwith compensate the Indenture Trustee for any
Losses as provided in Section 18(a) of the Participation Agreement.
(d) Pursuant to Section 18(b) of the Participation Agreement, interest
payable on the Certificates during the period in which funds are on deposit
in the Collateral Account shall be paid by Lessee.
SECTION 2.18. Release of Debt Portion and Lien on the Collateral
Account and the Liquid Collateral on Delivery Date. (a) Subject to the
satisfaction or waiver of the conditions precedent to the Indenture Trustee's
obligations set forth in Section 5(a) of the Participation Agreement, on the
Delivery Date, the Indenture Trustee shall release from the Collateral
Account an amount of Liquid Collateral, equal to the lesser of (A) the Debt
Portion and (B) the amount actually in the Collateral Account on the Delivery
Date. Such amount so released shall be used to finance a portion of Lessor's
Cost as contemplated by Section 1(d)(i) of the Participation Agreement. Any
amount remaining in the Collateral Account after such release (net of any
uncompensated Losses) shall be remitted by the Indenture Trustee to Lessee
pursuant to Section 18(f) of the Participation Agreement.
(b) The Lien of this Trust Indenture on the Collateral Account and the
Liquid Collateral shall terminate (i) on the Delivery Date following the
transfer of amounts described in Section 1(d)(i) of the Participation
Agreement, (ii) on the date of assumption by Lessee of the Secured
Certificates or (iii) on the date of redemption of the Secured Certificates
pursuant to Section 2.10(c), 2.10(d) or 2.10(e) hereof.
SECTION 2.19. Release of Collateral Account. In the case of a
redemption under Section 2.10(c), 2.10(d) or Section 2.10(e) hereof, the
Indenture Trustee shall release from the Collateral Account all amounts held
in the Collateral Account on such date. Such amount so released, together
with the amount of any Losses received from Lessee pursuant to
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Sections 18(a), 18(c), 18(d) and 18(e) of the Participation Agreement, shall
be applied to pay amounts due under Section 2.12(a) hereof on the 15th day
following the Prepayment Date (in the case of a redemption under Section
2.10(c)), on the 15th day after the Determination Date (in the case of a
redemption under Section 2.10(d)), or the 15th day following the date of
occurrence of a Triggering Event (in the case of a redemption under Section
2.10(e)), as the case may be, and any amount (net of any uncompensated
Losses) remaining after such release and application shall be remitted by the
Indenture Trustee to the Lessee. In the case of an assumption of the Secured
Certificates by Lessee pursuant to Section 1(e)(i) of the Participation
Agreement, the Indenture Trustee shall release from the Collateral Account
all amounts (net of any uncompensated Losses) held in the Collateral Account
on such date to Lessee.
SECTION 2.20. Reoptimization. The Owner Trustee shall have the right,
on the Reoptimization Date, to modify the schedule of principal payments of
the Certificates subject to the terms and conditions set forth in Section
1(c)(ii) of the Participation Agreement. To give effect to the foregoing the
Indenture Trustee shall execute an amendment to this Trust Indenture which
shall set forth the new schedule of principal payments and Schedule I to each
Secured Certificate shall be amended accordingly. The Indenture Trustee
shall deliver such amendments to the Subordination Agent on behalf of the
Pass Through Trustee for each of the Pass Through Trusts. To the extent that
such amendment of this Trust Indenture occurs later than the Delivery Date,
this Trust Indenture, as amended, shall, if required, be duly filed for
recordation with the FAA.
SECTION 2.21. No Make-Whole Amount. Notwithstanding the provisions of
Section 2.10(b), Section 2.11, Section 2.13 and any other provision of this
Trust Indenture, no Make-Whole Amount shall be payable in connection with the
redemption or purchase of the Secured Certificates of any Series if such
redemption or purchase occurs on or after the Make-Whole Termination Date for
such Series.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. 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 and pursuant to Section
18(b) or 18(c) of the Participation Agreement 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
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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, 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
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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. 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
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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; 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
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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 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.
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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
(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
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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
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 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
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(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).
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
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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
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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.
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
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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).
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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, 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 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,
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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
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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
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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 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;
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(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 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
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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.
(a) 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
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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:
(A) with respect to the Replacement of any Airframe:
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(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);
(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
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(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 an 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
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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 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.
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
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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 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),
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from the inaccuracy of any representation or warranty of the Indenture
Trustee (in its individual capacity) in the Participation 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 will
receive on the Delivery Date whatever title is conveyed to it by Lessee, and
(ii) on the Delivery Date the Aircraft will be free and clear of Lessor Liens
(including for this purpose Liens which 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, the Secured Certificates, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or
the Guarantee, or as to the
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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. 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
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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 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,
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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. (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,
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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.
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
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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
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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, in the
case of (i) or (ii) below), (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, (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 and (iii) the Owner
Trustee (when authorized by the Owner Participant) and the Indenture Trustee
may enter into an indenture or indentures supplemental hereto to effect the
amendments contemplated by Section 1(c) of the Participation Agreement,
subject to the limitations set forth therein.
(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
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<PAGE>
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 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 hereof, 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
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<PAGE>
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; (vii) to include on the Secured
Certificates any legend as may be required by law, and (viii) to effect the
amendments and/or restatements contemplated by Section 1(c) of the
Participation Agreement, subject to the limitations set forth therein.
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
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<PAGE>
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, addressed to it at its office at Two
International
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<PAGE>
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
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<PAGE>
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>
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,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By: s/Greg A. Hawley
------------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee, Indenture Trustee
By: s/Donald E. Smith
------------------------------------
Name: Donald E. Smith
Title: Vice President
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<PAGE>
EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 G]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 G],
dated _______ __, _____ (herein called this "Trust Indenture Supplement") of
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee (herein called the "Owner Trustee") under that certain
Trust Agreement [NW 1997 G] dated as of September 25, 1997 (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 TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 G], dated
as of September 25, 1997 (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:
A-1
<PAGE>
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).
A-2
<PAGE>
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 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.
A-3
<PAGE>
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,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By:
--------------------------------------
Name:
Title:
A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A............ G $10,369,024.29 7.068%
[H 10,369,450.52
I 10,560,952.07
J 10,574,426.83
K 10,583,770.00
L 10,568,876.29]
Series B............ G $3,169,029.45 7.248%
[H 3,112,327.96
I 3,538,462.47
J 3,474,730.05
K 3,419,603.59
L 3,393,846.48]
Series C............ G $1,963,999.98 7.039%
[H 1,967,999.99
I 1,980,000.00
J 1,983,999.99
K 1,988,000.02
L 1,990,500.02]
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-2
<PAGE>
SERIES B
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-3
<PAGE>
SERIES C
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-4
<PAGE>
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. 1997-1A, dated as of
September 25, 1997.
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. 1997-1B, dated as of
September 25, 1997.
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. 1997-1C, dated as of
September 25, 1997.
Schedule II-1
<PAGE>
Exhibit 4(b)(3)
==============================================================================
GUARANTEE
[NW 1997 G]
Dated as of September 25, 1997
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
==============================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
1. Guarantee................................................................2
2. No Implied Third Party Beneficiaries.....................................4
3. Waiver; No Set-off; Reinstatement; Subrogation...........................4
4. Amendments, Etc..........................................................4
5. Payments.................................................................4
6. Assignment of Guarantee..................................................5
7. Jurisdictional Matters...................................................5
8. Integration; Counterparts; Successors and Assigns; Headings..............5
9. Notices..................................................................5
10. No Waivers...............................................................6
11. Survival.................................................................6
12. Severability.............................................................6
13. Governing Law............................................................6
14. Enforcement Expenses.....................................................6
15. Termination..............................................................6
16. No Guarantee of Secured Certificates.....................................6
<PAGE>
GUARANTEE
[NW 1997 G]
This GUARANTEE [NW 1997 G], dated as of September 25, 1997 (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 Participation Agreement [NW 1997 G], dated as of the date hereof (as
amended, modified or supplemented from time to time, the "Participation
Agreement"), among the Lessee, the Parties and certain other entities; and
WHEREAS, pursuant to the transactions contemplated by the Participation
Agreement, the Lessee intends on the Delivery Date to enter into a Lease
Agreement [NW 1997 G], dated as of the Delivery Date (as amended, modified or
supplemented from time to time, the "Lease"), between the Lessee and First
Security Bank, 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) British Aerospace Avro
146-RJ85A aircraft, together with four (4) Allied Signal LF507 type engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "Aircraft"); 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, pursuant to a Trust Indenture and Security Agreement [NW 1997 G],
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 Appendix A to the Participation Agreement;
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>
1. Guarantee.
(a) The Guarantor does hereby acknowledge that it is fully aware of the
terms and conditions of the Participation Agreement and the other Operative
Documents entered into by the Lessee on or prior to the Certificate Closing
Date 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 (as Lessee and not as the
Initial Owner Participant) of all payment obligations when due under the
Participation Agreement and the other Operative Documents entered into by the
Lessee (as Lessee and not as the Initial Owner Participant) on or prior to
the Certificate Closing Date (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 such Operative Documents, and the timely performance of all other
obligations of the Lessee (as Lessee and not as the Initial Owner
Participant) 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 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 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 any Operative Document to which the Lessee is a party, any
amendment, waiver or other modification of such Operative Document (except
that any such amendment or other modification shall be given effect in
determining the
-2-
<PAGE>
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 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 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 (c) 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, 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 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-
<PAGE>
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 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
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 for indemnities provided in Section 7 of the
Participation Agreement or otherwise not constituting part of the Trust
Indenture Estate.
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
-4-
<PAGE>
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. 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.
8. 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.
9. Notices. All requests, notices or other communications hereunder
shall be in writing, addressed as follows:
If to the Guarantor:
to the address or telecopy number set forth in the
Participation Agreement
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.
-5-
<PAGE>
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
-6-
<PAGE>
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: s/Mark D. Powers
--------------------------------
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By: s/Greg A. Hawley
-------------------------------
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By: s/Donald E. Smith
-------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW 1997 G]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
<PAGE>
Exhibit 4(c)(1)
This Trust Supplement No. 1997-1A, dated as of September 25, 1997 (herein
called the "Trust Supplement"), by and among Northwest Airlines Corporation, a
Delaware corporation (the "Guarantor"), Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), and State Street Bank and Trust Company (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June 3, 1996, by
and among the Guarantor, the Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered;
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to finance a portion of the purchase price of the aircraft purchased or
to be purchased by such Owner Trustee and leased or to be leased to the Company
pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1997-1A Trust") for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the 1997-1A Trust, by their respective
acceptances of the Certificates, join in the creation of this 1997-1A Trust with
the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
<PAGE>
2
NOW THEREFORE, in consideration of the premises herein, it is agreed by and
among the Guarantor, the Company and the Trustee as follows:
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"Pass Through Certificates, Series 1997-1A" (hereinafter defined as the "Series
1997-1A Certificates"). Each Series 1997-1A Certificate represents a Fractional
Undivided Interest in the 1997-1A Trust created hereby.
The terms and conditions applicable to the Series 1997-1A Certificates are
as follows:
(a) The aggregate principal amount of the Series 1997-1A
Certificates that shall be authenticated under the Agreement (except for
Series 1997-1A Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $125,914,000.
(b) The Cut-off Date is the earlier of (i) August 31, 1998 or, with
respect to two Prefunded Aircraft (as defined herein) scheduled to be
delivered in October and November 1997, June 15, 1998 and (ii) the 90th
day after the last day of the calendar month in which such Prefunded
Aircraft is delivered to the Company.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 2 and July 2, commencing on January
2, 1998, until payment of all of the Scheduled Payments to be made under
the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the
day (which shall be a Business Day) on which such redemption or purchase
is scheduled to occur pursuant to the terms of the applicable Indenture
and (ii) when used with respect to a Special Payment other than as
described in clause (i) above, 10 days after the last date on which the
Trustee must give notice pursuant to Section 4.02(c) of the Basic
Agreement (or the next Business Day after such 10th day if such date is
not a Business Day).
(e) (i) The Series 1997-1A Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1997-1A
Certificates, by its acceptance of such Certificate or its interest
therein, will be deemed to
<PAGE>
3
represent and warrant to and for the benefit of each Owner Participant and
the Company that either (x) the assets of an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or of a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") or of entities which may be
deemed to hold such plans, have not been used to purchase Series 1997-1A
Certificates or (y) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold such Certificate will not constitute a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code.
(ii) The Series 1997-1A Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, the Company and the
Clearing Agency attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) A portion of the proceeds of the Series 1997-1A Certificates
shall be used to purchase the Equipment Notes in the principal amount
specified below and the unused portion of such proceeds shall be
deposited in the Escrow Account to be applied as set forth in the
Agreement:
Principal Amount
Registration Number of Equipment Note
------------------- -----------------
N501XJ $10,481,250
N502XJ 10,481,250
N503XJ 10,481,250
N504XJ 10,481,250
N505XJ 10,481,250
N506XJ 10,481,250
N507XJ 10,369,024
N508XJ 10,369,451
N509XJ 10,560,952
N510XJ 10,574,427
N511XJ 10,583,770
N512XJ 10,568,876
(h) Each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue on a non-recourse
<PAGE>
4
basis, the Equipment Notes, the proceeds of which shall be used, among
other things, to finance a portion of the purchase price to such Owner
Trustee of the following Aircraft:
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N501XJ Avro RJ85(1) LF-507-1F(2)
N502XJ Avro RJ85 LF-507-1F
N503XJ Avro RJ85 LF-507-1F
N504XJ Avro RJ85 LF-507-1F
N505XJ Avro RJ85 LF-507-1F
N506XJ Avro RJ85 LF-507-1F
N507XJ Avro RJ85 LF-507-1F
N508XJ Avro RJ85 LF-507-1F
N509XJ Avro RJ85 LF-507-1F
N510XJ Avro RJ85 LF-507-1F
N511XJ Avro RJ85 LF-507-1F
N512XJ Avro RJ85 LF-507-1F
(i) The related Note Documents are listed on Exhibit D.
Section 1.02. Intercreditor Agreement. The Series 1997-1A Certificates
are subject to the Intercreditor Agreement.
Section 1.03. Ranking of Equipment Notes. The Equipment Notes will be
subject to the ranking and priority as set forth in the related Indenture.
Section 1.04. No Cross-Default or Cross- Collateralization of Equipment
Certificates. As set forth in the related Indenture, there are no
cross-collateralization provisions or cross-default provisions in respect of the
Equipment Notes.
Section 1.05. Ranking of Series 1997-1A Certificates. The Series 1997-1A
Certificates will be subject to the ranking and priority as set forth in the
Intercreditor Agreement.
- ---------------
(1) The reference to "Avro RJ85" means the British Aerospace Avro RJ85
airplane.
(2) The reference to "LF-507-1F" means the AlliedSignal LF-507-1F engine.
<PAGE>
5
Section 1.06. Liquidity Facility. Payments of interest on the Series
1997-1A Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.07. Purchase Rights of Certificateholders. Upon the occurrence
and during the continuation of a Triggering Event, as defined in the Basic
Agreement, (i) the holders of Certificates issued pursuant to the 1997-1B Trust
Supplement shall have the right to purchase all, but not less than all, of the
Series 1997-1A Certificates and (ii) the holders of Certificates issued pursuant
to the 1997-1C Trust Supplement shall have the right to purchase all, but not
less than all, of the Series 1997-1A Certificates and the Certificates issued
pursuant to the 1997-1B Trust Supplement.
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. During the period between the date of
issuance of Equipment Notes by the Owner Trustee in respect of NWA Trust Nos.
NWA 1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L, and
the earliest to occur of (i) the date of sale to an Owner Trustee of the related
Aircraft, (ii) the date of assumption by the Company of the Equipment Notes and
(iii) the date of redemption of the Equipment Notes under Section 2.10(c),
2.10(d) or 2.10(e) of the Indenture, such Equipment Notes will not be secured by
such Aircraft or the related Lease, but will be secured by the Prefunding
Collateral Account. Pursuant to the related Indenture, the Loan Trustee on
behalf of the related Owner Trustee will deposit the proceeds from the sale of
the related Equipment Notes into the Prefunding Collateral Account for the
benefit of the Loan Trustee.
Sums deposited in each Prefunding Collateral Account will be invested as
set forth in the related Indenture.
Section 2.02. Statement of Intent. Each of the parties hereto, and each
Certificateholder by acceptance of its Series 1997-1A Certificate, agrees for
Federal income tax purposes to treat the Equipment Notes issued by the Owner
Trustee in respect of NWA Trust Nos. NWA 1997 G, NWA 1997 H, NWA 1997 I, NWA
1997 J, NWA 1997 K and NWA 1997 L (a) on the date of their original issuance as
indebtedness of the Company maturing on the earliest of (i) the Delivery Date,
(ii) the date of assumption by the Company of the Equipment Notes or (iii) the
date of redemption of the Equipment Notes under Section 2.10(c), 2.10(d) or
2.10(e) of the Indenture and (b) thereafter, as indebtedness of the Owner
Trustee in the case of clause (a)(i) or of the Company in the case of clause
(a)(ii), issued on the respective date and maturing on the maturity date of the
Equipment Notes.
<PAGE>
6
DEFINITIONS
Section 3.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as
of the date hereof by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1997-1B (the "1997-1B Trust Supplement") dated the
date hereof relating to Northwest Airlines 1997-1B Pass Through Trust and
(ii) the Basic Agreement as supplemented by Trust Supplement No. 1997-1C
(the "1997-1C Trust Supplement") dated the date hereof relating to
Northwest Airlines 1997-1C Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Prefunded Aircraft: Means the six Aircraft which are expected to be
sold to the Owner Trustee during the period from October 1997 to May 1998.
Prefunding Collateral Account: Means each of the Prefunding
Collateral Accounts established pursuant to the Indentures for each of NWA
1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L into
which the proceeds of sale of the related Equipment Notes will be
deposited, respectively.
Specified Investments: has the meaning set forth in Schedule II to
the Participation Agreements.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Escrow
Account, the Certificate Account and the Special Payments Account, and
(iii) all rights of the Trust and the Trustee, on behalf of the Trust,
under the Intercreditor Agreement, and the Liquidity Facility, including,
without limitation, all rights to receive certain payments thereunder, and
all monies paid to the Trustee on behalf of the Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1997-1 Pass
Through Trusts to be formed pursuant to the
<PAGE>
7
Basic Agreement, as supplemented by this Trust Supplement and the Other
Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
September 16, 1997 by and among the Company, the Guarantor, Credit Suisse
First Boston Corporation, Lehman Brothers Inc. and Morgan Stanley & Co.
Incorporated.
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to execute and
deliver the Intercreditor Agreement on or prior to the Issuance Date in the form
delivered to the Trustee by the Company. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the validity or sufficiency of
this Trust Supplement or the due execution hereof by the Guarantor or the
Company, or for or in respect of the recitals and statements contained herein,
all of which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee by
reason of this Trust Supplement other than as set forth in the Basic Agreement,
and this Trust Supplement is executed and accepted on behalf of the Trustee,
subject to all the terms and conditions set forth in the Basic Agreement, upon
the effectiveness thereof, as fully to all intents as if the same were herein
set forth at length.
The Trustee represents and warrants that the Intercreditor Agreement will
be duly executed and delivered by one of its officers who is duly authorized to
execute and deliver such document on its behalf.
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1997-1A
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
<PAGE>
8
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused
this Trust Supplement to be duly executed by their respective officers thereto
duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By: _________________________
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: _________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: _________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch the registered owner hereof, Cede & Co., has an interest
herein.
Any person acquiring this Certificate by its acceptance hereof or its
interest herein, will be deemed to represent and warrant to and for the benefit
of each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1997-1A PASS THROUGH TRUST
Pass Through
Certificate, Series 1997-1A
Issuance Date: September 25, 1997
Final Legal Distribution Date: July 2, 2017
Evidencing A Fractional Undivided Interest In the 1997-1A Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To Northwest Airlines, Inc. Or A Collateral Account
Holding Specified Investments Purchased With The Proceeds Of The Sale
Of Such Issue Of The Equipment Notes
Certificate
No. _____ $________ Fractional Undivided Interest representing 0.__% of the
Trust per $1,000 of Reference Principal Amount
<PAGE>
2
THIS CERTIFIES THAT _______________, for value received, is the registered
owner of a Fractional Undivided Interest in the amount of $_______ (the
"Reference Principal Amount") in the Northwest Airlines 1997-1A Pass Through
Trust (the "Trust") created by State Street Bank and Trust Company, as trustee
(the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of June 3,
1996 (the "Basic Agreement"), by and among the Trustee, Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), and Northwest Airlines,
Inc., a Minnesota corporation (the "Company"), as supplemented by Trust
Supplement No. 1997-1A thereto, dated as of September 25, 1997 (collectively,
the "Agreement"), by and among the Trustee, the Guarantor and the Company, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "Pass Through Certificates, Series
1997-1A" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement and the
Intercreditor Agreement, to which Agreement the Certificateholder of this
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Trust includes certain
Equipment Notes and all rights of the Trust to receive payments under the
Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each
issue of the Equipment Notes is secured by a security interest in (A) the
Aircraft leased to the Company or (B) a collateral account holding Specified
Investments purchased with the proceeds of the sale of such issue of the
Equipment Notes.
Each of the Certificates represents a Fractional Undivided Interest in the
Trust and the Trust Property and has no rights, benefits or interest in respect
of any other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto. The
undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other Pass Through Certificates, Series
1997-1A, was determined on the basis of (x) the aggregate of the Reference
Principal Amount of this Certificate (as specified above) and of the other Pass
Through Certificates, Series 1997-1A and (y) the aggregate original principal
amounts of the Equipment Notes constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date"),
commencing January 2, 1998 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee,
<PAGE>
3
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Scheduled Payments. Subject
to and in accordance with the terms of the Agreement, in the event that Special
Payments on the Equipment Notes are received by the Trustee, from funds then
available to the Trustee, there shall be distributed on the applicable Special
Distribution Date, to the Person in whose name this Certificate is registered at
the close of business on the 15th day preceding the Special Distribution Date,
an amount in respect of such Special Payments on the Equipment Notes, the
receipt of which has been confirmed by the Trustee, equal to the product of the
percentage interest in the Trust evidenced by this Certificate and an amount
equal to the sum of such Special Payments so received. If a Regular
Distribution Date or Special Distribution Date is not a Business Day,
distribution shall be made on the immediately following Business Day with the
same force and effect as if made on such Regular Distribution Date or Special
Distribution Date and no interest shall accrue during the intervening period.
The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
<PAGE>
4
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set forth,
the transfer of this Certificate is registrable in the Register upon surrender
of this Certificate for registration of transfer at the offices or agencies
maintained by the Trustee in its capacity as Registrar, or by any successor
Registrar, duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 Fractional Undivided Interests and
integral multiples thereof. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the distribution to Certificateholders of
all amounts required to be
<PAGE>
5
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE>
6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
NORTHWEST AIRLINES 1997-1A
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as
Trustee
By: /s/ Mark D. Powers
___________________________
Name: Mark D. Powers
Title: Vice President-
Finance &
Assistant
Treasurer
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald E. Smith
_________________________
Name: Donald E. Smith
Title: Vice President
<PAGE>
EXHIBIT B
DTC Letter of Representations
(on the following page)
<PAGE>
EXHIBIT C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
January 2, 1998 $ 0.00
July 2, 1998 1,886,625.00
January 2, 1999 1,116,347.00
July 2, 1999 1,886,625.00
January 2, 2000 1,914,747.00
July 2, 2000 1,886,625.00
January 2, 2001 1,914,747.00
July 2, 2001 1,886,625.00
January 2, 2002 1,914,747.00
July 2, 2002 1,886,625.00
January 2, 2003 3,605,603.43
July 2, 2003 195,768.57
January 2, 2004 1,273,230.00
July 2, 2004 2,528,142.00
January 2, 2005 1,273,230.00
July 2, 2005 2,528,142.00
January 2, 2006 1,273,230.00
July 2, 2006 2,528,142.00
January 2, 2007 3,159,855.00
July 2, 2007 641,517.00
January 2, 2008 3,788,730.00
July 2, 2008 641,517.00
January 2, 2009 4,950,537.48
July 2, 2009 117,958.52
January 2, 2010 5,068,496.00
July 2, 2010 0.00
January 2, 2011 5,068,496.00
July 2, 2011 0.00
<PAGE>
2
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
January 2, 2012 9,894,109.59
July 2, 2012 0.00
January 2, 2013 16,168,543.46
July 2, 2013 0.00
January 2, 2014 18,632,788.43
July 2, 2014 61,419.90
January 2, 2015 16,887,164.90
July 2, 2015 0.00
January 2, 2016 9,333,666.07
<PAGE>
Exhibit D
NOTE DOCUMENTS
(on the following page)
<PAGE>
Exhibit 4(c)(2)
This Trust Supplement No. 1997-1B, dated as of September 25, 1997 (herein
called the "Trust Supplement"), by and among Northwest Airlines Corporation, a
Delaware corporation (the "Guarantor"), Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), and State Street Bank and Trust Company (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June 3, 1996, by
and among the Guarantor, the Company and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered;
WHEREAS, each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue, on a non-recourse basis, Equipment Notes, among other
things, to finance a portion of the purchase price of the aircraft purchased or
to be purchased by such Owner Trustee and leased or to be leased to the Company
pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1997-1B Trust") for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the 1997-1B Trust, by their respective
acceptances of the Certificates, join in the creation of this 1997-1B Trust with
the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all respects
duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
<PAGE>
NOW THEREFORE, in consideration of the premises herein, it is agreed by and
among the Guarantor, the Company and the Trustee as follows:
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"Pass Through Certificates, Series 1997-1B" (hereinafter defined as the "Series
1997-1B Certificates"). Each Series 1997-1B Certificate represents a Fractional
Undivided Interest in the 1997-1B Trust created hereby.
The terms and conditions applicable to the Series 1997-1B Certificates are
as follows:
(a) The aggregate principal amount of the Series 1997-1B
Certificates that shall be authenticated under the Agreement (except for
Series 1997-1B Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $46,433,000.
(b) The Cut-off Date is the earlier of (i) August 31, 1998 or, with
respect to two Prefunded Aircraft (as defined herein) scheduled to be
delivered in October and November 1997, June 15, 1998 and (ii) the 90th day
after the last day of the calendar month in which such Prefunded Aircraft
is delivered to the Company.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 2 and July 2, commencing on January
2, 1998, until payment of all of the Scheduled Payments to be made under
the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the day
(which shall be a Business Day) on which such redemption or purchase is
scheduled to occur pursuant to the terms of the applicable Indenture and
(ii) when used with respect to a Special Payment other than as described in
clause (i) above, 10 days after the last date on which the Trustee must
give notice pursuant to Section 4.02(c) of the Basic Agreement (or the next
Business Day after such 10th day if such date is not a Business Day).
(e) (i) The Series 1997-1B Certificates shall be in the form attached
hereto as Exhibit A. Each purchaser of Series 1997-1B Certificates, by its
acceptance of such Certificate or its interest therein, will be deemed to
<PAGE>
represent and warrant to and for the benefit of each Owner Participant and
the Company that either (x) the assets of an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or of a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") or of entities which may be
deemed to hold such plans, have not been used to purchase Series 1997-1B
Certificates or (y) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold such Certificate will not constitute a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code.
(ii) The Series 1997-1B Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, the Company and the
Clearing Agency attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) A portion of the proceeds of the Series 1997-1B Certificates
shall be used to purchase the Equipment Notes in the principal amount
specified below and the unused portion of such proceeds shall be deposited
in the Escrow Account to be applied as set forth in the Agreement:
Principal Amount
Registration Number of Equipment Note
------------------- -----------------
N501XJ $4,387,500
N502XJ 4,387,500
N503XJ 4,387,000
N504XJ 4,387,000
N505XJ 4,387,000
N506XJ 4,387,000
N507XJ 3,169,029
N508XJ 3,112,328
N509XJ 3,538,462
N510XJ 3,474,730
N511XJ 3,419,604
N512XJ 3,393,846
<PAGE>
(h) Each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue on a non-recourse basis, the Equipment Notes, the
proceeds of which shall be used, among other things, to finance a portion
of the purchase price to such Owner Trustee of the following Aircraft:
Registration Number Aircraft Type Engine Type
------------------- --------------- -------------
N501XJ Avro RJ85 (1) LF-507-1F (2)
N502XJ Avro RJ85 LF-507-1F
N503XJ Avro RJ85 LF-507-1F
N504XJ Avro RJ85 LF-507-1F
N505XJ Avro RJ85 LF-507-1F
N506XJ Avro RJ85 LF-507-1F
N507XJ Avro RJ85 LF-507-1F
N508XJ Avro RJ85 LF-507-1F
N509XJ Avro RJ85 LF-507-1F
N510XJ Avro RJ85 LF-507-1F
N511XJ Avro RJ85 LF-507-1F
N512XJ Avro RJ85 LF-507-1F
(i) The related Note Documents are listed on Exhibit D.
Section 1.02. Intercreditor Agreement. The Series 1997-1B Certificates
are subject to the Intercreditor Agreement.
Section 1.03. Ranking of Equipment Notes. The Equipment Notes will be
subject to the ranking and priority as set forth in the related Indenture.
Section 1.04. No Cross-Default or Cross- Collateralization of Equipment
Certificates. As set forth in the related Indenture, there are no
cross-collateralization provisions or cross-default provisions in respect of
the Equipment Notes.
Section 1.05. Ranking of Series 1997-1B Certificates. The Series 1997-1B
Pass Through Certificates will be subject to
- --------------------------------
(1) The reference to "Avro RJ85" means the British Aerospace Avro RJ85
airplane.
(2) The reference to "LF-507-IF" means the AlliedSignal LF-507-1F engine.
<PAGE>
the ranking and priority as set forth in the Intercreditor Agreement.
Section 1.06. Liquidity Facility. Payments of interest on the Series
1997-1B Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.07. Purchase Rights of Certificateholders.
Upon the occurrence and during the continuation of a Triggering Event (i)
holders of Series 1997-1B Certificates shall have the right to purchase all, but
not less than all, of the Certificates issued pursuant to the 1997-1A Trust
Supplement and (ii) the holders of Certificates issued pursuant to the 1997-1C
Trust Supplement shall have the right to purchase all, but not less than all, of
the Series 1997-1B Certificates and the Certificates issued pursuant to the
1997-1A Trust Supplement.
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. During the period between the date of
issuance of Equipment Notes by the Owner Trustee in respect of NWA Trust Nos.
NWA 1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L, and
the earliest to occur of (i) the date of sale to an Owner Trustee of the related
Aircraft, (ii) the date of assumption by the Company of the Equipment Notes and
(iii) the date of redemption of the Equipment Notes under Section 2.10(c),
2.10(d) or 2.10(e) of the Indenture, such Equipment Notes will not be secured by
such Aircraft or the related Lease, but will be secured by the Prefunding
Collateral Account. Pursuant to the related Indenture, the Loan Trustee on
behalf of the related Owner Trustee will deposit the proceeds from the sale of
the related Equipment Notes into the Prefunding Collateral Account for the
benefit of the Loan Trustee.
Sums deposited in each Prefunding Collateral Account will be invested as
set forth in the related Indenture.
Section 2.02. Statement of Intent. Each of the parties hereto, and each
Certificateholder by acceptance of its Series 1997-1B Certificate, agrees for
Federal income tax purposes to treat the Equipment Notes issued by the Owner
Trustee in respect of NWA Trust Nos. NWA 1997 G, NWA 1997 H, NWA 1997 I, NWA
1997 J, NWA 1997 K and NWA 1997 L (a) on the date of their original issuance as
indebtedness of the Company maturing on the earliest of (i) the Delivery Date,
(ii) the date of assumption by the Company of the Equipment Notes or (iii) the
date of redemption of the Equipment Notes under Section 2.10(c), 2.10(d) or
2.10(e) of the Indenture and (b) thereafter, as indebtedness of the Owner
Trustee in the case of clause (a)(i) or of the
<PAGE>
Company in the case of clause (a)(ii), issued on the respective date and
maturing on the maturity date of the Equipment Notes.
DEFINITIONS
Section 3.01. Definitions. For all purposes of the Basic Agreement as
supplemented by this Trust Supplement, the following capitalized terms have the
following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as
of the date hereof by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1997-1A (the "1997-1A Trust Supplement") dated the
date hereof relating to Northwest Airlines 1997-1A Pass Through Trust and
(ii) the Basic Agreement as supplemented by Trust Supplement No. 1997-1C
(the "1997-1C Trust Supplement") dated the date hereof relating to
Northwest Airlines 1997-1C Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Prefunded Aircraft: Means the six Aircraft which are expected to be
sold to the Owner Trustee during the period from October 1997 to May 1998.
Prefunding Collateral Account: Means each of the Prefunding
Collateral Accounts established pursuant to the Indentures for each of NWA
1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L into
which the proceeds of sale of the related Equipment Notes will be
deposited, respectively.
Specified Investments: has the meaning set forth in Schedule II to
the Participation Agreements.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Escrow
Account, the Certificate Account and the Special Payments Account, and
(iii) all rights of the Trust and the Trustee, on behalf of the Trust,
under the Intercreditor Agreement, and the Liquidity Facility, including,
without limitation, all rights to receive certain payments thereunder, and
all
<PAGE>
monies paid to the Trustee on behalf of the Trust pursuant to the
Intercreditor Agreement or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1997-1 Pass
Through Trusts to be formed pursuant to the Basic Agreement, as
supplemented by this Trust Supplement and the Other Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
September 16, 1997 by and among the Company,the Guarantor, Credit Suisse
First Boston Corporation, Lehman Brothers Inc. and Morgan Stanley & Co.
Incorporated.
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to execute and
deliver the Intercreditor Agreement on or prior to the Issuance Date in the form
delivered to the Trustee by the Company. The Trustee shall not be responsible
in any manner whatsoever for or in respect of the validity or sufficiency of
this Trust Supplement or the due execution hereof by the Guarantor or the
Company, or for or in respect of the recitals and statements contained herein,
all of which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee by
reason of this Trust Supplement other than as set forth in the Basic Agreement,
and this Trust Supplement is executed and accepted on behalf of the Trustee,
subject to all the terms and conditions set forth in the Basic Agreement, upon
the effectiveness thereof, as fully to all intents as if the same were herein
set forth at length.
The Trustee represents and warrants that the Intercreditor Agreement will
be duly executed and delivered by one of its officers who is duly authorized to
execute and deliver such document on its behalf.
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust
<PAGE>
Supplement shall be taken, read and construed as one and the same instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES 1997-1B
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused
this Trust Supplement to be duly executed by their respective officers thereto
duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By:
---------------------------
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By:
---------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
---------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch the registered owner hereof, Cede & Co., has an interest
herein.
Any person acquiring this Certificate by its acceptance hereof or its
interest herein, will be deemed to represent and warrant to and for the benefit
of each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1997-1B PASS THROUGH TRUST
Pass Through
Certificate, Series 1997-1B
Issuance Date: September 25, 1997
Final Legal Distribution Date: July 2, 2014
Evidencing A Fractional Undivided Interest In the 1997-1B Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To Northwest Airlines, Inc. Or A Collateral Account
Holding Specified Investments Purchased With The Proceeds Of The Sale
Of Such Issue Of The Equipment Notes
Certificate
No. _____ $________ Fractional Undivided Interest representing 0.__% of the
Trust per $1,000 of Reference Principal Amount
<PAGE>
THIS CERTIFIES THAT _______________, for value received, is the registered
owner of a Fractional Undivided Interest in the amount of $_______ (the
"Reference Principal Amount") in the Northwest Airlines 1997-1B Pass Through
Trust (the "Trust") created by State Street Bank and Trust Company, as trustee
(the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of June 3,
1996 (the "Basic Agreement"), by and among the Trustee, Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), and Northwest Airlines,
Inc., a Minnesota corporation (the "Company"), as supplemented by Trust
Supplement No. 1997-1B thereto, dated as of September 25, 1997 (collectively,
the "Agreement"), by and among the Trustee, the Guarantor and the Company, a
summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "Pass Through Certificates, Series
1997-1B" (herein called the "Certificates"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement and the
Intercreditor Agreement, to which Agreement the Certificateholder of this
Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Trust includes certain
Equipment Notes and all rights of the Trust to receive payments under the
Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each
issue of the Equipment Notes is secured by a security interest in (A) the
Aircraft leased to the Company or (B) a collateral account holding Specified
Investments purchased with the proceeds of the sale of such issue of the
Equipment Notes.
Each of the Certificates represents a Fractional Undivided Interest in the
Trust and the Trust Property and has no rights, benefits or interest in respect
of any other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto. The
undivided percentage interest in the Trust represented by each of this
Certificate (as specified above) and the other Pass Through Certificates, Series
1997-1B, was determined on the basis of (x) the aggregate of the Reference
Principal Amount of this Certificate (as specified above) and of the other Pass
Through Certificates, Series 1997-1B and (y) the aggregate original principal
amounts of the Equipment Notes constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each January 2 and July 2 (a "Regular Distribution Date"),
commencing January 2, 1998 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee,
<PAGE>
equal to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Scheduled Payments. Subject
to and in accordance with the terms of the Agreement, in the event that Special
Payments on the Equipment Notes are received by the Trustee, from funds then
available to the Trustee, there shall be distributed on the applicable Special
Distribution Date, to the Person in whose name this Certificate is registered at
the close of business on the 15th day preceding the Special Distribution Date,
an amount in respect of such Special Payments on the Equipment Notes, the
receipt of which has been confirmed by the Trustee, equal to the product of the
percentage interest in the Trust evidenced by this Certificate and an amount
equal to the sum of such Special Payments so received. If a Regular
Distribution Date or Special Distribution Date is not a Business Day,
distribution shall be made on the immediately following Business Day with the
same force and effect as if made on such Regular Distribution Date or Special
Distribution Date and no interest shall accrue during the intervening period.
The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
<PAGE>
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set forth,
the transfer of this Certificate is registrable in the Register upon surrender
of this Certificate for registration of transfer at the offices or agencies
maintained by the Trustee in its capacity as Registrar, or by any successor
Registrar, duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 Fractional Undivided Interests and
integral multiples thereof. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the distribution to Certificateholders of
all amounts required to be
<PAGE>
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
NORTHWEST AIRLINES 1997-1B
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as
Trustee
By: /s/ Mark D. Powers
---------------------
Name: Mark D. Powers
Title: Vice President-
Finance &
Assistant
Treasurer
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald E. Smith
---------------------
Name: Donald E.Smith
Title: Vice President
<PAGE>
EXHIBIT B
DTC Letter of Representations
<PAGE>
EXHIBIT C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
January 2, 1998 $368,270.76
July 2, 1998 659,979.24
January 2, 1999 0.00
July 2, 1999 1,140,750.00
January 2, 2000 0.00
July 2, 2000 1,140,750.00
January 2, 2001 1,140,750.00
July 2, 2001 0.00
January 2, 2002 1,721,827.32
July 2, 2002 0.00
January 2, 2003 0.00
July 2, 2003 0.00
January 2, 2004 0.00
July 2, 2004 0.00
January 2, 2005 115,783.30
July 2, 2005 48,901.86
January 2, 2006 4,211,713.10
July 2, 2006 20,123.59
January 2, 2007 1,745,769.95
July 2, 2007 648,036.92
January 2, 2008 3,715,892.14
July 2, 2008 288,459.27
January 2, 2009 5,414,843.67
July 2, 2009 0.00
January 2, 2010 6,954,761.79
July 2, 2010 0.00
January 2, 2011 9,521,318.12
July 2, 2011 0.00
<PAGE>
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
January 2, 2012 6,324,600.14
July 2, 2012 0.00
January 2, 2013 1,250,468.83
July 2, 2013 0.00
January 2, 2014 0.00
July 2, 2014 0.00
January 2, 2015 0.00
July 2, 2015 0.00
January 2, 2016 0.00
<PAGE>
EXHIBIT D
NOTE DOCUMENTS
<PAGE>
Exhibit 4(c)(3)
This Trust Supplement No. 1997-1C, dated as of September 25, 1997
(herein called the "Trust Supplement"), by and among Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), Northwest Airlines,
Inc., a Minnesota corporation (the "Company"), and State Street Bank and
Trust Company (the "Trustee"), to the Pass Through Trust Agreement, dated as
of June 3, 1996, by and among the Guarantor, the Company and the Trustee (the
"Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates (unless otherwise specified herein,
capitalized terms used herein without definition having the respective
meanings specified heretofore in the Basic Agreement) which may be issued
thereunder, has heretofore been executed and delivered;
WHEREAS, each Owner Trustee, acting on behalf of its respective
Owner Participant, will issue, on a non-recourse basis, Equipment Notes,
among other things, to finance a portion of the purchase price of the
aircraft purchased or to be purchased by such Owner Trustee and leased or to
be leased to the Company pursuant to the related Lease;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee having the same
interest rate as, and final maturity dates not later than the final Regular
Distribution Date of, the Certificates issued hereunder and shall hold such
Equipment Notes in trust for the benefit of the Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1997-1C Trust") for the benefit of the Certificateholders, and the initial
Certificateholders as the grantors of the 1997-1C Trust, by their respective
acceptances of the Certificates, join in the creation of this 1997-1C Trust
with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable,
be governed by such provisions;
<PAGE>
2
NOW THEREFORE, in consideration of the premises herein, it is agreed
by and among the Guarantor, the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series
of Certificates to be issued under the Agreement to be distinguished and
known as "Pass Through Certificates, Series 1997-1C" (hereinafter defined as
the "Series 1997-1C Certificates"). Each Series 1997-1C Certificate
represents a Fractional Undivided Interest in the 1997-1C Trust created
hereby.
The terms and conditions applicable to the Series 1997-1C
Certificates are as follows:
(a) The aggregate principal amount of the Series 1997-1C Certificates
that shall be authenticated under the Agreement (except for Series 1997-1C
Certificates authenticated and delivered pursuant to Sections 3.03, 3.04
and 3.05 of the Basic Agreement) upon their initial issuance is
$23,462,000.
(b) The Cut-off Date is the earlier of (i) August 31, 1998 or, with
respect to two Prefunded Aircraft (as defined herein) scheduled to be
delivered in October and November 1997, June 15, 1998 and (ii) the 90th day
after the last day of the calendar month in which such Prefunded Aircraft
is delivered to the Company.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 2 and July 2, commencing on January
2, 1998, until payment of all of the Scheduled Payments to be made under
the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the day
(which shall be a Business Day) on which such redemption or purchase is
scheduled to occur pursuant to the terms of the applicable Indenture and
(ii) when used with respect to a Special Payment other than as described in
clause (i) above, 10 days after the last date on which the Trustee must
give notice pursuant to Section 4.02(c) of the Basic Agreement (or the next
Business Day after such 10th day if such date is not a Business Day).
(e) (i) The Series 1997-1C Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1997-1C
Certificates, by its acceptance of such Certificate or its interest
therein, will be deemed to
<PAGE>
3
represent and warrant to and for the benefit of each Owner Participant
and the Company that either (x) the assets of an employee benefit plan
subject to Title I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or of a plan subject to Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase
Series 1997-1C Certificates or (y) one or more prohibited transaction
statutory or administrative exemptions applies such that the use of such
plan assets to purchase and hold such Certificates will not constitute a
non-exempt prohibited transaction under ERISA or Section 4975 of the
Code.
(ii) The Series 1997-1C Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the Letter
of Representations among the Guarantor, the Company and the Clearing Agency
attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) A portion of the proceeds of the Series 1997-1C Certificates
shall be used to purchase the Equipment Notes in the principal amount
specified below and the unused portion of such proceeds shall be deposited
in the Escrow Account to be applied as set forth in the Agreement:
Principal Amount
Registration Number of Equipment Note
------------------- -----------------
N501XJ $1,931,250
N502XJ 1,931,250
N503XJ 1,931,250
N504XJ 1,931,250
N505XJ 1,931,250
N506XJ 1,931,250
N507XJ 1,964,000
N508XJ 1,968,000
N509XJ 1,980,000
N510XJ 1,984,000
N511XJ 1,988,000
N512XJ 1,990,500
<PAGE>
4
(h) Each Owner Trustee, acting on behalf of its respective Owner
Participant, will issue on a non-recourse basis, the Equipment Notes, the
proceeds of which shall be used, among other things, to finance a portion
of the purchase price to such Owner Trustee of the following Aircraft:
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N501XJ Avro RJ85(1) LF-507-1F(2)
N502XJ Avro RJ85 LF-507-1F
N503XJ Avro RJ85 LF-507-1F
N504XJ Avro RJ85 LF-507-1F
N505XJ Avro RJ85 LF-507-1F
N506XJ Avro RJ85 LF-507-1F
N507XJ Avro RJ85 LF-507-1F
N508XJ Avro RJ85 LF-507-1F
N509XJ Avro RJ85 LF-507-1F
N510XJ Avro RJ85 LF-507-1F
N511XJ Avro RJ85 LF-507-1F
N512XJ Avro RJ85 LF-507-1F
(i) The related Note Documents are listed on Exhibit D.
Section 1.02. Intercreditor Agreement. The Series 1997-1C
Certificates are subject to the Intercreditor Agreement.
Section 1.03. Ranking of Equipment Notes. The Equipment Notes will
be subject to the ranking and priority as set forth in the related Indenture.
Section 1.04. No Cross-Default or Cross- Collateralization of
Equipment Certificates. As set forth in the related Indenture, there are no
cross-collateralization provisions or cross-default provisions in respect of
the Equipment Notes.
- -----------------
(1) The reference to "Avro RJ85" means the British Aerospace Avro RJ85
airplane.
(2) The reference to "LF-507-1F" means the AlliedSignal LF-507-1F engine.
<PAGE>
5
Section 1.05. Ranking of Series 1997-1C Certificates. The Series
1997-1C Certificates will be subject to the ranking and priority as set forth
in the Intercreditor Agreement.
Section 1.06. Liquidity Facility. Payments of interest on the
Series 1997-1C Certificates will be supported by a Liquidity Facility to be
provided by the Liquidity Provider for the benefit of the Certificateholders.
Section 1.07. Purchase Rights of Certificateholders. Upon the
occurrence and during the continuation of a Triggering Event, as defined in
the Basic Agreement, (i) the holders of Certificates issued pursuant to the
1997-1B Trust Supplement shall have the right to purchase all, but not less
than all, of the Series 1997-1A Certificates and (ii) the holders of
Certificates issued pursuant to the 1997-1C Trust Supplement shall have the
right to purchase all, but not less than all, of the Series 1997-1A
Certificates and the Certificates issued pursuant to the 1997-1B Trust
Supplement.
ARTICLE II
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. During the period between the
date of issuance of Equipment Notes by the Owner Trustee in respect of NWA
Trust Nos. NWA 1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA
1997 L, and the earliest to occur of (i) the date of sale to an Owner Trustee
of the related Aircraft, (ii) the date of assumption by the Company of the
Equipment Notes and (iii) the date of redemption of the Equipment Notes under
Section 2.10(c), 2.10(d) and 2.10(e) of the Indenture, such Equipment Notes
will not be secured by such Aircraft or the related Lease, but will be
secured by the Prefunding Collateral Account. Pursuant to the related
Indenture, the Loan Trustee on behalf of the related Owner Trustee will
deposit the proceeds from the sale of the related Equipment Notes into the
Prefunding Collateral Account for the benefit of the Loan Trustee.
Sums deposited in each Prefunding Collateral Account will be
invested as set forth in the related Indenture.
Section 2.02. Statement of Intent. Each of the parties hereto, and
each Certificateholder by acceptance of its Series 1997-1C Certificate,
agrees for Federal income tax purposes to treat the Equipment Notes issued by
the Owner Trustee in respect of NWA Trust Nos. NWA 1997 G, NWA 1997 H, NWA
1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L(a) on the date of their
original issuance as indebtedness of the Company maturing on the earliest of
(i) the Delivery Date, (ii) the date of assumption by the Company of the
Equipment Notes or (iii) the date of redemption of the Equipment Notes under
Section 2.10(c), 2.10(d)
<PAGE>
6
or 2.10(e) of the Indenture and (b) thereafter, as indebtedness of the Owner
Trustee in the case of clause (a)(i) or of the Company in the case of clause
(a)(ii), issued on the respective date and maturing on the maturity date of
the Equipment Notes.
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. For all purposes of the Basic Agreement
as supplemented by this Trust Supplement, the following capitalized terms
have the following meaning:
Intercreditor Agreement: Means the Intercreditor Agreement dated as
of the date hereof by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company
of Connecticut, National Association, as Subordination Agent.
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1997-1A (the "1997-1A Trust Supplement") dated the
date hereof relating to Northwest Airlines 1997-1A Pass Through Trust and
(ii) the Basic Agreement as supplemented by Trust Supplement No. 1997-1B
(the "1997-1B trust Supplement") dated the date hereof relating to
Northwest Airlines 1997-1B Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
Prefunded Aircraft: Means the six Aircraft which are expected to be
sold to the Owner Trustee during the period from October 1997 to November
1998.
Prefunding Collateral Account: Means each of the Prefunding
Collateral Accounts established pursuant to the Indentures for each of NWA
1997 G, NWA 1997 H, NWA 1997 I, NWA 1997 J, NWA 1997 K and NWA 1997 L into
which the proceeds of sale of the related Equipment Notes will be
deposited, respectively.
Specified Investments: has the meaning set forth in Schedule II to
the Participation Agreements.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the Escrow
Account, the Certificate Account and the Special Payments Account, and
(iii) all rights of the Trust and the Trustee, on behalf of the Trust,
under the Intercreditor Agreement, and the Liquidity Facility, including,
without limitation,
<PAGE>
7
all rights to receive certain payments thereunder, and all monies paid to
the Trustee on behalf of the Trust pursuant to the Intercreditor Agreement
or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1997-1 Pass
Through Trusts to be formed pursuant to the Basic Agreement, as
supplemented by this Trust Supplement and the Other Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
September 16, 1997 by and among the Company, the Guarantor, Credit Suisse
First Boston Corporation, Lehman Brothers Inc. and Morgan Stanley & Co.
Incorporated.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance
Date in the form delivered to the Trustee by the Company. The Trustee shall
not be responsible in any manner whatsoever for or in respect of the validity
or sufficiency of this Trust Supplement or the due execution hereof by the
Guarantor or the Company, or for or in respect of the recitals and statements
contained herein, all of which recitals and statements are made solely by the
Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee
by reason of this Trust Supplement other than as set forth in the Basic
Agreement, and this Trust Supplement is executed and accepted on behalf of
the Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor Agreement
will be duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as
herein expressly provided, all of the provisions, terms and conditions of the
Basic Agreement are in all respects
<PAGE>
8
ratified and confirmed; and the Basic Agreement and this Trust Supplement
shall be taken, read and construed as one and the same instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1997-1C CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
Section 5.03. Execution in Counterparts. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the
same instrument.
<PAGE>
9
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have
caused this Trust Supplement to be duly executed by their respective officers
thereto duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By:
--------------------------------------
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By:
---------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
---------------------------------------
Name:
Title:
<PAGE>
10
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the
registered owner hereof, Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or
its interest herein, will be deemed to represent and warrant to and for the
benefit of each Owner Participant and the Company that either (i) the assets
of an employee benefit plan subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") or
of entities which may be deemed to hold such plans, have not been used to
purchase this Certificate or (ii) one or more prohibited transaction
statutory or administrative exemptions applies such that the use of such plan
assets to purchase and hold this Certificate will not constitute a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1997-1C PASS THROUGH TRUST
Pass Through
Certificate, Series 1997-1C
Issuance Date: September 25, 1997
Final Legal Distribution Date: July 2, 2008
Evidencing A Fractional Undivided Interest In the 1997-1C Trust,
The Property Of Which Includes Certain Equipment Notes Each Secured
By An Aircraft Leased To Northwest Airlines, Inc. Or A Collateral
Account Holding Specified Investments Purchased With The Proceeds
Of The Sale Of Such Issue Of Equipment Notes
Certificate
No. _____ $________ Fractional Undivided Interest representing
0.__% of the Trust per $1,000 of Reference Principal
Amount
<PAGE>
11
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a Fractional Undivided Interest in the amount of $_______
(the "Reference Principal Amount") in the Northwest Airlines 1997-1C Pass
Through Trust (the "Trust") created by State Street Bank and Trust Company,
as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated
as of June 3, 1996 (the "Basic Agreement"), by and among the Trustee,
Northwest Airlines Corporation, a Delaware corporation (the "Guarantor"), and
Northwest Airlines, Inc., a Minnesota corporation (the "Company"), as
supplemented by Trust Supplement No. 1997-1C thereto, dated as of September
25, 1997 (collectively, the "Agreement"), by and among the Trustee, the
Guarantor and the Company, a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1997-1C" (herein called the
"Certificates"). This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Intercreditor
Agreement, to which Agreement the Certificateholder of this Certificate by
virtue of the acceptance hereof assents and by which such Certificateholder
is bound. The property of the Trust includes certain Equipment Notes and all
rights of the Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facility (the "Trust Property"). Each issue of the Equipment
Notes is secured by a security interest in (A) the Aircraft leased to the
Company or (B) a collateral account holding Specified Investments purchased
with the proceeds of the sale of such issue of the Equipment Notes.
Each of the Certificates represents a Fractional Undivided Interest
in the Trust and the Trust Property and has no rights, benefits or interest
in respect of any other separate trust established pursuant to the terms of
the Basic Agreement for any other series of certificates issued pursuant
thereto. The undivided percentage interest in the Trust represented by each
of this Certificate (as specified above) and the other Pass Through
Certificates, Series 1997-1C, was determined on the basis of (x) the
aggregate of the Reference Principal Amount of this Certificate (as specified
above) and of the other Pass Through Certificates, Series 1997-1C and (y) the
aggregate original principal amounts of the Equipment Notes constituting the
Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will
be distributed on each January 2 and July 2 (a "Regular Distribution Date"),
commencing January 2, 1999 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which
has been confirmed by the Trustee,
<PAGE>
12
equal to the product of the percentage interest in the Trust evidenced by
this Certificate and an amount equal to the sum of such Scheduled Payments.
Subject to and in accordance with the terms of the Agreement, in the event
that Special Payments on the Equipment Notes are received by the Trustee,
from funds then available to the Trustee, there shall be distributed on the
applicable Special Distribution Date, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding
the Special Distribution Date, an amount in respect of such Special Payments
on the Equipment Notes, the receipt of which has been confirmed by the
Trustee, equal to the product of the percentage interest in the Trust
evidenced by this Certificate and an amount equal to the sum of such Special
Payments so received. If a Regular Distribution Date or Special Distribution
Date is not a Business Day, distribution shall be made on the immediately
following Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date and no interest shall
accrue during the intervening period. The Trustee shall mail notice of each
Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon. Except
as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by
the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency of the Trustee
specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee
or any affiliate thereof. The Certificates are limited in right or payment,
all as more specifically set forth herein and in the Agreement. All payments
or distributions made to Certificateholders under the Agreement shall be made
only from the Trust Property and only to the extent that the Trustee shall
have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each
Certificateholder of this Certificate, by its acceptance hereof, agrees that
it will look solely to the income and proceeds from the Trust Property to the
extent available for distribution to such Certificateholder as provided in
the Agreement. This Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby. A copy of the Agreement may be examined during normal business hours
at the principal office of the Trustee, and at such other places, if any,
designated by the Trustee, by any Certificateholder upon request.
<PAGE>
13
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall
be conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed
by the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided
Interests and integral multiples thereof. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same aggregate Fractional Undivided Interest in the Trust, as requested by
the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to
cover any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Trustee, the Registrar,
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be
<PAGE>
14
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
<PAGE>
15
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORTHWEST AIRLINES 1997-1C
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as Trustee
By: Mark D. Powers
----------------------------------
Name: Mark D. Powers
Title: Vice President-Finance &
Assistant Treasurer
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald E. Smith
----------------------------------
Name: Donald E. Smith
Title: Vice President
<PAGE>
16
EXHIBIT B
DTC Letter of Representations
<PAGE>
17
SERIES 1997-1C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
January 2, 1999 $ 0.00
July 2, 1999 0.00
January 2, 1999 545,822.78
July 2, 1999 0.00
January 2, 2000 275,769.00
July 2, 2000 0.00
January 2, 2001 428,323.02
July 2, 2001 0.00
January 2, 2002 3,430,384.10
July 2, 2002 800,335.74
January 2, 2003 4,413,586.16
July 2, 2003 0.00
January 2, 2004 5,319,923.93
July 2, 2004 1,183,942.32
January 2, 2005 4,176,681.87
July 2, 2005 570,094.19
January 2, 2006 2,086,736.55
July 2, 2006 103,301.50
January 2, 2007 127,098.84
July 2, 2007 0.00
January 2, 2008 0.00
July 2, 2008 0.00
January 2, 2009 0.00
July 2, 2009 0.00
January 2, 2010 0.00
July 2, 2010 0.00
January 2, 2011 0.00
July 2, 2011 0.00
January 2, 2012 0.00
<PAGE>
18
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
July 2, 2012 0.00
January 2, 2013 0.00
July 2, 2013 0.00
January 2, 2014 0.00
July 2, 2014 0.00
January 2, 2015 0.00
July 2, 2015 0.00
July 2, 2016 0.00
<PAGE>
19
EXHIBIT D
NOTE DOCUMENTS
<PAGE>
EXHIBIT 4.(d)(1)
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
Dated as of September 25, 1997
by and between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent,
as agent and trustee for the
Northwest Airlines 1997-1A Pass Through Trust,
as Borrower
and
ROYAL BANK OF CANADA
as Liquidity Provider
Relating to
Northwest Airlines 1997-lA Pass Through Trust
7.068% Northwest Airlines Pass Through Certificates,
Series 1997-1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms ....................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances ................................................ 6
Section 2.2 Making the Advances ......................................... 6
Section 2.3 Fees ........................................................ 8
Section 2.4 Reduction or Termination of the Commitment; Extension
of the Expiry Date ........................................ 9
Section 2.5 Repayments of Interest Advances or the Final Advance ........ 10
Section 2.6 Repayments of Downgrade Advances and Non-Extension Advances . 10
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement ................................... 11
Section 2.8 Book Entries ................................................ 12
Section 2.9 Payments from Available Funds Only .......................... 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs ............................................. 12
Section 3.2 Capital Adequacy ............................................ 13
Section 3.3 Payments Free of Deductions ................................. 14
Section 3.4 Payments .................................................... 15
Section 3.5 Computations ................................................ 15
Section 3.6 Payment on Non-Business Days ................................ 15
Section 3.7 Interest .................................................... 15
Section 3.8 Replacement of Borrower ..................................... 17
Section 3.9 Funding Loss Indemnification ................................ 17
Section 3.10 Illegality .................................................. 17
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1 ........ 18
Section 4.2 Conditions Precedent to Borrowing ........................... 20
<PAGE>
Page
----
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower ....................... 20
Section 5.2 Negative Covenants of the Borrower .......................... 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance ............................................... 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. ............................................ 21
Section 7.2 Notices, Etc ................................................ 22
Section 7.3 No Waiver; Remedies ......................................... 22
Section 7.4 Further Assurances .......................................... 22
Section 7.5 Indemnification; Survival of Certain Provisions ............. 23
Section 7.6 Liability of the Liquidity Provider ......................... 23
Section 7.7 Costs, Expenses and Taxes ................................... 24
Section 7.8 Binding Effect; Participations .............................. 24
Section 7.9 Severability ................................................ 26
Section 7.10 Governing Law ............................................... 26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver
of Immunity ............................................... 26
Section 7.12 Execution in Counterparts ................................... 27
Section 7.13 Entirety .................................................... 27
Section 7.14 Headings; Section References ................................ 27
Section 7.15 Liquidity Provider's Obligation to Make Advances ............ 27
ANNEX I - Interest Advance Notice of Borrowing
ANNEX II - Downgrade Advance Notice of Borrowing
ANNEX III - Non-Extension Advance Notice of Borrowing
ANNEX IV - Notice of Replacement Borrower
-ii-
<PAGE>
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES dated
as of September 25, 1997 by and between STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as Subordination Agent under the Intercreditor
Agreement (each as defined below), as agent and trustee for the Class A Trust
(as defined below) (the "Borrower"), and ROYAL BANK OF CANADA (the "Liquidity
Provider").
WITNESSETH:
WHEREAS, pursuant to the Class A Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.1), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class A Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.1.
"Advance" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade Advance, a Non-Extension Advance, an
Applied Non-Extension Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" means the rate of interest specified in
Section 3.7 with respect to any Advance or other amount referred to in
this Agreement.
"Applicable Margin" means (x) with respect to any Unpaid Advance
(including an Applied Downgrade Advance or
<PAGE>
Applied Non-Extension Advance) that is a LIBOR Advance, 2% and (y) with
respect to any Unpaid Advance (including an Applied Downgrade Advance or
Applied Non-Extension Advance) that is a Base Rate Advance, 0.50%
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.6(a)
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.6(a).
"Available Commitment" means, at any time of determination, an
amount equal to (i) the Commitment at such time less (ii) subject to the
proviso contained in the third sentence of Section 2.2(a), the aggregate
amount of each Advance outstanding at such time; provided that following a
Downgrade Advance, a Non-Extension Advance or a Final Advance, the
Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of (i) the rate of interest per annum announced by the Liquidity
Provider in New York City from time to time in its sole discretion as its
United States Dollar prime commercial lending rate for such day, or (ii)
the rate quoted by the Liquidity Provider, at approximately 11:00 A.M.,
New York City time, to dealers in the New York Federal funds market for
overnight offering of dollars by the Liquidity Provider, for deposit plus
.50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing or pursuant to Section 6.1.
"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
Minneapolis, Minnesota, New York, New York or, so long as any Class A
Certificate is outstanding, the city and state in which the Class A
Trustee maintains its Corporate Trust Office or receives or disburses
funds, and, if the applicable Business Day relates to any Advance or other
amount bearing interest based on the LIBOR Rate, on which dealings are
carried on in the London interbank market.
-2-
<PAGE>
"Commitment" means, initially, $13,349,402, as the same may be
reduced from time to time in accordance with Section 2.4(a).
"Downgrade Advance" means an Advance made pursuant to Section 2.2(b)
(i).
"Effective Date" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.1(e) shall be conclusive evidence that the Effective Date has
occurred.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means September 25, 2002, unless such date shall be
extended in accordance with Section 2.5(c) hereof, in which event the
"Expiry Date" shall be such extended date.
"Final Advance" means an Advance made pursuant to Section 2.2(c) and
6.1.
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, by and among the Trustees, the Liquidity Provider, the
liquidity provider under each Liquidity Facility (other than this
Agreement) and the Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
"Interest Advance" means an Advance made pursuant to Section 2.2(a).
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the date such LIBOR Advance is
made (or is converted from a Base Rate Advance) and ending on the
next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next Regular
Distribution Date.
"Lending Office" means the lending office of the Liquidity Provider,
presently located at One Financial Square, New York, New York 10005-3531,
or such other lending
-3-
<PAGE>
office as the Liquidity Provider from time to time shall notify the
Borrower as being its lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, the rate
per annum at which deposits in U.S. dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London
Interbank market at approximately 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in the principal amount
of the Advance to which such Interest Period is to apply and for a period
of time comparable to such Interest Period, as quoted by the Liquidity
Provider to the Subordination Agent.
"Liquidity Event of Default" means the occurrence of the following:
all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity. A Liquidity Event of Default shall not occur upon an automatic
acceleration of the Equipment Notes as a result of a Northwest Bankruptcy
Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each
affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Non-Extension Advance" means an Advance made pursuant to Section
2.2(b)(ii).
"Notice of Borrowing" has the meaning specified in Section 2.2(d).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
-4-
<PAGE>
"Prospectus" means the prospectus included in the Registration
Statement on Form S-3 (File No. 333-13307) filed by Northwest and NWA
Corp. under the Securities Act, as it became effective under the
Securities Act and the Registration Statement on Form S-3 (File No.
333-28649) filed by Northwest and NWA Corp. under the Securities Act, as
it became effective under the Securities Act, which latter Registration
Statement constitutes Post-Effective Amendment No. 3 to the former
Registration Statement, each such Registration Statement relating to
certain pass through certificates, as supplemented by the prospectus
supplement dated September 16, 1997 reflecting the terms of the
Certificates, as such Prospectus may be amended or supplemented.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class A Certificates, that would be payable on the
Class A Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class A Certificates on such day and without regard to
expected future payments of principal on the Class A Certificates.
"Securities Act" means the Securities Act of 1933, as amended.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; and (v) the date
on which no Advance is or may (including by reason of
-5-
<PAGE>
reinstatement as herein provided) become available for a Borrowing
hereunder.
"Unpaid Advance" has the meaning assigned to such term in Section
2.5.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"Certificates", "Class A Certificates", "Class A
Certificateholders", "Class A Cash Collateral Account", "Class A Trust",
"Class A Trust Agreement", "Class A Trustee", "Class B Certificates",
"Class C Certificates", "Controlling Party", "Corporate Trust Office",
"Distribution Date", "Equipment Notes", "Indenture", "Investment
Earnings", "Liquidity Facility", "Moody's", "NWA Corp.", "Northwest",
"Northwest Bankruptcy Event", "Operative Agreements", "Participation
Agreements", "Performing Equipment Note", "Person", "Pool Balance",
"Rating Agency", "Regular Distribution Date", "Replacement Liquidity
Facility", "Responsible Officer", "Scheduled Payment", "Special Payment",
"Standard & Poor's", "Stated Interest Rate", "Subordination Agent",
"Taxes", "Threshold Rating", "Triggering Event", "Trust Agreements",
"Trustee", "Underwriters", "Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
Section 2.2 Making the Advances. (a) Interest Advances shall be made
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto in each instance, signed by a Responsible Officer of the
Borrower, in an amount not exceeding the Available Commitment at such time and
shall be used solely for the payment when due of interest on the Class A
Certificates at the Stated Interest Rate thereof or in accordance with Section
3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder
shall automatically reduce the Available Commitment and the
-6-
<PAGE>
amount available to be borrowed hereunder by subsequent Advances by the amount
of such Interest Advance (subject to reinstatement as provided in the next
sentence). Upon repayment to the Liquidity Provider in full of the amount of any
Interest Advance made pursuant to this Section 2.2(a), together with accrued
interest thereon (as provided herein), the Available Commitment shall be
reinstated by the amount of such repaid Interest Advance; provided, however,
that the Available Commitment shall not be so reinstated at any time if (i) (x)
a Triggering Event shall have occurred and be continuing and (y) there is a
Performing Note Deficiency or (ii) a Liquidity Event of Default shall have
occurred and be continuing.
(b)(i) A Downgrade Advance shall be made in a single Borrowing upon
a downgrading of the rating of the Liquidity Provider resulting in the Liquidity
Provider's ratings not meeting the Threshold Rating (as provided for in Section
3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility
shall have been delivered to the Borrower in accordance with said Section
3.6(c), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex II attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class A Cash Collateral
Account in accordance with said Section 3.6(c).
(ii) A Non-Extension Advance shall be made in a single Borrowing
upon the non-extension of the Commitment hereunder (as provided for in Section
3.6(d) of the Intercreditor Agreement) unless a Replacement Liquidity Facility
shall have been delivered to the Borrower in accordance with said Section
3.6(d), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex III attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class A Cash Collateral
Account in accordance with said Section 3.6(d).
(c) A Final Advance shall be made by the Liquidity Provider without
the necessity for a Notice of Borrowing at the option of the Liquidity Provider
on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount
equal to the Available Commitment at such time, and shall be used to fund the
Class A Cash Collateral Account.
(d) Each Borrowing (other than the making of the Final Advance)
shall be made on notice in writing (a "Notice of Borrowing") in substantially
the form required by Section 2.2(a) or 2.2(b), as the case may be, given not
later than 12:00 Noon (New York City time) on the Business Day prior to the day
of the proposed Borrowing by the Borrower to the Liquidity Provider. Upon
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the
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date of such Borrowing or on such later Business Day as may be specified by the
Borrower in such Notice of Borrowing, make available to the Borrower, in U.S.
dollars and in immediately available funds, the amount of such Borrowing to be
paid to the Borrower in accordance with its payment instructions. If a Notice of
Borrowing is delivered by the Borrower in respect of any Borrowing after 12:00
Noon (New York City time) on a Business Day, the Liquidity Provider shall,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of Borrowing or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. Payments of proceeds of a Borrowing shall be made by wire transfer
of immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other person (including the holder of any
Class A Certificate or the Class A Trustee) who makes to the Class A Trustee or
the Borrower a demand for payment with respect to any Class A Certificate.
Following the making of any Advance pursuant to Section 2.2(b) or (c) hereof to
fund the Class A Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class A Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class A Cash Collateral
Account; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Sections
3.2 or 3.3 of the Intercreditor Agreement. By paying to the Borrower proceeds of
Advances requested by the Borrower in accordance with the provisions of this
Agreement, the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.3 Fees. (a) The Borrower agrees to pay to the Liquidity
Provider on the Effective Date a non-refundable fee equal to $25,000 in
aggregate with respect to this Agreement, the Irrevocable Revolving Credit
Agreement, Class B Certificates, dated as of September 25, 1997, by and between
State Street Trust Company of Connecticut, National Association and Royal Bank
and the Irrevocable Revolving Credit, Class C Certificates dated as
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of September 25, 1997, by and between State Street Trust Company of Connecticut,
National Association and Royal Bank.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.30% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance or Non-Extension Advance is made and the date on which the
Commitment terminates. Such fee shall be payable in arrears on each Regular
Distribution Date. In addition, the Borrower shall pay, or shall cause to be
paid, to the Liquidity Provider, a fee equal to 0.30% per annum on the unpaid
principal amount of each Downgrade Advance or Non-Extension Advance (other than
an Applied Downgrade Advance or an Applied Non-Extension Advance) from and
including the date of such Advance to but excluding the date such principal
amount shall be paid in full. Such fee shall be payable in arrears on each
Regular Distribution Date and, in the event of the payment of principal of such
Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.3(b) shall require the Borrower to pay any amount under this Section
2.3(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.4 Reduction or Termination of the Commitment; Extension of
the Expiry Date. (a) Automatic Reductions. Promptly following each date on which
the Required Amount is reduced as a result of a reduction in the Pool Balance of
the Class A Certificates or otherwise, the Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Commitment to the Liquidity Provider within two Business Days thereof. The
failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Commitment.
(b) Termination. Upon the making of any Downgrade Advance,
Non-Extension Advance or Final Advance hereunder or the occurrence of the
Termination Date, the obligation of the Liquidity Provider to make further
Advances hereunder shall automatically and irrevocably terminate, and the
Borrower shall not be entitled to request any further Borrowing hereunder.
(c) Extension of the Expiry Date. Unless the Expiry Date has
previously been extended to a date that is 15 days after the Final Legal
Distribution Date for the Class A Certificates, then, no earlier than the 180th
day and no later than the 90th day prior to the Expiry Date then in effect, the
Subordination Agent shall request that the Liquidity Provider extend the Expiry
Date to a date no later than such 15th day (unless the obligations of the
Liquidity Provider are earlier terminated in accordance herewith). The Liquidity
Provider shall advise the
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Subordination Agent, no earlier than 90 days and no later than 60 days prior to
such Stated Expiration Date, whether, in its sole discretion, it agrees to so
extend the Expiry Date and, if so, the proposed new Expiry Date. If, on or
before such 25th day, the Expiry Date shall not have been so extended and, in
such event, the Commitment shall not have been replaced in accordance with
Section 3.6(e) of the Intercreditor Agreement, or if the Liquidity Provider
fails irrevocably and unconditionally to advise the Subordination Agent on or
before the 25th day prior to the Expiry Date then in effect that such Expiry
Date shall be so extended, the Subordination Agent shall, on such 25th day (or
as soon as possible thereafter), request a Non-Extension Advance in accordance
with the terms hereof and of Section 3.6(d) of the Intercreditor Agreement.
Section 2.5 Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Interest Advance or the Final Advance (any such Interest
Advance or the Final Advance, until repaid, is referred to herein as an "Unpaid
Advance"), plus (b) interest on the amount of each such Unpaid Advance as
provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise
waived by the Liquidity Provider, the Borrower shall be obligated, without
notice of an Advance or demand for repayment from the Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to repay the Liquidity
Provider for all Interest Advances and Final Advances on the same day as made
and all Applied Downgrade Advances and Applied Non-Extension Advances on the
same day they become Applied Downgrade Advances or Applied Non-Extension
Advances, as applicable, in accordance with Section 2.6 hereof. The Borrower and
the Liquidity Provider agree that the repayment in full of each Interest Advance
and the Final Advance on the date such Interest Advance or the Final Advance is
made is intended to be a contemporaneous exchange for new value given to the
Borrower by the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances and Non-Extension
Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance shall
be deposited in the Class A Cash Collateral Account, and invested and withdrawn
from the Class A Cash Collateral Account, as set forth in Sections 3.6(c) and
(f) of the Intercreditor Agreement. Amounts advanced hereunder in respect of a
Non-Extension Advance shall be deposited in the Class A Cash Collateral Account,
and invested and withdrawn from the Class A Cash Collateral Account, as set
forth in Sections 3.6(d) and (f) of the Intercreditor Agreement. The Borrower
agrees to pay to the Liquidity Provider, on each Regular Distribution Date,
commencing on the first Regular Distribution Date after the making of a
Downgrade Advance or a Non-Extension Advance, interest on the principal amount
of any such Advance as provided in Section 3.7; provided, however, that (i) any
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distribution to the Liquidity Provider of Investment Earnings pursuant to
Section 3.6(f) of the Intercreditor Agreement shall constitute a payment of
interest on such Advance in the amount of such Investment Earnings (not to
exceed the amount specified in Section 3.7) and (ii) amounts in respect of a
Downgrade Advance or a Non-Extension Advance withdrawn from the Class A Cash
Collateral Account for the purpose of paying interest on the Class A
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement
(the amount of any such withdrawal being (i) in the case of a withdrawn
Downgrade Advance, an "Applied Downgrade Advance" and (ii) in the case of a
withdrawn Non-Extension Advance, an "Applied Non-Extension Advance") shall be
treated as an Interest Advance under this Agreement for purposes of determining
the Applicable Liquidity Rate for interest payable thereon. Immediately upon the
withdrawal of any amounts from the Class A Cash Collateral Account on account of
a reduction in the Required Amount, the Borrower shall repay the Downgrade
Advance or Non-Extension Advance (as the case may be) in a principal amount
equal to the amount of such reduction, plus interest on the principal amount
prepaid as provided in Section 3.7.
(b) At any time when an Applied Downgrade Advance (or any portion
thereof) or an Applied Non-Extension Advance (or any portion thereof) is
outstanding, upon the deposit in the Class A Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b), clause "third" of Section
3.2 or clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such
amount being a "Replenishment Amount") for the purpose of replenishing the
balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances or Applied
Non-Extension Advances (as the case may be) shall be automatically reduced by
the amount of such Replenishment Amount and (ii) the principal amount of the
outstanding Downgrade Advance or Non-Extension Advance (as the case may be)
shall be automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class A Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class A Certificates on the date of such
replacement, or otherwise.
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor
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Agreement, to the extent payable to the Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider in the order of priority required by
the applicable provisions of Articles II and III of the Intercreditor Agreement.
Section 2.8 Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.9 Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class A Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or
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(ii) impose on the Liquidity Provider any other condition regarding this
Agreement or any Advance, or (iii) subject the Liquidity Provider to any Taxes
with respect to amounts payable or paid or change the basis of taxation of any
amounts payable to the Liquidity Provider (other than Taxes imposed on the
overall net or gross income of the Liquidity Provider) and (b) the result of any
event referred to in the preceding clauses (i), (ii) or (iii) shall be to
increase the cost to the Liquidity Provider of issuing or maintaining its
commitment or funding or maintaining Advances (which increase in cost shall be
determined by the Liquidity Provider's reasonable allocations of the aggregate
of such cost increases resulting from such event), then, upon demand by the
Liquidity Provider (such demand to be made not later than 180 days after a
Responsible Officer of the Liquidity Provider obtains actual knowledge of any
event referred to in clause (i), (ii) or (iii) above), the Borrower shall pay,
or cause to be paid, to the Liquidity Provider, from time to time as specified
by the Liquidity Provider, additional amounts which shall be sufficient to
compensate the Liquidity Provider for such increased cost; provided that if such
demand for payment is made after such 180-day period, the Borrower shall be
obligated to pay such additional amounts only with respect to such increased
cost actually incurred or effected on or after the 180th day prior to the date
of such demand. A certificate as to such increased cost incurred by the
Liquidity Provider as a result of any event mentioned in clauses (i), (ii) or
(iii) above, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive evidence of the amount owed under
this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.1 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital
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adequacy) by an amount deemed by the Liquidity Provider to be material, then,
upon demand by the Liquidity Provider, the Borrower shall pay to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
reduction in respect of issuing or maintaining its commitment hereunder or its
funding or maintaining Advances. A certificate as to any such additional amount
describing the event which has the effect of reducing the rate of return on the
Liquidity Provider's capital, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive evidence of the amount
owed under this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.3 Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter after the
occurrence of any event requiring a change in the most recent form previously
delivered by it (and prior to the immediately following due date of any payment
by the Borrower hereunder), to the extent that the Liquidity Provider is legally
entitled to do so, two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
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Service, certifying that the Liquidity Provider is completely exempt from United
States withholding tax on payments pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.3 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.4 Payments. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, New
York, New York, ABA #021000021, for the account of Royal Bank of Canada, No.
920-1-033363 for further credit to account #218-599-9 (referencing Northwest
Liquidity Facility).
Section 3.5 Computations. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate and of fees
payable to the Liquidity Provider shall be made on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 Payment on Non-Business Days. Whenever any payment to be
made hereunder (other than a payment on LIBOR Advances) becomes due and payable
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payments on a LIBOR Advance
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 Interest. (a) The Borrower shall pay, or shall cause to
be paid, interest on (i) the unpaid principal amount of each Advance from and
including the date of such Advance (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class A Cash Collateral Account
to pay interest on the Class A Certificates) to but excluding the date such
principal amount shall be paid in
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full and (ii) any other amount due hereunder (whether fees, commissions,
expenses or other amounts or, to the extent permitted by law, installments of
interest on Advances or any such other amount) which is not paid when due
(whether at stated maturity, by acceleration or otherwise) from and including
the due date thereof, to but excluding the date such amount is paid in full, in
each such case, at a fluctuating interest rate per annum for each day equal to
the Applicable Liquidity Rate for such Advance or such other amount as in effect
for such day, but in no event at a rate per annum greater than the maximum rate
permitted by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section 3.7 shall exceed
the maximum rate permitted by applicable law, then any subsequent reduction in
such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.7 below the maximum rate permitted by applicable law until the total
amount of interest accrued equals the amount of interest that would have accrued
if such otherwise applicable interest rate as set forth in this Section 3.7 had
at all times been in effect. Nothing contained in this Section 3.7 shall require
the Borrower to pay any amount under this Section 3.7 other than to the extent
the Borrower shall have funds available therefor.
(b) Each Advance (other than a Downgrade Advance that is not an
Applied Downgrade Advance and a Non-Extension Advance that is not an Applied
Non-Extension Advance, and for which, in each case, subsection (e) below shall
apply) will be either a Base Rate Advance or a LIBOR Advance as provided in this
Section. Each such Advance will be a Base Rate Advance for the period from the
date of its borrowing to (but excluding) the third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Advance.
Thereafter, such Advance shall be a LIBOR Advance; provided that the Final
Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may
not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
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(e) Each Downgrade Advance (other than an Applied Downgrade Advance)
and each Non-Extension Advance (other than an Applied Non-Extension Advance)
shall bear interest in an amount equal to the higher of (i) a per annum rate
equal to LIBOR plus 0.30% and (ii) the Investment Earnings on amounts on deposit
in the Class A Cash Collateral Account, payable in arrears on each Regular
Distribution Date and, in the event of the payment of principal of such Advance
on a day other than a Regular Distribution Date, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(g) Each change in the Base Rate shall become effective immediately.
Section 3.8 Replacement of Borrower. From time to time, upon the
effective date and time specified in a written and completed Notice of
Replacement Borrower in substantially the form of Annex IV attached hereto (a
"Notice of Replacement Borrower") delivered to the Liquidity Provider by the
then Borrower, the successor Borrower designated therein shall be substituted as
the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(a) Any payment of a LIBOR Advance on a date other than the last day
of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow or convert, as the case
may be, a LIBOR Advance on the date for borrowing or conversion, as the
case may be, specified in the relevant notice under Section 2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the
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Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall
be converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1.
Section 2.1 of this Agreement shall become effective on and as of the first date
(the "Effective Date") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents delivered pursuant to paragraphs (v) and (vii) of this Section
4.l(a)), and each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of each of
the Operative Agreements (other than this Agreement and the
Intercreditor Agreement) which, when taken together, bear the
signatures of all of the respective parties thereto and which are in
full force and effect in accordance with their respective terms;
(iv) A copy of the Prospectus and specimen copies of the Class
A Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates and the Class C Certificates
will receive long-term credit ratings from Moody's of not lower than
A3, Baa2 and Baa3, respectively, and from Standard & Poor's of not
lower than A, BBB and BBB-, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the Class
A Trust Agreement, the Intercreditor Agreement, the Participation
Agreements and the other Operative Agreements (together with, in the
case of each such opinion, other than the opinion
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of counsel for the Underwriters and each opinion which is addressed
to the Liquidity Provider, a letter from the counsel rendering such
opinion to the effect that the Liquidity Provider is entitled to
rely on such opinion as if it were addressed to the Liquidity
Provider);
(vii) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements;
(viii) Copies of the appraisals attached as exhibits to the
Prospectus;
(ix) A letter from NWA Corp. regarding the delivery to the
Liquidity Provider of periodic financial reports;
(x) A guaranty by State Street Bank and Trust Company, a
Massachusetts trust company, of the obligations of State Street
under the Operative Documents to which it is a party; and
(xi) Such other documents, instruments, opinions and approvals
(and, if requested by the Liquidity Provider, certified duplicates
or executed copies thereof) as the Liquidity Provider shall have
reasonably requested.
(b) The following statements shall be true and shall be deemed to
have been represented by each party (other than clause (ii) below, which
shall be deemed to have been represented only by Northwest) to the
Participation Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Participation Agreement are true and correct on
and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or would result
from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
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(c) The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Underwriters under the Underwriting Agreement shall
have been satisfied (unless any of such conditions precedent under the
Underwriting Agreement shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section
4.1(e)).
Section 4.2 Conditions Precedent to Borrowing. The obligation of the
Liquidity Provider to make an Advance on the occasion of each Borrowing shall be
subject to the conditions precedent that the Effective Date shall have occurred
and, except in the case of the Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider
shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data, including copies
of all documents with respect to
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the transactions contemplated by the Operative Agreements as from time to
time may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions to make extracts and
copies thereof and to meet with officers, agents, professional advisers
and employees of the Borrower to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a)(i) a Triggering Event shall have
occurred and be continuing and (ii) there is a Performing Note Deficiency or (b)
a Liquidity Event of Default shall have occurred and be continuing, the
Liquidity Provider may, in its sole discretion, make a Final Advance whereupon
(i) the Liquidity Provider shall have no further obligation to make Advances
hereunder, (ii) all other outstanding Advances shall be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all
Advances, any accrued interest thereon and all other amounts outstanding
hereunder shall become immediately due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Liquidity
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Provider, and, in the case of an amendment, the Borrower, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: State Street Bank and Trust Company
of Connecticut, National Association
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5600
Telecopy: (617) 664-5371
Liquidity
Provider: Royal Bank of Canada
One Financial Square
New York, New York 10005-3531
Attention: Loans Administration
Telephone: (212) 428-6335
Telecopy: (212) 428-2301
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Further Assurances. The Borrower agrees to do, upon
request, such further acts and things and to execute and deliver to the
Liquidity Provider such additional assignments, agreements, powers and
instruments as the Liquidity
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Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7 of the Participation Agreements. In addition, the
Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on demand, all Expenses
of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.1, 3.2 or 7.7 hereof (regardless of whether indemnified
against pursuant to said Sections)), whether arising before, on or after the
date hereof, that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the Intercreditor Agreement or
the Participation Agreements; provided, however, that the Borrower shall not be
required to indemnify, protect, defend and hold harmless any Liquidity
Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Expense is attributable to the failure by such
Liquidity Indemnitee or its or any Related Indemnitee, (ii) to the extent such
Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe in any material respect any agreement,
covenant or condition on its part to be performed or observed in any Operative
Agreement. The indemnitees contained in such Section 7 of the Participation
Agreements, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the expiration or termination of this Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; provided, however,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or gross negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the
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terms of this Agreement, including, but not limited to, the Liquidity Provider's
failure to make lawful payment hereunder after the delivery to it by the
Borrower of a Notice of Borrowing strictly complying with the terms and
conditions hereof; provided, however that the Borrower shall not have a claim
against the Liquidity Provider, and the Liquidity Provider shall not be liable
to the Borrower, to the extent of an order or judgment for punitive or
consequential damages regarding damages suffered by the Borrower which were the
result of subparagraphs (A) and (B) above in the first proviso of this Section
7.6.
(b) The Liquidity Provider shall not be liable or responsible in any
respect for (i) any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with this Agreement or any Notice of Borrowing delivered hereunder,
or (ii) any action, inaction or omission which may be taken by it in good faith,
absent willful misconduct or negligence (in which event the extent of the
Liquidity Provider's potential liability to the Borrower shall be limited as set
forth in the immediately preceding paragraph), in connection with this Agreement
or any Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses of the Liquidity Provider in connection with the preparation,
negotiation, execution, delivery, filing and recording of this Agreement, any
other Operative Agreement and any other documents which may be delivered in
connection with this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider and (B) on
demand, all reasonable costs and expenses of the Liquidity Provider (including
reasonable counsel fees and expenses) in connection with (i) the enforcement of
this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Document or otherwise affecting the application of funds in the Cash Collateral
Accounts. In addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
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Section 7.8 Binding Effect; Participations. (a) This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.8) nor the
Borrower shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirement of Section 7.8(b). The Liquidity Provider may grant participations
herein or in any of its rights or security hereunder and under the other
Operative Agreements to such Persons as the Liquidity Provider may in its sole
discretion select, subject to the requirement of Section 7.8(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants. Accordingly,
references in this Agreement and the other Operative Agreements to
determinations, reserve and capital adequacy requirements, increased costs,
reduced receipts and the like as they pertain to the Liquidity Provider shall be
deemed also to include those of each of its participants (subject, in each case,
to the maximum amount that would have been incurred by or attributable to the
Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation to any bank or other entity (each, a "Participant"),
then, concurrently with the effectiveness of such participation, the Participant
shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes will be required to be withheld by the Borrower or the
Liquidity Provider with respect to any payments to be made to such Participant
in respect of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the laws of the
United States or a state thereof or (y) if it is not so incorporated, two copies
of a properly completed United States Internal Revenue Service Form 4224 or Form
1001, as appropriate, or other applicable form, certificate or document
prescribed by the Internal Revenue Service certifying, in each case, such
Participant's entitlement to a complete exemption from United States federal
withholding tax in respect to any and all payments to be made hereunder, and
(iii) agree (for the benefit of the Liquidity Provider and the Borrower) to
provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after
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the occurrence of any event requiring a change in the most recent form
previously delivered by it and prior to the immediately following due date of
any payment by the Borrower hereunder, certifying in the case of a Form 1001 or
Form 4224 that such Participant is entitled to a complete exemption from United
States federal withholding tax on payments under this Agreement. Unless the
Borrower has received forms or other documents reasonably satisfactory to it
indicating that payments hereunder are not subject to United States federal
withholding tax, the Borrower will withhold taxes as required by law from such
payments at the applicable statutory rate without any obligation to gross-up or
indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
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(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) if such party does not maintain an office for the transaction
of its business in New York, agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form and mail),
postage prepaid, to each party hereto at its address set forth in Section
7.2, or at such other address of which the Liquidity Provider shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any state and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgement entered by any such court under
the United States Foreign Sovereign Immunities Act of 1976 or any similar
successor legislation.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
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Section 7.14 Headings; Section References. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. Unless the context
otherwise requires or otherwise indicated herein, all Section references in this
Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Subordination
Agent, as Borrower
By: /s/ Donald E. Smith
-------------------------------------
Name: Donald E. Smith
Title: Vice President
ROYAL BANK OF CANADA,
as Liquidity Provider
By: /s/ Michael J. Madnick
-------------------------------------
Name: Michael J. Madnick
Title: Manager
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Annex I to Irrevocable
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to Royal Bank of Canada, (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement" the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class A Certificates which was payable on
_______________ in accordance with the terms and provisions of the Class A
Trust Agreement and the Class A Certificates pursuant to clause fourth of
Section 3.2 of the Intercreditor Agreement or clause sixth of Section 3.3
of the Intercreditor Agreement, which Advance is requested to be made on
_______________.
(3) The amount of the Interest Advance requested hereby (i) is
$_________, to be applied in respect of the payment of interest which was
due and payable on the Class A Certificates on such Distribution Date,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A Certificates, the Class B Certificates or
the Class C Certificates, or interest on the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), (iv) does not exceed the Available Commitment on the date
hereof, and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until so
applied shall be commingled with other funds held by the Borrower.
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance and that such Base Rate Advance be converted into a
LIBOR Rate Advance on the third Business Day following your receipt of
this notice.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the Available Commitment by an amount
equal to the amount of the Interest Advance requested to be made hereby as set
forth in clause (i) of paragraph (3) of this Certificate and such reduction
shall automatically result in corresponding reductions in the amounts available
to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the __ day of __________, ________.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as Borrower
By:______________________________________
Name:
Title:
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SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Royal Bank of Canada,
(the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(l) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on ________________.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class A Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class A Certificates, or principal of, or
interest or premium on, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class A Certificates, the Class A Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as
<PAGE>
requested by this Notice of Borrowing shall automatically and irrevocably
terminate the obligation of the Liquidity Provider to make further Advances
under the Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of __________, ________.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as Borrower
By:______________________________________
Name:
Title:
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<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Royal Bank of Canada,
(the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement by reason of the
non-extension of the Commitment as provided in said Section 3.6(d), which
Advance is requested to be made on __________.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class A Cash Collateral
Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class A Certificates, or principal of, or
interest or premium on, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class A Certificates, the Class A Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by this
Notice of Borrowing shall automatically and
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<PAGE>
irrevocably terminate the obligation of the Liquidity Provider to make further
Advances under the Liquidity Agreement; and (B) following the making by the
Liquidity Provider of the Non-Extension Advance requested by this Notice of
Borrowing, the Borrower shall not be entitled to request any further Advances
under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of __________, __________.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as Borrower
By:______________________________________
Name:
Title:
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<PAGE>
SCHEDULE I TO Non-Extension ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex IV to Irrevocable Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights as Borrower thereunder. The undersigned
shall pay any costs and expenses of such transfer, including, but not limited
to, transfer taxes or governmental charges.
We ask that his transfer be effective as of _________, ____.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as Borrower
By:______________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.(d)(2)
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
Dated as of September 25, 1997
by and between
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent,
as agent and trustee for the
Northwest Airlines 1997-1B Pass Through Trust,
as Borrower
and
ROYAL BANK OF CANADA
as Liquidity Provider
Relating to
Northwest Airlines 1997-1B Pass Through Trust
7.248% Northwest Airlines Pass Through Certificates,
Series 1997-1
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms ...................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances ............................................. 6
Section 2.2 Making the Advances ...................................... 6
Section 2.3 Fees ..................................................... 8
Section 2.4 Reduction or Termination of the Commitment ............... 9
Section 2.5 Repayments of Interest Advances or the Final Advance ..... 10
Section 2.6 Repayments of Downgrade Advances and
Non-Extension Advances ................................... 10
Section 2.7 Payments to the Liquidity Provider Under
the Intercreditor Agreement .............................. 11
Section 2.8 Book Entries ............................................. 12
Section 2.9 Payments from Available Funds Only ....................... 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs .......................................... 12
Section 3.2 Capital Adequacy ......................................... 13
Section 3.3 Payments Free of Deductions .............................. 14
Section 3.4 Payments ................................................. 15
Section 3.5 Computations ............................................. 15
Section 3.6 Payment on Non-Business Days ............................. 15
Section 3.7 Interest ................................................. 15
Section 3.8 Replacement of Borrower .................................. 17
Section 3.9 Funding Loss Indemnification ............................. 17
Section 3.10 Illegality ............................................... 17
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1 ..... 18
Section 4.2 Conditions Precedent to Borrowing ........................ 20
<PAGE>
Page
----
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower .................... 20
Section 5.2 Negative Covenants of the Borrower ....................... 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance ............................................ 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. ......................................... 21
Section 7.2 Notices, Etc. ............................................ 22
Section 7.3 No Waiver; Remedies ...................................... 22
Section 7.4 Further Assurances ....................................... 22
Section 7.5 Indemnification; Survival of Certain Provisions .......... 23
Section 7.6 Liability of the Liquidity Provider ...................... 23
Section 7.7 Costs, Expenses and Taxes ................................ 24
Section 7.8 Binding Effect; Participations ........................... 25
Section 7.9 Severability ............................................. 26
Section 7.10 GOVERNING LAW ............................................ 26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity ....................................... 26
Section 7.12 Execution in Counterparts ................................ 27
Section 7.13 Entirety ................................................. 27
Section 7.14 Headings; Section References ............................. 28
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES ......... 28
ANNEX I -- Interest Advance Notice of Borrowing
ANNEX II -- Downgrade Advance Notice of Borrowing
ANNEX III -- Non-Extension Advance Notice of Borrowing
ANNEX IV -- Notice of Replacement Borrower
<PAGE>
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES dated
as of September 25, 1997 by and between STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as Subordination Agent under the Intercreditor
Agreement (each as defined below), as agent and trustee for the Class B Trust
(as defined below) (the "Borrower"), and ROYAL BANK OF CANADA (the "Liquidity
Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.1), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class B Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Additional Cost" has the meaning assigned to such term in Section
3.1.
"Advance" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade Advance, a Non-Extension Advance, an Applied
Non-Extension Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" means the rate of interest specified in
Section 3.7 with respect to any Advance or other amount referred to in
this Agreement.
"Applicable Margin" means (x) with respect to any Unpaid Advance
(including an Applied Downgrade Advance or
<PAGE>
Applied Non-Extension Advance) that is a LIBOR Advance, 2% and (y) with
respect to any Unpaid Advance (including an Applied Downgrade Advance or
Applied Non-Extension Advance) that is a Base Rate Advance, 0.50%
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.6(a).
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.6(a).
"Available Commitment" means, at any time of determination, an
amount equal to (i) the Commitment at such time less (ii) subject to the
proviso contained in the third sentence of Section 2.2(a), the aggregate
amount of each Advance outstanding at such time; provided that following a
Downgrade Advance, a Non-Extension Advance or a Final Advance, the
Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of (i) the rate of interest per annum announced by the Liquidity
Provider in New York City from time to time in its sole discretion as its
United States Dollar prime commercial lending rate for such day, or (ii)
the rate quoted by the Liquidity Provider, at approximately 11:00 A.M.,
New York City time, to dealers in the New York Federal funds market for
overnight offering of dollars by the Liquidity Provider, for deposit plus
.50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing or pursuant to Section 6.1.
"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
Minneapolis, Minnesota, New York, New York or, so long as any Class B
Certificate is outstanding, the city and state in which the Class B
Trustee maintains its Corporate Trust Office or receives or disburses
funds, and, if the applicable Business Day relates to any Advance or other
amount bearing interest based on the LIBOR Rate, on which dealings are
carried on in the London interbank market.
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<PAGE>
"Commitment" means, initially, $5,048,196 as the same may be reduced
from time to time in accordance with Section 2.4(a).
"Downgrade Advance" means an Advance made pursuant to Section 2.2(b)
(i)
"Effective Date" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.1(e) shall be conclusive evidence that the Effective Date has
occurred.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means September 25, 2002, unless such date shall be
extended in accordance with Section 2.5(c) hereof, in which event the
"Expiry Date" shall be such extended date.
"Final Advance" means an Advance made pursuant to Section 2.2(c) and
6.1.
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, by and among the Trustees, the Liquidity Provider, the
liquidity provider under each Liquidity Facility (other than this
Agreement) and the Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
"Interest Advance" means an Advance made pursuant to Section 2.2(a).
"Interest Period" means, with respect to any LIBOR Advance, each of the
following periods:
(i) the period beginning on the date such LIBOR Advance is
made (or is converted from a Base Rate Advance) and ending on the
next Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next Regular
Distribution Date.
"Lending Office" means the lending office of the Liquidity Provider,
presently located at One Financial Square, New York, New York 10005-3531,
or such other lending office as the Liquidity Provider from time to time
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<PAGE>
shall notify the Borrower as being its lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, the rate
per annum at which deposits in U.S. dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London
interbank market at approximately 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in the principal amount
of the Advance to which such Interest Period is to apply and for a period
of time comparable to such Interest Period, as quoted by the Liquidity
Provider to the Subordination Agent.
"Liquidity Event of Default" means the occurrence of the following:
all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity. A Liquidity Event of Default shall not occur upon an automatic
acceleration of the Equipment Notes as a result of a Northwest Bankruptcy
Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) each
affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Non-Extension Advance" means an Advance made pursuant to Section
2.2(b)(ii).
"Notice of Borrowing" has the meaning specified in Section 2.2(d).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
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<PAGE>
"Prospectus" means the prospectus included in the Registration
Statement on Form S-3 (File No. 333-13307) filed by Northwest and NWA
Corp. under the Securities Act, as it became effective under the
Securities Act and the Registration Statement on Form S-3 (File No.
333-28649) filed by Northwest and NWA Corp. under the Securities Act, as
it became effective under the Securities Act, which latter Registration
Statement constitutes Post-Effective Amendment No. 3 to the former
Registration Statement, each such Registration Statement relating to
certain pass through certificates, as supplemented by the prospectus
supplement dated September 16, 1997 reflecting the terms of the
Certificates, as such Prospectus may be amended or supplemented.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates, that would be payable on the
Class B Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class B Certificates on such day and without regard to
expected future payments of principal on the Class B Certificates.
"Securities Act" means the Securities Act of 1933, as amended.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class B Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; and (v) the date
on which no Advance is or may (including by reason of
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<PAGE>
reinstatement as herein provided) become available for a Borrowing
hereunder.
"Unpaid Advance" has the meaning assigned to such term in Section
2.5.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"Certificates", "Class A Certificates", "Class B Certificates", "Class B
Certificateholders", "Class B Cash Collateral Account", "Class B Trust",
"Class B Trust Agreement", "Class B Trustee", "Class C Certificates",
"Controlling Party", "Corporate Trust Office", "Distribution Date",
"Equipment Notes", "Indenture", "Investment Earnings", "Liquidity
Facility", "Moody's", "NWA Corp.", "Northwest", "Northwest Bankruptcy
Event", "Operative Agreements", "Participation Agreements", "Performing
Equipment Note", "Person", "Pool Balance", "Rating Agency", "Regular
Distribution Date", "Replacement Liquidity Facility", "Responsible
Officer", "Scheduled Payment", "Special Payment", "Standard & Poor's",
"Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold
Rating", "Triggering Event", "Trust Agreements", "Trustee",
"Underwriters", "Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
Section 2.2 Making the Advances. (a) Interest Advances shall be made
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto in each instance, signed by a Responsible Officer of the
Borrower, in an amount not exceeding the Available Commitment at such time and
shall be used solely for the payment when due of interest on the Class B
Certificates at the Stated Interest Rate therefor in accordance with Section
3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder
shall automatically reduce the Available Commitment and the
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<PAGE>
amount available to be borrowed hereunder by subsequent Advances by the amount
of such Interest Advance (subject to reinstatement as provided in the next
sentence). Upon repayment to the Liquidity Provider in full of the amount of any
Interest Advance made pursuant to this Section 2.2(a), together with accrued
interest thereon (as provided herein), the Available Commitment shall be
reinstated by the amount of such repaid Interest Advance; provided, however,
that the Available Commitment shall not be so reinstated at any time if (i) (x)
a Triggering Event shall have occurred and be continuing and (y) there is a
Performing Note Deficiency or (ii) a Liquidity Event of Default shall have
occurred and be continuing.
(b) (i) A Downgrade Advance shall be made in a single Borrowing upon
a downgrading of the rating of the Liquidity Provider resulting in the Liquidity
Provider's ratings not meeting the Threshold Rating (as provided for in Section
3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility
shall have been delivered to the Borrower in accordance with said Section
3.6(c), by delivery to the Liquidity provider of a written and completed Notice
of Borrowing in substantially the form of Annex II attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class B Cash Collateral
Account in accordance with said Section 3.6(c).
(ii) A Non-Extension Advance shall be made in a single Borrowing
upon the non-extension of the Commitment hereunder (as provided for in Section
3.6(d) of the Intercreditor Agreement) unless a Replacement Liquidity Facility
shall have been delivered to the Borrower in accordance with said Section
3.6(d), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex III attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class B Cash Collateral
Account in accordance with said Section 3.6(d).
(c) A Final Advance shall be made by the Liquidity Provider without
the necessity for a Notice of Borrowing at the option of the Liquidity Provider
on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount
equal to the Available Commitment at such time, and shall be used to fund the
Class B Cash Collateral Account.
(d) Each Borrowing (other than the making of the Final Advance)
shall be made on notice in writing (a "Notice of Borrowing") in substantially
the form required by Section 2.2(a) or 2.2(b), as the case may be, given not
later than 12:00 Noon (New York City time) on the Business Day prior to the day
of the proposed Borrowing by the Borrower to the Liquidity Provider. Upon
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the
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<PAGE>
date of such Borrowing or on such later Business Day as may be specified by the
Borrower in such Notice of Borrowing, make available to the Borrower, in U.S.
dollars and in immediately available funds, the amount of such Borrowing to be
paid to the Borrower in accordance with its payment instructions. If a Notice of
Borrowing is delivered by the Borrower in respect of any Borrowing after 12:00
Noon (New York City time) on a Business Day, the Liquidity Provider shall,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of Borrowing or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. Payments of proceeds of a Borrowing shall be made by wire transfer
of immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other person (including the holder of any
Class B Certificate or the Class B Trustee) who makes to the Class B Trustee or
the Borrower a demand for payment with respect to any Class B Certificate.
Following the making of any Advance pursuant to Section 2.2(b) or (c) hereof to
fund the Class B Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class B Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class B Cash Collateral
Account; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Sections
3.2 or 3.3 of the Intercreditor Agreement. By paying to the Borrower proceeds of
Advances requested by the Borrower in accordance with the provisions of this
Agreement, the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.3 Fees. (a) The Borrower agrees to pay to the Liquidity
Provider on the Effective Date a non-refundable fee equal to $25,000 in
aggregate with respect to the Irrevocable Revolving Credit Agreement, Class A
Certificates, dated as of September 25, 1997, by and between State Street Trust
Company of Connecticut, National Association and Royal Bank, this Agreement and
the Irrevocable Revolving Credit, Class C Certificates, dated
-8-
<PAGE>
as of September 25, 1997, by and between State Street Trust Company of
Connecticut, National Association and Royal Bank.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.30% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance or Non-Extension Advance is made and the date on which the
Commitment terminates. Such fee shall be payable in arrears on each Regular
Distribution Date. In addition, the Borrower shall pay, or shall cause to be
paid, to the Liquidity Provider, a fee equal to 0.30% per annum on the unpaid
principal amount of each Downgrade Advance or Non-Extension Advance (other than
an Applied Downgrade Advance or an Applied Non-Extension Advance) from and
including the date of such Advance to but excluding the date such principal
amount shall be paid in full. Such fee shall be payable in arrears on each
Regular Distribution Date and, in the event of the payment of principal of such
Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.3(b) shall require the Borrower to pay any amount under this Section
2.3(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.4 Reduction or Termination of the Commitment; Extension of
the Expiry Date. (a) Automatic Reductions. Promptly following each date on which
the Required Amount is reduced as a result of a reduction in the Pool Balance of
the Class B Certificates or otherwise, the Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Commitment to the Liquidity Provider within two Business Days thereof. The
failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Commitment.
(b) Termination. Upon the making of any Downgrade Advance,
Non-Extension Advance or Final Advance hereunder or the occurrence of the
Termination Date, the obligation of the Liquidity Provider to make further
Advances hereunder shall automatically and irrevocably terminate, and the
Borrower shall not be entitled to request any further Borrowing hereunder.
(c) Extension of the Expiry Date. Unless the Expiry Date has
previously been extended to a date that is 15 days after the Final Legal
Distribution Date for the Class B Certificates, then, no earlier than the 180th
day and no later than the 90th day prior to the Expiry Date then in effect, the
Subordination Agent shall request that the Liquidity Provider extend the Expiry
Date to a date no later than such 15th day (unless the obligations of the
Liquidity Provider are earlier terminated in accordance herewith). The Liquidity
Provider shall advise the
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Subordination Agent, no earlier than 90 days and no later than 60 days prior to
such Stated Expiration Date, whether, in its sole discretion, it agrees to so
extend the Expiry Date and, if so, the proposed new Expiry Date. If, on or
before such 25th day, the Expiry Date shall not have been so extended and, in
such event, the Commitment shall not have been replaced in accordance with
Section 3.6(e) of the Intercreditor Agreement, or if the Liquidity Provider
fails irrevocably and unconditionally to advise the Subordination Agent on or
before the 25th day prior to the Expiry Date then in effect that such Expiry
Date shall be so extended, the Subordination Agent shall, on such 25th day (or
as soon as possible thereafter), request a Non-Extension Advance in accordance
with the terms hereof and of Section 3.6(d) of the Intercreditor Agreement.
Section 2.5 Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Interest Advance or the Final Advance (any such Interest
Advance or the Final Advance, until repaid, is referred to herein as an "Unpaid
Advance"), plus (b) interest on the amount of each such Unpaid Advance as
provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise
waived by the Liquidity Provider, the Borrower shall be obligated, without
notice of an Advance or demand for repayment from the Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to repay the Liquidity
Provider for all Interest Advances and Final Advances on the same day as made
and all Applied Downgrade Advances and Applied Non-Extension Advances on the
same day they become Applied Downgrade Advances or Applied Non-Extension
Advances, as applicable, in accordance with Section 2.6 hereof. The Borrower and
the Liquidity Provider agree that the repayment in full of each Interest Advance
and the Final Advance on the date such Interest Advance or the Final Advance is
made is intended to be a contemporaneous exchange for new value given to the
Borrower by the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances and Non-Extension
Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance shall
be deposited in the Class B Cash Collateral Account, and invested and withdrawn
from the Class B Cash Collateral Account, as set forth in Sections 3.6(c) and
(f) of the Intercreditor Agreement. Amounts advanced hereunder in respect of a
Non-Extension Advance shall be deposited in the Class B Cash Collateral Account,
and invested and withdrawn from the Class B Cash Collateral Account, as set
forth in Sections 3.6(d) and (f) of the Intercreditor Agreement. The Borrower
agrees to pay to the Liquidity Provider, on each Regular Distribution Date,
commencing on the first Regular Distribution Date after the making of a
Downgrade Advance or a Non-Extension Advance, interest on the principal amount
of any such Advance as provided in Section 3.7; provided, however, that (i) any
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distribution to the Liquidity Provider of Investment Earnings pursuant to
Section 3.6(f) of the Intercreditor Agreement shall constitute a payment of
interest on such Advance in the amount of such Investment Earnings (not to
exceed the amount specified in Section 3.7) and (ii) amounts in respect of a
Downgrade Advance or a Non-Extension Advance withdrawn from the Class B Cash
Collateral Account for the purpose of paying interest on the Class B
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement
(the amount of any such withdrawal being (i) in the case of a withdrawn
Downgrade Advance, an "Applied Downgrade Advance" and (ii) in the case of a
withdrawn Non-Extension Advance, an "Applied Non-Extension Advance") shall be
treated as an Interest Advance under this Agreement for purposes of determining
the Applicable Liquidity Rate for interest payable thereon. Immediately upon the
withdrawal of any amounts from the Class B Cash Collateral Account on account of
a reduction in the Required Amount, the Borrower shall repay the Downgrade
Advance or Non-Extension Advance (as the case may be) in a principal amount
equal to the amount of such reduction, plus interest on the principal amount
prepaid as provided in Section 3.7.
(b) At any time when an Applied Downgrade Advance (or any portion
thereof) or an Applied Non-Extension Advance (or any portion thereof) is
outstanding, upon the deposit in the Class B Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b), clause "third" of Section
3.2 or clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such
amount being a "Replenishment Amount") for the purpose of replenishing the
balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances or Applied
Non-Extension Advances (as the case may be) shall be automatically reduced by
the amount of such Replenishment Amount and (ii) the principal amount of the
outstanding Downgrade Advance or Non-Extension Advance (as the case may be)
shall be automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class B Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class B Certificates on the date of such
replacement, or otherwise.
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor
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Agreement, to the extent payable to the Liquidity Provider pursuant to the terms
of the Intercreditor Agreement (including, without limitation, Section 3.6(f) of
the Intercreditor Agreement), shall be paid to the Liquidity Provider in
accordance with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider in the order of priority required by
the applicable provisions of Articles II and III of the Intercreditor Agreement.
Section 2.8 Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.9 Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class B Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider
any other condition regarding
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this Agreement or any Advance, or (iii) subject the Liquidity Provider to any
Taxes with respect to amounts payable or paid or change the basis of taxation of
any amounts payable to the Liquidity Provider (other than Taxes imposed on the
overall net or gross income of the Liquidity Provider) and (b) the result of any
event referred to in the preceding clauses (i), (ii) or (iii) shall be to
increase the cost to the Liquidity Provider of issuing or maintaining its
commitment or funding or maintaining Advances (which increase in cost shall be
determined by the Liquidity Provider's reasonable allocations of the aggregate
of such cost increases resulting from such event), then, upon demand by the
Liquidity Provider (such demand to be made not later than 180 days after a
Responsible Officer of the Liquidity Provider obtains actual knowledge of any
event referred to in clause (i), (ii) or (iii) above), the Borrower shall pay,
or cause to be paid, to the Liquidity Provider, from time to time as specified
by the Liquidity Provider, additional amounts which shall be sufficient to
compensate the Liquidity Provider for such increased cost; provided that if such
demand for payment is made after such 180-day period, the Borrower shall be
obligated to pay such additional amounts only with respect to such increased
cost actually incurred or effected on or after the 180th day prior to the date
of such demand. A certificate as to such increased cost incurred by the
Liquidity Provider as a result of any event mentioned in clauses (i), (ii) or
(iii) above, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive evidence of the amount owed under
this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.1 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital adequacy) by an amount deemed by the Liquidity Provider to be
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material, then, upon demand by the Liquidity Provider, the Borrower shall pay to
the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such reduction in respect of issuing or maintaining its
commitment hereunder or its funding or maintaining Advances. A certificate as to
any such additional amount describing the event which has the effect of reducing
the rate of return on the Liquidity Provider's capital, prepared in reasonable
detail and submitted by the Liquidity Provider to the Borrower, shall be
conclusive evidence of the amount owed under this Section, absent manifest
error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.3 Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter after the
occurrence of any event requiring a change in the most recent form previously
delivered by it (and prior to the immediately following due date of any payment
by the Borrower hereunder), to the extent that the Liquidity Provider is legally
entitled to do so, two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is completely
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exempt from United States withholding tax on payments pursuant to this
Agreement.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.3 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.4 Payments. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, New
York, New York, ABA #021000021, for the account of Royal Bank of Canada, No.
920-1-033363 for further credit to account #218-599-9 (referencing Northwest
Liquidity Facility).
Section 3.5 Computations. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate and of fees
payable to the Liquidity Provider shall be made on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 Payment on Non-Business Days. Whenever any payment to be
made hereunder (other than a payment on LIBOR Advances) becomes due and payable
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payments on a LIBOR Advance
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 Interest. (a) The Borrower shall pay, or shall cause to
be paid, interest on (i) the unpaid principal amount of each Advance from and
including the date of such Advance (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class B Cash Collateral Account
to pay interest on the Class B Certificates) to but excluding the date such
principal amount shall be paid in full and (ii) any other amount due hereunder
(whether fees,
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commissions, expenses or other amounts or, to the extent permitted by law,
installments of interest on Advances or any such other amount) which is not paid
when due (whether at stated maturity, by acceleration or otherwise) from and
including the due date thereof, to but excluding the date such amount is paid in
full, in each such case, at a fluctuating interest rate per annum for each day
equal to the Applicable Liquidity Rate for such Advance or such other amount as
in effect for such day, but in no event at a rate per annum greater than the
maximum rate permitted by applicable law; provided, however, that, if at any
time the otherwise applicable interest rate as set forth in this Section 3.7
shall exceed the maximum rate permitted by applicable law, then any subsequent
reduction in such interest rate will not reduce the rate of interest payable
pursuant to this Section 3.7 below the maximum rate permitted by applicable law
until the total amount of interest accrued equals the amount of interest that
would have accrued if such otherwise applicable interest rate as set forth in
this Section 3.7 had at all times been in effect. Nothing contained in this
Section 3.7 shall require the Borrower to pay any amount under this Section 3.7
other than to the extent the Borrower shall have funds available therefor.
(b) Each Advance (other than a Downgrade Advance that is not an
Applied Downgrade Advance and a Non-Extension Advance that is not an Applied
Non-Extension Advance, and for which, in each case, subsection (e) below shall
apply) will be either a Base Rate Advance or a LIBOR Advance as provided in this
Section. Each such Advance will be a Base Rate Advance for the period from the
date of its borrowing to (but excluding) the third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Advance.
Thereafter, such Advance shall be a LIBOR Advance; provided that the Final
Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may
not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) Each Downgrade Advance (other than an Applied Downgrade Advance)
and each Non-Extension Advance (other than an
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Applied Non-Extension Advance) shall bear interest in an amount equal to the
higher of (i) a per annum rate equal to LIBOR plus 0.30% and (ii) the Investment
Earnings on amounts on deposit in the Class B Cash Collateral Account, payable
in arrears on each Regular Distribution Date and, in the event of the payment of
principal of such Advance on a day other than a Regular Distribution Date, on
the date of such payment (to the extent of interest accrued on the amount of
principal repaid).
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(g) Each change in the Base Rate shall become effective immediately.
Section 3.8 Replacement of Borrower. From time to time, upon the
effective date and time specified in a written and completed Notice of
Replacement Borrower in substantially the form of Annex IV attached hereto (a
"Notice of Replacement Borrower") delivered to the Liquidity Provider by the
then Borrower, the successor Borrower designated therein shall be substituted as
the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(a) Any payment of a LIBOR Advance on a date other than the last day
of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow or convert, as the case
may be, a LIBOR Advance on the date for borrowing or conversion, as the
case may be, specified in the relevant notice under Section 2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately
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upon demand of the Liquidity Provider, if such change or compliance with such
request, in the judgment of the Liquidity Provider, requires immediate
repayment; or (b) at the expiration of the last Interest Period to expire before
the effective date of any such change or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1.
Section 2.1 of this Agreement shall become effective on and as of the first date
(the "Effective Date") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents delivered pursuant to paragraphs (v) and (vii) of this Section
4.1(a)), and each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of each of
the Operative Agreements (other than this Agreement and the
Intercreditor Agreement) which, when taken together, bear the
signatures of all of the respective parties thereto and which are in
full force and effect in accordance with their respective terms;
(iv) A copy of the Prospectus and specimen copies of the Class
B Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates and the Class C Certificates
will receive long-term credit ratings from Moody's of not lower than
A3, Baa2 and Baa3, respectively, and from Standard & Poor's of not
lower than A, BBB and BBB-, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the Class
B Trust Agreement, the Intercreditor Agreement, the Participation
Agreements and the other Operative Agreements (together with, in the
case of each such opinion, other than the opinion of counsel for the
Underwriters and each opinion which is addressed to the Liquidity
Provider, a letter from
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the counsel rendering such opinion to the effect that the Liquidity
Provider is entitled to rely on such opinion as if it were addressed
to the Liquidity Provider);
(vii) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements;
(viii) Copies of the appraisals attached as exhibits to the
Prospectus;
(ix) A letter from NWA Corp. regarding the delivery to the
Liquidity Provider of periodic financial reports;
(x) A guaranty by State Street Bank and Trust Company, a
Massachusetts trust company, of the obligations of State Street
under the Operative Documents to which it is a party; and
(xi) Such other documents, instruments, opinions and approvals
(and, if requested by the Liquidity Provider, certified duplicates
or executed copies thereof) as the Liquidity Provider shall have
reasonably requested.
(b) The following statements shall be true and shall be deemed to
have been represented by each party (other than clause (ii) below, which
shall be deemed to have been represented only by Northwest) to the
Participation Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Participation Agreement are true and correct on
and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or would result
from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
(c) The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or
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for the account of the Liquidity Provider on or prior to the Effective
Date.
(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the purchase of the
Certificates by the Underwriters under the Underwriting Agreement shall
have been satisfied (unless any of such conditions precedent under the
Underwriting Agreement shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section
4.1(e)).
Section 4.2 Conditions Precedent to Borrowing. The obligation of the
Liquidity Provider to make an Advance on the occasion of each Borrowing shall be
subject to the conditions precedent that the Effective Date shall have occurred
and, except in the case of the Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider
shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data, including copies
of all documents with respect to the transactions contemplated by the
Operative Agreements as from time to time may be reasonably requested by
the
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Liquidity Provider; and permit the Liquidity Provider, upon reasonable
notice, to inspect the Borrower's books and records with respect to such
transactions to make extracts and copies thereof and to meet with
officers, agents, professional advisers and employees of the Borrower to
discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a)(i) a Triggering Event shall have
occurred and be continuing and (ii) there is a Performing Note Deficiency or (b)
a Liquidity Event of Default shall have occurred and be continuing, the
Liquidity Provider may, in its sole discretion, make a Final Advance whereupon
(i) the Liquidity Provider shall have no further obligation to make Advances
hereunder, (ii) all other outstanding Advances shall be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all
Advances, any accrued interest thereon and all other amounts outstanding
hereunder shall become immediately due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment, the Borrower, and
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then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: State Street Bank and Trust Company
of Connecticut, National Association
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5600
Telecopy: (617) 664-5371
Liquidity
Provider: Royal Bank of Canada
One Financial Square
New York, New York 10005-3531
Attention: Loans Administration
Telephone: (212) 428-6335
Telecopy: (212) 428-2301
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Further Assurances. The Borrower agrees to do, upon
request, such further acts and things and to execute and deliver to the
Liquidity Provider such additional assignments, agreements, powers and
instruments as the Liquidity Provider may reasonably require or deem advisable
to carry into
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effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7 of the Participation Agreements. In addition, the
Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on demand, all Expenses
of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.1, 3.2 or 7.7 hereof (regardless of whether indemnified
against pursuant to said Sections)), whether arising before, on or after the
date hereof, that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the Intercreditor Agreement or
the Participation Agreements; provided, however, that the Borrower shall not be
required to indemnify, protect, defend and hold harmless any Liquidity
Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is
ordinary and usual operating overhead expense or (iii) to the extent such
Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe in any material respect any agreement,
covenant or condition on its part to be performed or observed in any Operative
Agreement. The indemnities contained in such Section 7 of the Participation
Agreements, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the expiration or termination of this Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; provided, however,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or gross negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the terms of this Agreement, including, but not
limited to, the
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Liquidity Provider's failure to make lawful payment hereunder after the delivery
to it by the Borrower of a Notice of Borrowing strictly complying with the terms
and conditions hereof; provided, however that the Borrower shall not have a
claim against the Liquidity Provider, and the Liquidity Provider shall not be
liable to the Borrower, to the extent of an order or judgment for punitive or
consequential damages regarding damages suffered by the Borrower which were the
result of subparagraphs (A) and (B) above in the first proviso of this Section
7.6.
(b) The Liquidity Provider shall not be liable or responsible in any
respect for (i) any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with this Agreement or any Notice of Borrowing delivered hereunder,
or (ii) any action, inaction or omission which may be taken by it in good faith,
absent willful misconduct or negligence (in which event the extent of the
Liquidity Provider's potential liability to the Borrower shall be limited as set
forth in the immediately preceding paragraph), in connection with this Agreement
or any Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses of the Liquidity Provider in connection with the preparation,
negotiation, execution, delivery, filing and recording of this Agreement, any
other Operative Agreement and any other documents which may be delivered in
connection with this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider and (B) on
demand, all reasonable costs and expenses of the Liquidity Provider (including
reasonable counsel fees and expenses) in connection with (i) the enforcement of
this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Document or otherwise affecting the application of funds in the Cash Collateral
Accounts. In addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
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<PAGE>
Section 7.8 Binding Effect; Participations. (a) This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.8) nor the
Borrower shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the other party, subject to the
requirement of Section 7.8(b). The Liquidity Provider may grant participations
herein or in any of its rights or security hereunder and under the other
Operative Agreements to such Persons as the Liquidity Provider may in its sole
discretion select, subject to the requirement of Section 7.8(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants. Accordingly,
references in this Agreement and the other Operative Agreements to
determinations, reserve and capital adequacy requirements, increased costs,
reduced receipts and the like as they pertain to the Liquidity Provider shall be
deemed also to include those of each of its participants (subject, in each case,
to the maximum amount that would have been incurred by or attributable to the
Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation to any bank or other entity (each, a "Participant"),
then, concurrently with the effectiveness of such participation, the Participant
shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes will be required to be withheld by the Borrower or the
Liquidity Provider with respect to any payments to be made to such Participant
in respect of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the laws of the
United States or a state thereof or (y) if it is not so incorporated, two copies
of a properly completed United States Internal Revenue Service Form 4224 or Form
1001, as appropriate, or other applicable form, certificate or document
prescribed by the Internal Revenue Service certifying, in each case, such
Participant's entitlement to a complete exemption from United States federal
withholding tax in respect to any and all payments to be made hereunder, and
(iii) agree (for the benefit of the Liquidity Provider and the Borrower) to
provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after
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the occurrence of any event requiring a change in the most recent form
previously delivered by it and prior to the immediately following due date of
any payment by the Borrower hereunder, certifying in the case of a Form 1001 or
Form 4224 that such Participant is entitled to a complete exemption from United
States federal withholding tax on payments under this Agreement. Unless the
Borrower has received forms or other documents reasonably satisfactory to it
indicating that payments hereunder are not subject to United States federal
withholding tax, the Borrower will withhold taxes as required by law from such
payments at the applicable statutory rate without any obligation to gross-up or
indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
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(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) if such party does not maintain an office for the transaction
of its business in New York, agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form and mail),
postage prepaid, to each party hereto at its address set forth in Section
7.2, or at such other address of which the Liquidity Provider shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any state and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgement entered by any such court under
the United States Foreign Sovereign Immunities Act of 1976 or any similar
successor legislation.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
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<PAGE>
Section 7.14 Headings; Section References. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. Unless the context
otherwise requires or otherwise indicated herein, all Section references in this
Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By: /s/ Donald E. Smith
-------------------------
Name: Donald E. Smith
Title: Vice President
ROYAL BANK OF CANADA,
as Liquidity Provider
By: /s/ Michael J. Madnick
-------------------------
Name: Michael J. Madnick
Title: Manager
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<PAGE>
Annex I to Irrevocable
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to Royal Bank of Canada, (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement", the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class B Certificates which was payable on
_______________ in accordance with the terms and provisions of the Class B
Trust Agreement and the Class B Certificates pursuant to clause fourth of
Section 3.2 of the Intercreditor Agreement or clause sixth of Section 3.3
of the Intercreditor Agreement, which Advance is requested to be made on
_________________.
(3) The amount of the Interest Advance requested hereby (i) is
$_________, to be applied in respect of the payment of interest which was
due and payable on the Class B Certificates on such Distribution Date,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A Certificates, the Class B Certificates or
the Class C Certificates, or interest on the Class A Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), (iv) does not exceed the Available Commitment on the date
hereof, and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the
case may be, (b) no portion of such amount shall be applied by the
Borrower for any other purpose and (c) no portion of such amount until so
applied shall be commingled with other funds held by the Borrower.
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance and that such Base Rate Advance be converted into a
LIBOR Rate Advance on the third Business Day following your receipt of
this notice.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the Available Commitment by an amount
equal to the amount of the Interest Advance requested to be made hereby as set
forth in clause (i) of paragraph (3) of this Certificate and such reduction
shall automatically result in corresponding reductions in the amounts available
to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the __ day of _____________, ____.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By:
---------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Royal Bank of Canada,
(the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on _____________.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class B Certificates, or principal of, or
interest or premium on, the Class A Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class B Certificates, the Class B Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as
<PAGE>
requested by this Notice of Borrowing shall automatically and irrevocably
terminate the obligation of the Liquidity Provider to make further Advances
under the Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of ___________, ____.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By:
---------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Royal Bank of Canada,
(the "Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement by reason of the
non-extension of the Commitment as provided in said Section 3.6(d), which
Advance is requested to be made on _________.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class B Certificates, or principal of, or
interest or premium on, the Class A Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class B Certificates, the Class B Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
<PAGE>
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by this
Notice of Borrowing shall automatically and irrevocably terminate the obligation
of the Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider of the
Non-Extension Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of _______________, ____.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By:
---------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO Non-Extension ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights as Borrower thereunder. The undersigned
shall pay any costs and expenses of such transfer, including, but not limited
to, transfer taxes or governmental charges.
We ask that this transfer be effective as of ____________, ____.
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Subordination Agent, as
Borrower
By:
---------------------------------
Name:
Title:
<PAGE>
Exhibit 4(d)(3)
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
DATED AS OF SEPTEMBER 25, 1997
BY AND BETWEEN
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
AS SUBORDINATION AGENT,
AS AGENT AND TRUSTEE FOR THE
NORTHWEST AIRLINES 1997-1C PASS THROUGH TRUST,
AS BORROWER
AND
ROYAL BANK OF CANADA,
AS LIQUIDITY PROVIDER
RELATING TO
NORTHWEST AIRLINES 1997-1C PASS THROUGH TRUST
7.039% NORTHWEST AIRLINES PASS THROUGH CERTIFICATES,
SERIES 1997-1
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms........................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances.................................................... 6
Section 2.2 Making the Advances............................................. 6
Section 2.3 Fees............................................................ 8
Section 2.4 Reduction or Termination of the
Commitment; Extension of the Expiry
Date............................................................ 9
Section 2.5 Repayments of Interest Advances or the
Final Advance................................................... 10
Section 2.6 Repayments of Downgrade Advances and
Non-Extension Advances.......................................... 10
Section 2.7 Payments to the Liquidity Provider
Under the Intercreditor Agreement............................... 11
Section 2.8 Book Entries.................................................... 12
Section 2.9 Payments from Available Funds Only.............................. 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs................................................. 12
Section 3.2 Capital Adequacy................................................ 13
Section 3.3 Payments Free of Deductions..................................... 14
Section 3.4 Payments........................................................ 15
Section 3.5 Computations.................................................... 15
Section 3.6 Payment on Non-Business Days.................................... 15
Section 3.7 Interest........................................................ 15
Section 3.8 Replacement of Borrower......................................... 17
Section 3.9 Funding Loss Indemnification.................................... 17
Section 3.10 Illegality...................................................... 17
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness
of Section 2.1.................................................. 18
Section 4.2 Conditions Precedent to Borrowing............................... 20
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ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower........................... 20
Section 5.2 Negative Covenants of the Borrower.............................. 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance................................................... 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc................................................. 21
Section 7.2 Notices, Etc.................................................... 22
Section 7.3 No Waiver; Remedies............................................. 22
Section 7.4 Further Assurances.............................................. 22
Section 7.5 Indemnification; Survival of Certain
Provisions...................................................... 23
Section 7.6 Liability of the Liquidity Provider............................. 23
Section 7.7 Costs, Expenses and Taxes....................................... 24
Section 7.8 Binding Effect; Participations.................................. 24
Section 7.9 Severability.................................................... 26
Section 7.10 Governing Law................................................... 26
Section 7.11 Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity.................................. 26
Section 7.12 Execution in Counterparts....................................... 27
Section 7.13 Entirety........................................................ 27
Section 7.14 Headings; Section References.................................... 27
Section 7.15 Liquidity Provider's Obligation to Make
Advances........................................................ 28
ANNEX I -- Interest Advance Notice of Borrowing
ANNEX II -- Downgrade Advance Notice of Borrowing
ANNEX III -- Non-Extension Advance Notice of Borrowing
ANNEX IV -- Notice of Replacement Borrower
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IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES dated as
of September 25, 1997 between STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as Subordination Agent under the Intercreditor
Agreement (each as defined below), as agent and trustee for the Class C Trust
(as defined below) (the "BORROWER"), and ROYAL BANK OF CANADA (the "LIQUIDITY
PROVIDER").
W I T N E S S E T H :
WHEREAS, pursuant to the Class C Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.1), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class C Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS. (a) DEFINITIONS. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"ADDITIONAL COST" has the meaning assigned to such term in Section
3.1.
"ADVANCE" means an Interest Advance, a Final Advance, a Downgrade
Advance, an Applied Downgrade Advance, a Non-Extension Advance, an Applied
Non-Extension Advance or an Unpaid Advance, as the case may be.
"APPLICABLE LIQUIDITY RATE" means the rate of interest specified in
Section 3.7 with respect to any Advance or other amount referred to in this
Agreement.
"APPLICABLE MARGIN" means (x) with respect to any Unpaid Advance
(including an Applied Downgrade Advance or
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Applied Non-Extension Advance) that is a LIBOR Advance, 2% and (y) with
respect to any Unpaid Advance (including an Applied Downgrade Advance or
Applied Non-Extension Advance) that is a Base Rate Advance, 0.50%
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.6(a).
"APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such term
in Section 2.6(a).
"AVAILABLE COMMITMENT" means, at any time of determination, an amount
equal to (i) the Commitment at such time LESS (ii) subject to the proviso
contained in the third sentence of Section 2.2(a), the aggregate amount of
each Advance outstanding at such time; PROVIDED that following a Downgrade
Advance, a Non-Extension Advance or a Final Advance, the Available
Commitment shall be zero.
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
higher of (i) the rate of interest per annum by the Liquidity Provider in
New York City from time to time in its sole discretion as its United States
Dollar prime commercial lending rate for such day, or (ii) the rate quoted
by the Liquidity Provider, at approximately 11:00 A.M., New York City time,
to dealers in the New York Federal funds market for overnight offering of
dollars by the Liquidity Provider, for deposit plus .50 of 1 percent
(.50%).
"BASE RATE ADVANCE" means an Advance that bears interest at a rate
based upon the Base Rate.
"BORROWER" has the meaning assigned to such term in the recital of
parties to this Agreement.
"BORROWING" means the making of Advances requested by delivery of a
Notice of Borrowing or pursuant to Section 6.1.
"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
Minneapolis, Minnesota, New York, New York or, so long as any Class C
Certificate is outstanding, the city and state in which the Class C Trustee
maintains its Corporate Trust Office or receives or disburses funds, and,
if the applicable Business Day relates to any Advance or other amount
bearing interest based on the LIBOR Rate, on which dealings are carried on
in the London interbank market.
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"COMMITMENT" means, initially, $2,477,235 as the same may be reduced
from time to time in accordance with Section 2.4(a).
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section
2.2(b)(i).
"EFFECTIVE DATE" has the meaning specified in Section 4.1. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.1(e) shall be conclusive evidence that the Effective Date has
occurred.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), PROVIDED that Expenses shall not
include any Taxes.
"EXPIRY DATE" means September 25, 2002, unless such date shall be
extended in accordance with Section 2.5(c) hereof, in which event the
"Expiry Date" shall be such extended date.
"FINAL ADVANCE" means an Advance made pursuant to Section 2.2(c) and
6.1.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated the
date hereof, by and among the Trustees, the Liquidity Provider, the
liquidity provider under each Liquidity Facility (other than this
Agreement) and the Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section 2.2(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the date such LIBOR Advance is
made (or is converted from Base Rate Advance) and ending on the next
Regular Distribution Date; and
(ii) each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"LENDING OFFICE" means the lending office of the Liquidity Provider,
presently located at One Financial Square, New York, New York 10005-3531,
or such other lending
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office as the Liquidity Provider from time to time shall notify the
Borrower as being its lending office hereunder.
"LIBOR ADVANCE" means an Advance bearing interest at a rate based upon
the LIBOR Rate.
"LIBOR RATE" means, with respect to any Interest Period, the rate per
annum at which deposits in U.S. dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London
interbank market at approximately 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in the principal amount
of the Advance to which such Interest Period is to apply and for a period
of time comparable to such Interest Period, as quoted by the Liquidity
Provider to the Subordination Agent.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of the following:
all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity. A Liquidity Event of Default shall not occur upon an automatic
acceleration of the Equipment Notes as a result of a Northwest Bankruptcy
Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii) each
affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"LIQUIDITY PROVIDER" has the meaning assigned to such term in the
recital of parties to this Agreement.
"NON-EXCLUDED TAX" has the meaning specified in Section 3.3.
"NON-EXTENSION ADVANCE" means an Advance made pursuant to Section
2.2(b)(ii).
"NOTICE OF BORROWING" has the meaning specified in Section 2.2(d).
"NOTICE OF REPLACEMENT BORROWER" has the meaning specified in Section
3.8.
"PARTICIPANT" has the meaning assigned to such term in Section 7.8(b).
"PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the
then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
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"PROSPECTUS" means the prospectus included in the Registration
Statement on Form S-3 (File No. 333-13307) filed by Northwest and NWA Corp.
under the Securities Act, as it became effective under the Securities Act
and the Registration Statement on Form S-3 (File No. 333-28649) filed by
the Northwest and NWA Corp. under the Securities Act, as it became
effective under the Securities Act, which latter Registration Statement
constitutes Post-Effective Amendment No. 3 to the former Registration
Statement, each such Registration Statement relating to certain pass
through certificates, as supplemented by the prospectus supplement dated
September 16, 1997 reflecting the terms of the Certificates, as such
Prospectus may be amended or supplemented.
"RELATED INDEMNITEE" means, with respect to any Liquidity Indemnitee,
its director, officer, employee, agent, affiliate or employer.
"REPLENISHMENT AMOUNT" has the meaning assigned to such term in
Section 2.6(b).
"REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount
of interest, calculated at the rate per annum equal to the Stated Interest
Rate for the Class C Certificates, that would be payable on the Class C
Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class C Certificates on such day and without regard to
expected future payments of principal on the Class C Certificates.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TERMINATION DATE" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid in
full (or provision has been made for such payment in accordance with the
Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full pursuant
to Section 3.6(e) of the Intercreditor Agreement; (iv) the date on which
the Liquidity Provider makes the Final Advance; and (v) the date on which
no Advance is or may (including by reason of
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reinstatement as herein provided) become available for a Borrowing
hereunder.
"UNPAID ADVANCE" has the meaning assigned to such term in Section 2.5.
(b) TERMS DEFINED IN THE INTERCREDITOR AGREEMENT. For all purposes of
this Agreement, the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:
"Certificates", "Class A Certificates", Class B Certificates", "Class C
Certificates", "Class C Certificateholders", "Class C Cash Collateral
Account", "Class C Trust", "Class C Trust Agreement", "Class C Trustee",
"Controlling Party", "Corporate Trust Office", "Distribution Date",
"Equipment Notes", "Indenture", "Investment Earnings", "Liquidity
Facility", "Moody's", "NWA Corp.", "Northwest", "Northwest Bankruptcy
Event", "Operative Agreements", "Participation Agreements", "Performing
Equipment Note", "Person", "Pool Balance", "Rating Agency", "Regular
Distribution Date", "Replacement Liquidity Facility", "Responsible
Officer", "Scheduled Payment", "Special Payment", "Standard & Poor's",
"Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold Rating",
"Triggering Event", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 THE ADVANCES. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
Section 2.2 MAKING THE ADVANCES. (a) Interest Advances shall be made
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto in each instance, signed by a Responsible Officer of the
Borrower, in an amount not exceeding the Available Commitment at such time and
shall be used solely for the payment when due of interest on the Class C
Certificates at the Stated Interest Rate therefor in accordance with Section
3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder
shall automatically reduce the Available Commitment and the
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amount available to be borrowed hereunder by subsequent Advances by the amount
of such Interest Advance (subject to reinstatement as provided in the next
sentence). Upon repayment to the Liquidity Provider in full of the amount of
any Interest Advance made pursuant to this Section 2.2(a), together with accrued
interest thereon (as provided herein), the Available Commitment shall be
reinstated by the amount of such repaid Interest Advance; PROVIDED, HOWEVER,
that the Available Commitment shall not be so reinstated at any time if (i) (x)
a Triggering Event shall have occurred and be continuing and (y) there is a
Performing Note Deficiency or (ii) a Liquidity Event of Default shall have
occurred and be continuing.
(b) (i) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the rating of the Liquidity Provider resulting in the Liquidity
Provider's ratings not meeting the Threshold Rating (as provided for in Section
3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity Facility
shall have been delivered to the Borrower in accordance with said Section
3.6(c), by delivery to the Liquidity Provider of a written and completed Notice
of Borrowing in substantially the form of Annex II attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class C Cash Collateral
Account in accordance with said Section 3.6(c).
(ii) A Non-Extension Advance shall be made in a single Borrowing upon
the non-extension of the Commitment hereunder (as provided for in Section 3.6(d)
of the Intercreditor Agreement) unless a Replacement Liquidity Facility shall
have been delivered to the Borrower in accordance with said Section 3.6(d), by
delivery to the Liquidity Provider of a written and completed Notice of
Borrowing in substantially the form of Annex III attached hereto, signed by a
Responsible Officer of the Borrower, in an amount equal to the Available
Commitment at such time, and shall be used to fund the Class C Cash Collateral
Account in accordance with said Section 3.6(d).
(c) A Final Advance shall be made by the Liquidity Provider without
the necessity for a Notice of Borrowing at the option of the Liquidity Provider
on the occurrence of an event described in Section 6.1(a) or 6.1(b) in an amount
equal to the Available Commitment at such time, and shall be used to fund the
Class C Cash Collateral Account.
(d) Each Borrowing (other than the making of the Final Advance) shall
be made on notice in writing (a "NOTICE OF BORROWING") in substantially the form
required by Section 2.2(a) or 2.2(b), as the case may be, given not later than
12:00 Noon (New York City time) on the Business Day prior to the day of the
proposed Borrowing by the Borrower to the Liquidity Provider. Upon satisfaction
of the conditions precedent set forth in Section 4.2 with respect to a requested
Borrowing, the Liquidity Provider shall, before 12:00 Noon (New York City time)
on the
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date of such Borrowing or on such later Business Day as may be specified by the
Borrower in such Notice of Borrowing, make available to the Borrower, in U.S.
dollars and in immediately available funds, the amount of such Borrowing to be
paid to the Borrower in accordance with its payment instructions. If a Notice
of Borrowing is delivered by the Borrower in respect of any Borrowing after
12:00 Noon (New York City time) on a Business Day, the Liquidity Provider shall,
before 12:00 Noon (New York City time) on the second Business Day next following
the day of receipt of such Notice of Borrowing or on such later Business Day as
may be specified by the Borrower in such Notice of Borrowing, make available to
the Borrower, in U.S. dollars and in immediately available funds, the amount of
such Borrowing to be paid to the Borrower in accordance with its payment
instructions. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(e) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other person (including the holder of any
Class C Certificate or the Class C Trustee) who makes to the Class C Trustee or
the Borrower a demand for payment with respect to any Class C Certificate.
Following the making of any Advance pursuant to Section 2.2(b) or (c) hereof to
fund the Class C Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Class C Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class C Cash Collateral
Account; provided that the foregoing shall not affect or impair the obligations
of the Subordination Agent to make the distributions contemplated by Sections
3.2 or 3.3 of the Intercreditor Agreement. By paying to the Borrower proceeds
of Advances requested by the Borrower in accordance with the provisions of this
Agreement, the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.3 FEES. (a) The Borrower agrees to pay to the Liquidity
Provider on the Effective Date a non-refundable fee equal to $25,000 in
aggregate with respect to the Irrevocable Revolving Credit Agreement, Class A
Certificates, the Irrevocable Revolving Credit Agreement, Class B Certificates
and the Irrevocable Revolving Credit, Class C Certificates.
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(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.30% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance or Non-Extension Advance is made and the date on which the
Commitment terminates. Such fee shall be payable in arrears on each Regular
Distribution Date. In addition, the Borrower shall pay, or shall cause to be
paid, to the Liquidity Provider, a fee equal to 0.30% per annum on the unpaid
principal amount of each Downgrade Advance or Non-Extension Advance (other than
an Applied Downgrade Advance or an Applied Non-Extension Advance) from and
including the date of such Advance to but excluding the date such principal
amount shall be paid in full. Such fee shall be payable in arrears on each
Regular Distribution Date and, in the event of the payment of principal of such
Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.3(b) shall require the Borrower to pay any amount under this Section
2.3(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.4 REDUCTION OR TERMINATION OF THE COMMITMENT; EXTENSION OF
THE EXPIRY DATE. (a) AUTOMATIC REDUCTIONS. Promptly following each date on
which the Required Amount is reduced as a result of a reduction in the Pool
Balance of the Class C Certificates or otherwise, the Commitment shall
automatically be reduced to an amount equal to such reduced Required Amount (as
calculated by the Borrower). The Borrower shall give notice of any such
automatic reduction of the Commitment to the Liquidity Provider within two
Business Days thereof. The failure by the Borrower to furnish any such notice
shall not affect such automatic reduction of the Commitment.
(b) TERMINATION. Upon the making of any Downgrade Advance,
Non-Extension Advance or Final Advance hereunder or the occurrence of the
Termination Date, the obligation of the Liquidity Provider to make further
Advances hereunder shall automatically and irrevocably terminate, and the
Borrower shall not be entitled to request any further Borrowing hereunder.
(c) EXTENSION OF THE EXPIRY DATE. Unless the Expiry Date has
previously been extended to a date that is 15 days after the Final Legal
Distribution Date for the Class C Certificates, then, no earlier than the 180th
day and no later than the 90th day prior to the Expiry Date then in effect, the
Subordination Agent shall request that the Liquidity Provider extend the Expiry
Date to a date no later than such 15th day (unless the obligations of the
Liquidity Provider are earlier terminated in accordance herewith). The
Liquidity Provider shall advise the Subordination Agent, no earlier than 90 days
and no later than 60 days prior to such Stated Expiration Date, whether, in its
sole discretion, it agrees to so extend the Expiry Date and, if so,
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the proposed new Expiry Date. If, on or before such 25th day, the Expiry Date
shall not have been so extended and, in such event, the Commitment shall not
have been replaced in accordance with Section 3.6(e) of the Intercreditor
Agreement, or if the Liquidity Provider fails irrevocably and unconditionally to
advise the Subordination Agent on or before the 25th day prior to the Expiry
Date then in effect that such Expiry Date shall be so extended, the
Subordination Agent shall, on such 25th day (or as soon as possible thereafter),
request a Non-Extension Advance in accordance with the terms hereof and of
Section 3.6(d) of the Intercreditor Agreement.
Section 2.5 REPAYMENTS OF INTEREST ADVANCES OR THE FINAL ADVANCE.
Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Interest Advance or the Final Advance (any such Interest
Advance or the Final Advance, until repaid, is referred to herein as an "UNPAID
ADVANCE"), plus (b) interest on the amount of each such Unpaid Advance as
provided in Section 3.7. Subject to Sections 2.6, 2.7 and 2.9, unless otherwise
waived by the Liquidity Provider, the Borrower shall be obligated, without
notice of an Advance or demand for repayment from the Liquidity Provider (which
notice and demand are hereby waived by the Borrower), to repay the Liquidity
Provider for all Interest Advances and Final Advances on the same day as made
and all Applied Downgrade Advances and Applied Non-Extension Advances on the
same day they become Applied Downgrade Advances or Applied Non-Extension
Advances, as applicable, in accordance with Section 2.6 hereof. The Borrower
and the Liquidity Provider agree that the repayment in full of each Interest
Advance and the Final Advance on the date such Interest Advance or the Final
Advance is made is intended to be a contemporaneous exchange for new value given
to the Borrower by the Liquidity Provider.
Section 2.6 REPAYMENTS OF DOWNGRADE ADVANCES AND NON-EXTENSION
ADVANCES. (a) Amounts advanced hereunder in respect of a Downgrade Advance
shall be deposited in the Class C Cash Collateral Account, and invested and
withdrawn from the Class C Cash Collateral Account, as set forth in Sections
3.6(c) and (f) of the Intercreditor Agreement. Amounts advanced hereunder in
respect of a Non-Extension Advance shall be deposited in the Class C Cash
Collateral Account, and invested and withdrawn from the Class C Cash Collateral
Account, as set forth in Sections 3.6(d) and (f) of the Intercreditor Agreement.
The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Downgrade Advance or a Non-Extension Advance, interest on the
principal amount of any such Advance as provided in Section 3.7; PROVIDED,
HOWEVER, that (i) any distribution to the Liquidity Provider of Investment
Earnings pursuant to Section 3.6(f) of the Intercreditor Agreement shall
constitute a payment of interest on such Advance in the amount of
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such Investment Earnings (not to exceed the amount specified in Section 3.7) and
(ii) amounts in respect of a Downgrade Advance or Non-Extension Advance
withdrawn from the Class C Cash Collateral Account for the purpose of paying
interest on the Class C Certificates in accordance with Section 3.6(f) of the
Intercreditor Agreement (the amount of any such withdrawal being (i) in the case
of a withdrawn Downgrade Advance, an "APPLIED DOWNGRADE ADVANCE" and (ii) in the
case of a withdrawn Non-Extension Advance, an "Applied Non-Extension Advance")
shall be treated as an Interest Advance under this Agreement for purposes of
determining the Applicable Liquidity Rate for interest payable thereon.
Immediately upon the withdrawal of any amounts from the Class C Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay the Downgrade Advance or Non-Extension Advance (as the case may be) in a
principal amount equal to the amount of such reduction, plus interest on the
principal amount prepaid as provided in Section 3.7.
(b) At any time when an Applied Downgrade Advance (or any portion
thereof) or an Applied Non-Extension Advance (or any portion thereof) is
outstanding, upon the deposit in the Class C Cash Collateral Account of any
amount pursuant to clause "third" of Section 2.4(b), clause "third" of Section
3.2 or clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such
amount being a "REPLENISHMENT AMOUNT") for the purpose of replenishing the
balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Downgrade Advances or Applied
Non-Extension Advances (as the case may be) shall be automatically reduced by
the amount of such Replenishment Amount and (ii) the principal amount of the
outstanding Downgrade Advance or Non-Extension Advance (as the case may be)
shall be automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, and prior to the effectiveness of any Replacement
Liquidity Facility, the Borrower agrees that all amounts owing to the Liquidity
Provider shall be repaid in full, whether from advances made by the Replacement
Liquidity Provider, from amounts remaining on deposit in the Class C Cash
Collateral Account after giving effect to any application of funds therefrom to
any payment of interest on the Class C Certificates on the date of such
replacement, or otherwise.
Section 2.7 PAYMENTS TO THE LIQUIDITY PROVIDER UNDER THE
INTERCREDITOR AGREEMENT. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor
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Agreement), shall be paid to the Liquidity Provider in accordance with the terms
thereof. Amounts so paid to the Liquidity Provider shall be applied by the
Liquidity Provider in the order of priority required by the applicable
provisions of Articles II and III of the Intercreditor Agreement.
Section 2.8 BOOK ENTRIES. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; PROVIDED, HOWEVER, that the failure by the Liquidity
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.
Section 2.9 PAYMENTS FROM AVAILABLE FUNDS ONLY. All payments to be
made by the Borrower under this Agreement shall be made only from amounts
received by it that constitute Scheduled Payments or Special Payments and only
to the extent that the Borrower shall have sufficient income or proceeds
therefrom to enable the Borrower to make payments in accordance with the terms
hereof after giving effect to the priority of payments provisions set forth in
the Intercreditor Agreement. The Liquidity Provider agrees that it will look
solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class C Cash Collateral Account shall be available to
make payments only to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 INCREASED COSTS. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider
any other condition regarding this Agreement or any Advance, or (iii) subject
the Liquidity Provider to any amounts payable or paid change the basis of
taxation of any amounts payable to the Liquidity Provider (other
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than Taxes imposed on the overall net or gross income of the Liquidity Provider)
and (b) the result of any event referred to in the preceding clauses (i), (ii)
or (iii) shall be to increase the cost to the Liquidity Provider of issuing or
maintaining its commitment or funding or maintaining Advances (which increase in
cost shall be determined by the Liquidity Provider's reasonable allocations of
the aggregate of such cost increases resulting from such event), then, upon
demand by the Liquidity Provider (such demand to be made not later than 180 days
after a Responsible Officer of the Liquidity Provider obtains actual knowledge
of any event referred to in clause (i), (ii) or (iii) above), the Borrower shall
pay, or cause to be paid, to the Liquidity Provider, from time to time as
specified by the Liquidity Provider, additional amounts which shall be
sufficient to compensate the Liquidity Provider for such increased cost;
provided that if such demand for payment is made after such 180-day period, the
Borrower shall be obligated to pay such additional amounts only with respect to
such increased cost actually incurred or effected on or after the 180th day
prior to the date of such demand. A certificate as to such increased cost
incurred by the Liquidity Provider as a result of any event mentioned in clauses
(i), (ii) or (iii) above, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive evidence of the amount
owed under this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.1 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.2 CAPITAL ADEQUACY. If the Liquidity Provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital adequacy) by an amount deemed by the Liquidity Provider to be
material, then, upon demand by the Liquidity Provider, the Borrower shall pay to
the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which
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shall be sufficient to compensate the Liquidity Provider for such reduction in
respect of issuing or maintaining its commitment hereunder or its funding or
maintaining Advances. A certificate as to any such additional amount describing
the event which has the effect of reducing the rate of return on the Liquidity
Provider's capital, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be prima facie evidence of the amount owed under
this Section absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.3 PAYMENTS FREE OF DEDUCTIONS. All payments made by the
Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "NON-EXCLUDED
TAXES" and, individually, as a "NON-EXCLUDED TAX"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. Whenever any Non-Excluded
Tax is payable by the Borrower, promptly thereafter the Borrower shall send the
Liquidity Provider certified copies of tax receipts evidencing such payment by
the Borrower. The Liquidity Provider agrees to provide to the Borrower on or
prior to the Effective Date, and from time to time thereafter after the
occurrence of any event requiring a change in the most recent form previously
delivered by it (and prior to the immediately following due date of any payment
by the Borrower hereunder), to the extent that the Liquidity Provider is legally
entitled to do so, two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is completely exempt from United
States withholding tax on payments pursuant to this Agreement.
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The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.3 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.4 PAYMENTS. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, New
York, New York, ABA #021000021, for the account of Royal Bank of Canada, No.
920-1-033363 for further credit to account #218-599-9 (referencing Northwest
Liquidity Facility).
Section 3.5 COMPUTATIONS. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate and of fees
payable to the Liquidity Provider shall be made on the basis of a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
Section 3.6 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder (other than a payment on LIBOR Advances) becomes due and payable
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day and interest thereon shall be payable at the then
applicable rate during such extension. If any payments on a LIBOR Advance
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.
Section 3.7 INTEREST. (a) The Borrower shall pay, or shall cause to
be paid, interest on (i) the unpaid principal amount of each Advance from and
including the date of such Advance (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class C Cash Collateral Account
to pay interest on the Class C Certificates) to but excluding the date such
principal amount shall be paid in full and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated
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maturity, by acceleration or otherwise) from and including the due date thereof
to but excluding the date such amount is paid in full, in each such case, at a
fluctuating interest rate per annum for each day equal to the Applicable
Liquidity Rate for such Advance or such other amount as in effect for such day,
but in no event at a rate per annum greater than the maximum rate permitted by
applicable law; PROVIDED, HOWEVER, that, if at any time the otherwise applicable
interest rate as set forth in this Section 3.7 shall exceed the maximum rate
permitted by applicable law, then any subsequent reduction in such interest rate
will not reduce the rate of interest payable pursuant to this Section 3.7 below
the maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.7 had at all times been
in effect. Nothing contained in this Section 3.7 shall require the Borrower to
pay any amount under this Section 3.7 other than to the extent the Borrower
shall have funds available therefor.
(b) Each Advance (other than a Downgrade Advance that is not an
Applied Downgrade Advance and a Non-Extension Advance that is not an Applied
Non-Extension Advance, and for which, in each case, subsection (e) below shall
apply) will be either a Base Rate Advance or a LIBOR Advance as provided in this
Section. Each such Advance will be a Base Rate Advance for the period from the
date of its borrowing to (but excluding) the third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Advance.
Thereafter, such Advance shall be a LIBOR Advance; PROVIDED that the Final
Advance shall, until repaid in full, be a Base Rate Advance and the Borrower may
not convert the Final Advance into a LIBOR Advance.
(c) Each LIBOR Advance shall bear interest during each Interest Period
at a per annum rate equal to the LIBOR Rate for such Interest Period plus the
Applicable Margin for such LIBOR Advance, payable in arrears on the last day of
such Interest Period and, in the event of the payment of principal of such LIBOR
Advance on a day other than such last day, on the date of such payment (to the
extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) Each Downgrade Advance (other than an Applied Downgrade Advance)
and each Non-Extension Advance (other than an Applied Non-Extension Advance)
shall bear interest in an amount equal to the higher of (i) a per annum rate
equal to LIBOR plus 0.30% and (ii) the Investment Earnings on amounts on deposit
in
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the Class C Cash Collateral Account, payable in arrears on each Regular
Distribution Date and, in the event of the payment of principal of such Advance
on a day other than a Regular Distribution Date, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances) shall bear interest at the Base Rate.
(g) Each change in the Base Rate shall become effective immediately.
Section 3.8 REPLACEMENT OF BORROWER. From time to time, upon the
effective date and time specified in a written and completed Notice of
Replacement Borrower in substantially the form of Annex IV attached hereto (a
"NOTICE OF REPLACEMENT BORROWER") delivered to the Liquidity Provider by the
then Borrower, the successor Borrower designated therein shall be substituted as
the Borrower for all purposes hereunder.
Section 3.9 FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(a) Any payment of a LIBOR Advance on a date other than the last day
of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow or convert, as the case may
be, a LIBOR Advance on the date for borrowing or conversion, as the case
may be, specified in the relevant notice under Section 2.2 or 3.7.
Section 3.10 ILLEGALITY. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration
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of the last Interest Period to expire before the effective date of any such
change or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 2.1.
Section 2.1 of this Agreement shall become effective on and as of the first date
(the "EFFECTIVE DATE") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents delivered pursuant to paragraphs (v) and (vii) of this Section
4.1(a)), and each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of each of
the Operative Agreements (other than this Agreement and the
Intercreditor Agreement) which, when taken together, bear the
signatures of all of the respective parties thereto and which are in
full force and effect in accordance with their respective terms;
(iv) A copy of the Prospectus and specimen copies of the
Class C Certificates;
(v) Evidence that, on the Effective Date, the Class A
Certificates, the Class B Certificates and the Class C Certificates
will receive long-term credit ratings from Moody's of not lower than
A3, Baa2 and Baa3, respectively, and from Standard & Poor's of not
lower than A, BBB and BBB-, respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered pursuant to the Class C
Trust Agreement, the Intercreditor Agreement, the Participation
Agreements and the other Operative Agreements (together with, in the
case of each such opinion, other than the opinion of counsel for the
Underwriters and each opinion which is addressed to the Liquidity
Provider, a letter from the counsel rendering such opinion to the
effect that the Liquidity Provider is entitled to rely on such
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opinion as if it were addressed to the Liquidity Provider);
(vii) Evidence that there shall have been made and shall be
in full force and effect, all filings, recordings and/or
registrations, and there shall have been given or taken any notice or
other similar action as may be reasonably necessary or, to the extent
reasonably requested by the Liquidity Provider, reasonably advisable,
in order to establish, perfect, protect and preserve the right, title
and interest, remedies, powers, privileges, liens and security
interests of, or for the benefit of, the Trustees and the Liquidity
Provider created by the Operative Agreements;
(viii) Copies of the appraisals attached as exhibits to the
Prospectus;
(ix) A letter from NWA Corp. regarding the delivery to the
Liquidity Provider of periodic financial reports;
(x) A guaranty by State Street Bank and Trust Company, a
Massachusetts trust company, of the obligations of State Street under
the Operative Documents to which it is a party; and
(xi) Such other documents, instruments, opinions and
approvals (and, if requested by the Liquidity Provider, certified
duplicates or executed copies thereof) as the Liquidity Provider shall
have reasonably requested.
(b) The following statements shall be true and shall be deemed to have
been represented by each party (other than clause (ii) below, which shall
be deemed to have been represented only by Northwest) to the Participation
Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such Person
contained in each Participation Agreement are true and correct on and
as of the Effective Date as though made on and as of the Effective
Date; and
(ii) No event has occurred and is continuing, or would
result from the entering into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of Default.
(c) The Liquidity Provider shall have received payment in full of all
fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.
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(d) All conditions precedent to the issuance of the Certificates under
the Trust Agreements shall have been satisfied, all conditions precedent to
the effectiveness of the other Liquidity Facilities shall have been
satisfied, and all conditions precedent to the purchase of the Certificates
by the Underwriters under the Underwriting Agreement shall have been
satisfied (unless any of such conditions precedent under the Underwriting
Agreement shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section 4.1(e)).
Section 4.2 CONDITIONS PRECEDENT TO BORROWING. The obligation of the
Liquidity Provider to make an Advance on the occasion of each Borrowing shall be
subject to the conditions precedent that the Effective Date shall have occurred
and, except in the case of the Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed as
may be required by the relevant form of the Notice of Borrowing for the type of
Advance requested.
ARTICLE V
COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the Liquidity Provider
shall otherwise consent in writing:
(a) PERFORMANCE OF THIS AND OTHER AGREEMENTS. Punctually pay or cause
to be paid all amounts payable by it under this Agreement and the other
Operative Agreements and observe and perform in all material respects the
conditions, covenants and requirements applicable to it contained in this
Agreement and the other Operative Agreements.
(b) REPORTING REQUIREMENTS. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data, including copies of
all documents with respect to the transactions contemplated by the
Operative Agreements as from time to time may be reasonably requested by
the Liquidity Provider; and permit the Liquidity Provider, upon reasonable
notice, to inspect the Borrower's books and records with respect to such
transactions to make extracts
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and copies thereof and to meet with officers, agents, professional advisers
and employees of the Borrower to discuss such transactions.
Section 5.2 NEGATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) AMENDMENTS. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 thereof.
(b) BORROWER. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 FINAL ADVANCE. If (a)(i) a Triggering Event shall have
occurred and be continuing and (ii) there is a Performing Note Deficiency or (b)
a Liquidity Event of Default shall have occurred and be continuing, the
Liquidity Provider may, in its sole discretion, make a Final Advance whereupon
(i) the Liquidity Provider shall have no further obligation to make Advances
hereunder, (ii) all other outstanding Advances shall be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iii) subject to Sections 2.7 and 2.9, all
Advances, any accrued interest thereon and all other amounts outstanding
hereunder shall become immediately due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment, the Borrower, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
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Section 7.2 NOTICES, ETC. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: State Street Bank and Trust Company
of Connecticut, National Association
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5600
Telecopy: (617) 664-5371
Liquidity
Provider: Royal Bank of Canada
One Financial Square
New York, New York 10005-3531
Attention: Loan Administration
Telephone: (212) 428-6335
Telecopy: (212) 428-2301
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.3 NO WAIVER; REMEDIES. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.4 FURTHER ASSURANCES. The Borrower agrees to do, upon
request, such further acts and things and to execute and deliver to the
Liquidity Provider such additional assignments, agreements, powers and
instruments as the Liquidity Provider may reasonably require or deem advisable
to carry into effect the purposes of this Agreement and the other Operative
Agreements or to better assure and confirm unto the Liquidity
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Provider its rights, powers and remedies hereunder and under the other Operative
Agreements.
Section 7.5 INDEMNIFICATION; SURVIVAL OF CERTAIN PROVISIONS. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7 of the Participation Agreements. In addition, the
Borrower agrees to indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on demand, all Expenses
of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.1, 3.2, or 7.7 hereof (regardless of whether indemnified
against pursuant to said Sections)), whether arising before, on or after the
date hereof, that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the Intercreditor Agreement or
the Participation Agreements; PROVIDED, HOWEVER, that the Borrower shall not be
required to indemnify, protect, defend and hold harmless any Liquidity
Indemnitee in respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or willful
misconduct of such Liquidity Indemnitee or any Related Indemnitee, (ii) that is
ordinary and usual operating overhead expense or (iii) to the extent such
Expense is attributable to the failure by such Liquidity Indemnitee or its
Related Indemnitee to perform or observe in any material respect any agreement,
covenant or condition on its part to be performed or observed in any Operative
Agreement. The indemnities contained in such Section 7 of the Participation
Agreements, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the expiration or termination of this Agreement.
Section 7.6 LIABILITY OF THE LIQUIDITY PROVIDER. (a) Neither the
Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; or (iii) the making of
Advances by the Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof; PROVIDED, HOWEVER,
that the Borrower shall have a claim against the Liquidity Provider, and the
Liquidity Provider shall be liable to the Borrower, to the extent of any damages
suffered by the Borrower which were the result of (A) the Liquidity Provider's
willful misconduct or gross negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the terms of this Agreement, including, but not
limited to, the Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing
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<PAGE>
strictly complying with the terms and conditions hereof; PROVIDED, HOWEVER that
the Borrower shall not have a claim against the Liquidity Provider, and the
Liquidity Provider shall not be liable to the Borrower, to the extent of an
order or judgment for punitive or consequential damages regarding damages
suffered by the Borrower which were the result of subparagraphs (A) and (B)
above in the first proviso of this Section 7.6.
(b) The Liquidity Provider shall not be liable or responsible in any
respect for (i) any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with this Agreement or any Notice of Borrowing delivered hereunder,
or (ii) any action, inaction or omission which may be taken by it in good faith,
absent willful misconduct or negligence (in which event the extent of the
Liquidity Provider's potential liability to the Borrower shall be limited as set
forth in the immediately preceding paragraph), in connection with this Agreement
or any Notice of Borrowing.
Section 7.7 COSTS, EXPENSES AND TAXES. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses of the Liquidity Provider in connection with the preparation,
negotiation, execution, delivery, filing and recording of this Agreement, any
other Operative Agreement and any other documents which may be delivered in
connection with this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider and (B) on
demand, all reasonable costs and expenses of the Liquidity Provider (including
reasonable counsel fees and expenses) in connection with (i) the enforcement of
this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Document or otherwise affecting the application of funds in the Cash Collateral
Accounts. In addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement, any other
Operative Agreement and such other documents, and agrees to save the Liquidity
Provider harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
Section 7.8 BINDING EFFECT; PARTICIPATIONS. (a) This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective
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<PAGE>
successors and assigns, except that neither the Liquidity Provider (except as
otherwise provided in this Section 7.8) nor the Borrower shall have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the other party, subject to the requirement of Section 7.8(b). The
Liquidity Provider may grant participations herein or in any of its rights or
security hereunder and under the other Operative Agreements to such Persons as
the Liquidity Provider may in its sole discretion select, subject to the
requirement of Section 7.8(b). No such participation by the Liquidity Provider,
however, will relieve the Liquidity Provider of its obligations hereunder. In
connection with any participation or any proposed participation, the Liquidity
Provider may disclose to the participant or the proposed participant any
information that the Borrower is required to deliver or to disclose to the
Liquidity Provider pursuant to this Agreement. The Borrower acknowledges and
agrees that the Liquidity Provider's source of funds may derive in part from its
participants. Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy requirements,
increased costs, reduced receipts and the like as they pertain to the Liquidity
Provider shall be deemed also to include those of each of its participants
(subject, in each case, to the maximum amount that would have been incurred by
or attributable to the Liquidity Provider directly if the Liquidity Provider,
rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider sells
any participation to any bank or other entity (each, a "PARTICIPANT"), then,
concurrently with the effectiveness of such participation, the Participant shall
(i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes will be required to be withheld by the Borrower or the
Liquidity Provider with respect to any payments to be made to such Participant
in respect of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the laws of the
United States or a state thereof or (y) if it is not so incorporated, two copies
of a properly completed United States Internal Revenue Service Form 4224 or Form
1001, as appropriate, or other applicable form, certificate or document
prescribed by the Internal Revenue Service certifying, in each case, such
Participant's entitlement to a complete exemption from United States federal
withholding tax in respect to any and all payments to be made hereunder, and
(iii) agree (for the benefit of the Liquidity Provider and the Borrower) to
provide the Liquidity Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires or becomes
obsolete or (B) after the occurrence of any event requiring a change in the most
recent form previously delivered by it and prior to the immediately following
due date of any payment by the Borrower hereunder,
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<PAGE>
certifying in the case of a Form 1001 or Form 4224 that such Participant is
entitled to a complete exemption from United States federal withholding tax on
payments under this Agreement. Unless the Borrower has received forms or other
documents reasonably satisfactory to it indicating that payments hereunder are
not subject to United States federal withholding tax, the Borrower will withhold
taxes as required by law from such payments at the applicable statutory rate
without any obligation to gross-up or indemnify pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, PROVIDED that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER
OF IMMUNITY.
(a) Each of the parties hereto hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the non-exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought
in such courts, and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or
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<PAGE>
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form and mail),
postage prepaid, to each party hereto at its address set forth in Section
7.2, or at such other address of which the Liquidity Provider shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER
CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have from
the jurisdiction of the courts of the United States or of any state and waives
any immunity any of its properties located in the United States may have from
attachment or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
Section 7.12 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 ENTIRETY. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior understandings and
agreements of such parties.
Section 7.14 HEADINGS; SECTION REFERENCES. Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement
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<PAGE>
for any other purpose. Unless the context otherwise requires or otherwise
indicated herein, all Section references in this Agreement are references to
Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By: /s/ Donald E. Smith
---------------------------
Name: Donald E. Smith
Title: Vice President
ROYAL BANK OF CANADA
as Liquidity Provider
By: /s/ Michael J. Madnick
---------------------------
Name: Michael J. Madnick
Title: Manager
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<PAGE>
Annex I to Irrevocable
Revolving Credit Agreement
--------------------------
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to Royal Bank of Canada (the
"LIQUIDITY PROVIDER"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class C Certificates which was payable on
______________ in accordance with the terms and provisions of the Class C
Trust Agreement and the Class C Certificates pursuant to clause FOURTH of
Section 3.2 of the Intercreditor Agreement or clause SIXTH of Section 3.3
of the Intercreditor Agreement, which Advance is requested to be made on
_____________.
(3) The amount of the Interest Advance requested hereby (i) is
$_________, to be applied in respect of the payment of interest which was
due and payable on the Class C Certificates on such Distribution Date, (ii)
does not include any amount with respect to the payment of principal of, or
premium on, the Class A Certificates, the Class B Certificates or the Class
C Certificates, or interest on the Class A Certificates or the Class B
Certificates, (iii) was computed in accordance with the provisions of the
Class C Certificates, the Class C Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
(iv) does not exceed the Available Commitment on the date hereof, and (v)
has not been and is not the subject of a prior or contemporaneous Notice of
Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.2 or 3.3 of the Intercreditor Agreement, as the case
may be, (b) no portion of such amount shall be applied by the Borrower for
any other purpose and (c) no portion of such amount until so applied shall
be commingled with other funds held by the Borrower.
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby be
a Base Rate Advance and that such Base Rate Advance be converted into a
LIBOR Rate Advance on the third Business Day following your receipt of this
notice.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the Available Commitment by an amount
equal to the amount of the Interest Advance requested to be made hereby as set
forth in clause (i) of paragraph (3) of this Certificate and such reduction
shall automatically result in corresponding reductions in the amounts available
to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the __ day of ___________, ____.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
--------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "BORROWER"), hereby certifies to Royal Bank of Canada,
(the "LIQUIDITY PROVIDER"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued by
either Rating Agency below the Threshold Rating, which Advance is requested
to be made on _________.
(3) The amount of the Downgrade Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class C Certificates, or principal of, or
interest or premium on, the Class A Certificates or the Class B
Certificates, (iii) was computed in accordance with the provisions of the
Class C Certificates, the Class C Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as
<PAGE>
requested by this Notice of Borrowing shall automatically and irrevocably
terminate the obligation of the Liquidity Provider to make further Advances
under the Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of _________, ______.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
--------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "BORROWER"), hereby certifies to Royal Bank of Canada,
(the "LIQUIDITY PROVIDER"), with reference to the Irrevocable Revolving Credit
Agreement dated as of September 25, 1997, between the Borrower and the Liquidity
Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement by reason of the
non-extension of the Commitment as provided in said Section 3.6(d), which
Advance is requested to be made on _________.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$________, which equals the Available Commitment on the date hereof and is
to be applied in respect of the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of the
principal of, or premium on, the Class C Certificates, or principal of, or
interest or premium on, the Class B Certificates or the Class C
Certificates, (iii) was computed in accordance with the provisions of the
Class C Certificates, the Class C Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
<PAGE>
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by this
Notice of Borrowing shall automatically and irrevocably terminate the obligation
of the Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider of the
Non-Extension Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of _________, ______.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
--------------------------------
Name:
Title:
-2-
<PAGE>
SCHEDULE I TO Non-Extension ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<PAGE>
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity Agreement referred
to above. The transferee has succeeded the undersigned as Subordination Agent
under the Intercreditor Agreement referred to in the first paragraph of the
Liquidity Agreement.
By this transfer, all rights of the undersigned as Borrower under the
Liquidity Agreement are transferred to the transferee and the transferee shall
hereafter have the sole rights as Borrower thereunder. The undersigned shall
pay any costs and expenses of such transfer, including, but not limited to,
transfer taxes or governmental charges.
We ask that this transfer be effective as of _________, ____.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit 4(d)(4)
INTERCREDITOR AGREEMENT
Dated as of
September 25, 1997
BY AND AMONG
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Northwest Airlines Pass Through Trust 1997-1A,
Northwest Airlines Pass Through Trust 1997-1B
and
Northwest Airlines Pass Through Trust 1997-1C
ROYAL BANK OF CANADA
as Class A Liquidity Provider,
Class B Liquidity Provider
and Class C Liquidity Provider,
AND
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions..................................................... 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination;
Payments from Monies Received Only............................ 20
SECTION 2.2 Trust Accounts................................................ 21
SECTION 2.3 Deposits to the Collection Account and
Special Payments Account...................................... 22
SECTION 2.4 Distributions of Special Payments............................. 22
SECTION 2.5 Designated Representatives.................................... 25
SECTION 2.6 Controlling Party............................................. 25
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution................................ 27
SECTION 3.2 Distribution of Amounts on Deposit in
the Collection Account........................................ 29
SECTION 3.3 Distribution of Amounts on Deposit
Following a Triggering Event.................................. 30
SECTION 3.4 Other Payments................................................ 32
SECTION 3.5 Payments to the Trustees and the
Liquidity Providers........................................... 32
SECTION 3.6 Liquidity Facilities.......................................... 32
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party......................... 39
SECTION 4.2 Remedies Cumulative........................................... 40
SECTION 4.3 Discontinuance of Proceedings................................. 40
SECTION 4.4 Right of Certificateholders to Receive
Payments Not to Be Impaired................................... 41
SECTION 4.5 Undertaking for Costs......................................... 41
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<PAGE>
Page
----
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or
Triggering Event.............................................. 41
SECTION 5.2 Indemnification............................................... 42
SECTION 5.3 No Duties Except as Specified in
Intercreditor Agreement....................................... 42
SECTION 5.4 Notice from the Liquidity Providers and
Trustees...................................................... 43
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and
Duties........................................................ 43
SECTION 6.2 Absence of Duties............................................. 43
SECTION 6.3 No Representations or Warranties as to
Documents..................................................... 43
SECTION 6.4 No Segregation of Monies; No Interest......................... 44
SECTION 6.5 Reliance; Agents; Advice of Counsel........................... 44
SECTION 6.6 Capacity in Which Acting...................................... 45
SECTION 6.7 Compensation.................................................. 45
SECTION 6.8 May Become Certificateholder.................................. 45
SECTION 6.9 Subordination Agent Required;
Eligibility................................................... 45
SECTION 6.10 Money to Be Held in Trust..................................... 46
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification...................................... 46
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent;
Appointment of Successor...................................... 46
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc...................................... 48
SECTION 9.2 Subordination Agent Protected................................. 49
SECTION 9.3 Effect of Supplemental Agreements............................. 49
SECTION 9.4 Notice to Rating Agencies..................................... 49
-ii-
<PAGE>
Page
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement........................ 49
SECTION 10.2 Intercreditor Agreement for Benefit of
Trustees, Liquidity Providers and Subordination Agent......... 50
SECTION 10.3 Notices....................................................... 50
SECTION 10.4 Severability.................................................. 51
SECTION 10.5 No Oral Modifications or Continuing
Waivers....................................................... 51
SECTION 10.6 Successors and Assigns........................................ 51
SECTION 10.7 Headings...................................................... 51
SECTION 10.8 Counterpart Form.............................................. 51
SECTION 10.9 Subordination................................................. 51
SECTION 10.10 Governing Law................................................. 53
SECTION 10.11 Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity................................ 53
Schedule 1 Indentures
Schedule 2 Participation Agreements
-iii-
<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of September 25, 1997, by and among
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company ("STATE
STREET"), not in its individual capacity but solely as Trustee of each Trust
(each as defined below), ROYAL BANK OF CANADA ("ROYAL BANK") as Class A
Liquidity Provider, Royal Bank, as Class B Liquidity Provider, Royal Bank, as
Class C Liquidity Provider, and STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, a Connecticut trust company ("STATE STREET OF
CONNECTICUT"), not in its individual capacity except as expressly set forth
herein, but solely as Subordination Agent and trustee hereunder (in such
capacity, together with any successor appointed pursuant to Article VIII hereof,
the "SUBORDINATION AGENT").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture, the related Owner Trustee
proposes to issue on a nonrecourse basis three series of Equipment Notes to
finance a portion of the indebtedness of such Owner Trustee incurred to finance
the purchase of the Aircraft referred to in such Indenture which has been or
will be leased to Northwest pursuant to the related Lease;
WHEREAS, pursuant to the Participation Agreements, each Trust will
acquire those Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "CLASS") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement (as defined below),
the Underwriters propose to purchase the Certificates issued by each Trust in
the aggregate face amount set forth opposite the name of such Trust on
Schedule I thereto on the terms and subject to the conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a revolving
credit agreement (each, a "LIQUIDITY FACILITY") with the Subordination Agent, as
agent for the respective Trustee of each Trust, for the benefit of the
Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement
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in respect of each Class of Certificates, and the Subordination Agent, the
Trustees and the Liquidity Providers, by entering into this Agreement, hereby
acknowledge and agree to such terms of subordination and the other provisions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; and
(4) the term "including" shall mean "including without limitation".
"ACCELERATION" means, with respect to the amounts payable in respect of the
Equipment Notes issued under any Indenture, the declaration or deemed
declaration of such amounts to be immediately due and payable. "ACCELERATE" and
"ACCELERATED" have meanings correlative to the foregoing.
"ADJUSTED EXPECTED DISTRIBUTIONS" means with respect to the Certificates of
any Class on any Current Distribution Date the sum of (x) the amount of accrued
and unpaid interest on such Certificates plus (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date and (y) the Pool Balance
of such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Non-Performing Equipment Notes held in
such Trust has been paid in full and such payments have been
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distributed to the holders of such Certificates, (ii) the principal of the
Performing Equipment Notes has been paid when due (but without giving
effect to any acceleration of Performing Equipment Notes) and has been
distributed to the holders of such Certificates and (iii) the principal of
any Equipment Notes formerly held in such Pass Through Trust which have
been sold pursuant to the terms hereof have been paid in full and such
payments have been distributed to the holders of such Certificates; and
(B) the amount if any by which (i) the Pool Balance of such Class of
Certificates as of the immediately preceding Distribution Date (less the
aggregate principal amount of the Equipment Notes relating to any Prefunded
Aircraft (as defined in the Trust Agreement) for which the date of sale to
the Owner Trustee has not occurred and which Northwest has not assumed)
exceeds (ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B) above
shall not be applicable.
"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" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGGREGATE LTV COLLATERAL AMOUNT" means for any Class of Certificates for
any Distribution Date the sum of the applicable LTV Collateral Amounts for each
Aircraft minus the Pool Balance for each Class of Certificates, if any, senior
to such Class after giving effect to any distribution of principal on such
Distribution Date on such senior Class or Classes.
"AIRCRAFT" means, with respect to any Indenture, the "Aircraft" referred to
therein.
"APPRAISED CURRENT MARKET VALUE" of any Aircraft means the lower of the
average and the median of the most recent three LTV Appraisals of such Aircraft.
"APPRAISERS" means Aircraft Information Services, Inc., BK Associates, Inc.
and Morten Beyer and Agnew, Inc.
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"AVAILABLE AMOUNT" means, with respect to any Liquidity Facility on any
drawing date, an amount equal to (a) the Stated Amount of such Liquidity
Facility, LESS (b) the amount of each Interest Drawing honored by the Liquidity
Provider under such Liquidity Facility on or prior to such date which has not
been reimbursed or reinstated as of such date; PROVIDED that, following a
Downgrade Drawing or a Final Drawing under such Liquidity Facility, the
Available Amount of such Liquidity Facility shall be zero.
"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 Minneapolis,
Minnesota, New York, New York, or the city and state in which any Trustee, the
Subordination Agent or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
"CASH COLLATERAL ACCOUNT" means the Class A Cash Collateral Account, the
Class B Cash Collateral Account or the Class C Cash Collateral Account, as
applicable.
"CERTIFICATE" means a Class A Certificate, a Class B Certificate or a Class
C Certificate, as applicable.
"CERTIFICATEHOLDER" means any holder of one or more Certificates.
"CLASS" has the meaning assigned to such term in the preliminary statements
to this Agreement.
"CLASS A CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account in the
name of the Subordination Agent maintained at an Eligible Institution, which
shall be the Subordination Agent if it shall so qualify, into which all amounts
drawn under the Class A Liquidity Facility pursuant to Section 3.6(c) or 3.6(i)
shall be deposited.
"CLASS A CERTIFICATEHOLDER" means, at any time, any holder of one or more
Class A Certificates.
"CLASS A CERTIFICATES" means the certificates issued by the Class A Trust,
substantially in the form of Exhibit A to the Class A Trust Agreement, and
authenticated by the Class A Trustee, representing fractional undivided
interests in the Class A Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class A Trust Agreement.
"CLASS A LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of September 25, 1997, by and between the Subordination
Agent, as agent of the Class A Trustee, and the Class A Liquidity Provider, and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any,
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in each case as amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"CLASS A LIQUIDITY PROVIDER" means Royal Bank, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace the Class A Liquidity Facility pursuant to Section 3.6(e).
"CLASS A TRUST" means Northwest Airlines 1997-1A Pass Through Trust created
and administered pursuant to the Class A Trust Agreement.
"CLASS A TRUST AGREEMENT" means the Pass Through Trust Agreement dated as
of June 3, 1996, by and among Northwest, NWA Corp. and the Class A Trustee, as
supplemented by Trust Supplement No. 1997-1A thereto dated as of September 25,
1997, by and among Northwest, NWA Corp. and the Trustee, governing the creation
and administration of the Class A Trust and the issuance of the Class A
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"CLASS A TRUSTEE" means State Street, not in its individual capacity except
as expressly set forth in the Class A Trust Agreement, but solely as trustee
under the Class A Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLASS B CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account in the
name of the Subordination Agent maintained at an Eligible Institution, which
shall be the Subordination Agent if it shall so qualify, into which all amounts
drawn under the Class B Liquidity Facility pursuant to Section 3.6(c) or 3.6(i)
shall be deposited.
"CLASS B CERTIFICATEHOLDER" means, at any time, any holder of one or more
Class B Certificates.
"CLASS B CERTIFICATES" means the certificates issued by the Class B Trust,
substantially in the form of Exhibit A to the Class B Trust Agreement, and
authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.
"CLASS B LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of September 25, 1997, by and between the Subordination
Agent, as agent of the Class B Trustee, and the Class B Liquidity Provider, and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
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"CLASS B LIQUIDITY PROVIDER" means Royal Bank, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace the Class B Liquidity Facility pursuant to Section 3.6(e).
"CLASS B TRUST" means Northwest Airlines 1997-1B Pass Through Trust created
and administered pursuant to the Class B Trust Agreement.
"CLASS B TRUST AGREEMENT" means the Pass Through Trust Agreement dated as
of June 3, 1996, by and among Northwest, NWA Corp. and the Class B Trustee, as
supplemented by Trust Supplement No. 1997-1B thereto dated as of September 25,
1997, by and among Northwest, NWA Corp. and the Trustee, governing the creation
and administration of the Class B Trust and the issuance of the Class B
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"CLASS B TRUSTEE" means State Street, not in its individual capacity except
as expressly set forth in the Class B Trust Agreement, but solely as trustee
under the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLASS C CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account in the
name of the Subordination Agent and maintained at an Eligible Institution, which
shall be the Subordination Agent if it shall so qualify, into which all amounts
drawn under the Class C Liquidity Facility pursuant to Section 3.6(c) or 3.6(i)
shall be deposited.
"CLASS C CERTIFICATEHOLDER" means, at any time, any holder of one or more
Class C Certificates.
"CLASS C CERTIFICATES" means the certificates issued by the Class C Trust,
substantially in the form of Exhibit A to the Class C Trust Agreement, and
authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or in replacement thereof pursuant to the terms of the Class C Trust Agreement.
"CLASS C LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of September 25, 1997, by and between the Subordination
Agent, as agent of the Class C Trustee, and the Class C Liquidity Provider and,
from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"CLASS C LIQUIDITY PROVIDER" means Royal Bank, together with any
Replacement Liquidity Provider which has issued a
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Replacement Liquidity Facility to replace the Class C Liquidity Facility
pursuant to Section 3.6(e).
"CLASS C TRUST" means Northwest Airlines 1997-1C Pass Through Trust created
and administered pursuant to the Class C Trust Agreement.
"CLASS C TRUST AGREEMENT" means the Pass Through Trust Agreement dated as
of June 3, 1996, by and among Northwest, NWA Corp. and the Class C Trustee, as
supplemented by Trust Supplement No. 1997-1C thereto dated as of September 25,
1997, by and among Northwest, NWA Corp. and the Trustee, governing the creation
and administration of the Class C Trust and the issuance of the Class C
Certificates, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"CLASS C TRUSTEE" means State Street, not in its individual capacity except
as expressly set forth in the Class C Trust Agreement, but solely as trustee
under the Class C Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLOSING DATE" means September 25, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" means the Eligible Deposit Account established by the
Subordination Agent pursuant to Section 2.2 which the Subordination Agent shall
make deposits in and withdrawals from in accordance with this Agreement.
"CONTROLLING PARTY" means the Person entitled to act as such pursuant to
the terms of Section 2.6.
"CORPORATE TRUST OFFICE" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the city
at which, at any particular time, its corporate trust business shall be
principally administered.
"CURRENT DISTRIBUTION DATE" means a Distribution Date specified as a
reference date for calculating the Adjusted Expected Distributions or Expected
Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"DESIGNATED REPRESENTATIVES" means the Trustee Representatives and the LP
Representatives identified under Section 2.5.
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"DISTRIBUTION DATE" means a Regular Distribution Date or a Special
Distribution Date.
"DOLLARS"or "$" means United States dollars.
"DOWNGRADE DRAWING" has the meaning assigned to such term in Section
3.6(c).
"DOWNGRADED FACILITY" has the meaning assigned to such term in Section
3.6(c).
"DRAWING" means an Interest Drawing, a Final Drawing or a Downgrade
Drawing, as the case may be.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any U.S. branch of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any of the securities
of such depository institution has a long-term unsecured debt rating from each
Rating Agency of at least A-3 or its equivalent. An Eligible Deposit Account
may be maintained with a Liquidity Provider so long as such Liquidity Provider
is an Eligible Institution (as defined below); PROVIDED that such Liquidity
Provider shall have waived all rights of set-off and counterclaim with respect
to such account.
"ELIGIBLE INSTITUTION" means, subject to the last sentence of subsection
2.2(c), (a) the corporate trust department of the Subordination Agent or any
Trustee, as applicable, or (b) a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least A-3 or its equivalent.
"ELIGIBLE INVESTMENTS" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later than 90
days following the date of such investment, (b) investments in open market
commercial paper of any corporation incorporated under the laws of the United
States of America or any state thereof with a short-term unsecured debt rating
issued by Moody's and Standard & Poor's of at least A-1 and P-1, respectively,
and, if rated by Fitch, F-1, having maturities no later than 90 days following
the date of such investment or (c) investments in negotiable certificates of
deposit, time deposits, banker's acceptances, commercial paper or other direct
obligations of, or obligations guaranteed by,
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commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank including
the Liquidity Provider) with issuer ratings of at least B/C by Thomson
Bankwatch, having maturities no later than 90 days following the date of such
investment; PROVIDED, HOWEVER, that (x) all Eligible Investments that are bank
obligations shall be denominated in U.S. dollars; and (y) the aggregate amount
of Eligible Investments at any one time that are bank obligations issued by any
one bank shall not be in excess of 5% of such bank's capital surplus; PROVIDED
FURTHER that (1) any investment of the types described in clauses (a), (b) and
(c) above may be made through a repurchase agreement in commercially reasonable
form with a bank or other financial institution qualifying as an Eligible
Institution so long as such investment is held by a third party custodian also
qualifying as an Eligible Institution, and (2) all such investments set forth in
(a), (b) and (c) above mature no later than the Business Day immediately
preceding the next Regular Distribution Date; PROVIDED FURTHER, HOWEVER, that in
the case of any Eligible Investment issued by a domestic branch of a foreign
bank, the income from such investment shall be from sources within the United
States for purposes of the Code. Notwithstanding the foregoing, no investment
of the types described in clause (b) or (c) above which is issued or guaranteed
by a Liquidity Provider or Northwest or any of their respective Affiliates shall
be an Eligible Investment.
"EQUIPMENT NOTES" means, at any time, the Series A Equipment Notes, the
Series B Equipment Notes and the Series C Equipment Notes, collectively, and in
each case, any Equipment Notes issued in exchange therefor or replacement
thereof pursuant to the terms of the Indentures.
"EXPECTED DISTRIBUTIONS" means, with respect to the Certificates of any
Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates and (y) the difference between (A) the Pool
Balance of such Certificates as of the immediately preceding Distribution Date
and (B) the Pool Balance of such Certificates as of the Current Distribution
Date, calculated on the basis that (1) the principal of the Equipment Notes held
in such Trust has been paid when due (whether at stated maturity or upon
redemption, prepayment, purchase or acceleration or otherwise) and such payments
have been distributed to the holders of such Certificates and (2) the principal
of any Equipment Notes formerly held in such Trust that have been sold pursuant
to this Agreement has been paid in full and such payments distributed to the
Certificateholders. For purposes of calculating Expected Distributions, any
premium paid on the Equipment Notes held in any Trust which has not been
distributed to the Certificateholders of such Trust (other than such premium or
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a portion thereof applied to the payment of interest on the Certificates of such
Trust or the reduction of the Pool Balance of such Trust) shall be added to the
amount of such Expected Distributions.
"FINAL DISTRIBUTIONS" means, with respect to the Certificates of any Trust
on any Distribution Date, the sum of (a) the aggregate amount of all accrued and
unpaid interest on such Certificates and (b) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date. For purposes of
calculating Final Distributions, any premium paid on the Equipment Notes held in
any Trust which has not been distributed to the Certificateholders of such Trust
(other than such premium or a portion thereof applied to the payment of interest
on the Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Final Distributions.
"FINAL DRAWING" means, in respect of a Liquidity Facility, a borrowing or
drawing, other than a Downgrade Drawing, of all available and undrawn amounts
under such Liquidity Facility in accordance with the provisions thereof.
"FINAL LEGAL DISTRIBUTION DATE" means, for the Class A Certificates, July
2, 2017, for the Class B Certificates, July 2, 2014 and, for the Class C
Certificates, July 2, 2008.
"FITCH" means Fitch Investors Service, L.P.
"INDENTURE" means each Trust Indenture and Mortgage listed on Schedule 1
hereto, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
"INDENTURE DEFAULT" means, with respect to any Indenture, any Event of
Default (as such term is defined in such Indenture) thereunder.
"INTEREST DRAWING" has the meaning assigned to such term in Section 3.6(a).
"INVESTMENT EARNINGS" means investment earnings on funds on deposit in the
Trust Accounts net of losses and investment expenses of the Subordination Agent
in making such investments.
"LEASE" means, with respect to any Indenture, the "Lease" referred to
therein.
"LIEN" means any mortgage, pledge, lien, charge, claim, disposition of
title, encumbrance, lease, sublease,
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sub-sublease or security interest of any kind, including, without limitation,
any thereof arising under any conditional sales or other title retention
agreement.
"LIQUIDITY EVENT OF DEFAULT" with respect to any Liquidity Facility, has
the meaning assigned to such term in such Liquidity Facility.
"LIQUIDITY EXPENSES" means all Liquidity Obligations other than (i) the
principal amount of any Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"LIQUIDITY FACILITY" means, at any time, the Class A Liquidity Facility,
the Class B Liquidity Facility or the Class C Liquidity Facility, as applicable.
"LIQUIDITY OBLIGATIONS" means all principal, interest, fees and other
amounts owing to the Liquidity Providers under the Liquidity Facilities and
Section 7 of the Participation Agreements.
"LIQUIDITY PROVIDER" means, at any time, the Class A Liquidity Provider,
the Class B Liquidity Provider or the Class C Liquidity Provider, as applicable.
"LOAN TRUSTEE" means, with respect to any Indenture, the indenture trustee
thereunder.
"LP INCUMBENCY CERTIFICATE" has the meaning assigned to such term in
Section 2.5(b).
"LP REPRESENTATIVES" has the meaning assigned to such term in Section
2.5(b).
"LTV APPRAISAL" means a current fair market appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
"LTV COLLATERAL AMOUNT" of any Aircraft for any Class of Certificates on
any Distribution Date means the lesser of (i) the LTV Ratio for such Class of
Certificates multiplied by the Appraised Current Market Value of such Aircraft
and (ii) the outstanding principal amount of the Equipment Notes secured by such
Aircraft after giving effect to any principal payments of such Equipment Notes
on or before such Distribution Date.
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"LTV RATIO" means, for the Class A Certificates, 43%, for the Class B
Certificates, 61% and, for the Class C Certificates, 68.9%.
"MINIMUM SALE PRICE" means, with respect to any Aircraft or the Equipment
Notes issued in respect of such Aircraft, at any time, the lesser of (a) 75% of
the Appraised Current Market Value of such Aircraft based upon the most recent
LTV Appraisal and (b) the aggregate outstanding principal amount of such
Equipment Notes, plus accrued and unpaid interest thereon.
"MOODY'S" means Moody's Investors Service, Inc.
"NON-CONTROLLING PARTY" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"NON-EXTENSION DRAWING" has the meaning provided in Section 3.6(d).
"NORTHWEST" means Northwest Airlines, Inc., a Minnesota corporation, and
its successors and assigns.
"NORTHWEST BANKRUPTCY EVENT" means the occurrence and continuation of any
of the following:
(a) the commencement of an involuntary case or other proceeding in
respect of Northwest 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 Northwest 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 Northwest, a
receiver, trustee or liquidator of Northwest, or of any substantial part of
its property, or sequestering any substantial part of the property of
Northwest 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
(b) the commencement by Northwest 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 Northwest to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Northwest or for all or
substantially all of its property, or the making by Northwest of any
assignment for the benefit of creditors or the taking by Northwest of any
corporate action to authorize any of the foregoing.
"NWA CORP." means Northwest Airlines Corporation, a Delaware corporation,
and its successors and assigns.
"OFFICER'S CERTIFICATE" of any Person means a certification signed by a
Responsible Officer of such Person.
"OPERATIVE AGREEMENTS" means this Agreement, the Liquidity Facilities, the
Indentures, the Trust Agreements, the Underwriting Agreement, the Leases, the
Participation Agreements, the Equipment Notes and the Certificates and any other
document which is an "Operative Agreement" under any Participation Agreement,
together with all exhibits and schedules included with any of the foregoing.
"OUTSTANDING" means, when used with respect to each Class of Certificates,
as of the date of determination, all Certificates of such Class theretofore
authenticated and delivered under the related Trust Agreement, except:
(i) Certificates of such Class theretofore cancelled by the
Registrar (as defined in such Trust Agreement) or delivered to the Trustee
thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full
amount required to make the final distribution with respect to such
Certificates pursuant to Section 11.01 of such Trust Agreement has been
theretofore deposited with the related Trustee in trust for the holders of
such Certificates as provided in Section 4.01 of such Trust Agreement
pending distribution of such money to such Certificateholders pursuant to
such final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of
which other Certificates have been authenticated and delivered pursuant to
such Trust Agreement;
PROVIDED, HOWEVER, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand,
authorization, direction,
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notice, consent or waiver hereunder, any Certificates owned by Northwest or any
of its Affiliates shall be disregarded and deemed not to be Outstanding, except
that, in determining whether such Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates that such Trustee knows to be so owned shall be so disregarded.
Certificates so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the applicable
Trustee the pledgee's right so to act with respect to such Certificates and that
the pledgee is not Northwest or any of its Affiliates.
"OVERDUE SCHEDULED PAYMENT" means any Scheduled Payment which is not in
fact received by the Subordination Agent within five days of the Scheduled
Payment Date relating thereto.
"OWNER TRUSTEE" means, with respect to any Indenture, the Owner Trustee (as
defined therein) not in its individual capacity but solely as trustee under the
related owner trust agreement, together with any successor trustee appointed
pursuant to such owner trust agreement.
"PARTICIPATION AGREEMENTS" means, with respect to each Indenture, each of
the Participation Agreements listed on Schedule 2 hereto, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"PERFORMING EQUIPMENT NOTE" means an Equipment Note issued pursuant to an
Indenture with respect to which no payment default has occurred and is
continuing (without giving effect to any acceleration thereof); PROVIDED that in
the event of a bankruptcy proceeding involving Northwest under Title 11 of the
United States Code (the "Bankruptcy Code"), (i) any payment default existing
during 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such
longer period as may apply under Section 1110(b) of the Bankruptcy Code) (the
"Section 1110 Period") shall not be taken into consideration, unless during such
period the trustee in such proceeding or Northwest refuses to assume or agree to
perform its obligations under the Lease related to such Equipment Notes and (ii)
any payment default occurring after the date of the order of relief in such
proceeding shall not be taken into consideration if such payment default is
cured under Section 1110(a)(1)(B) of the Bankruptcy Code before the later of 30
days after the date of such default or the expiration of the Section 1110
Period.
"PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the then
aggregate outstanding principal amount of all Equipment Notes are Performing
Equipment Notes.
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"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, trustee,
unincorporated organization or government or any agency or political subdivision
thereof.
"POOL BALANCE" means, with respect to each Trust or the Certificates issued
by any Trust, as of any date, (i) the original aggregate face amount of the
Certificates of such Trust LESS (ii) the aggregate amount of all payments made
in respect of the Certificates of such Trust other than payments made in respect
of interest or premium thereon or reimbursement of any costs and expenses in
connection therewith. The Pool Balance for each Trust or the Certificates
issued by any Trust as of any Distribution Date shall be computed after giving
effect to any payment of principal, if any, on the Equipment Notes or other
Trust Property held in such Trust and the distribution thereof to be made on
such date.
"PROCEEDING" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PTC EVENT OF DEFAULT" means, with respect to each Trust Agreement, the
failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Legal Distribution Date for such Class or (ii) interest due on such Certificates
on any Distribution Date (unless, in the case of the Class A, Class B or Class C
Certificates, the Subordination Agent shall have made an Interest Drawing with
respect thereto in an amount sufficient to pay such interest and shall have
distributed such amount to the holders of the Certificates entitled thereto).
"RATING AGENCIES" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. Initially, the
Rating Agencies shall consist of Moody's, Standard & Poor's and Fitch.
"RATINGS CONFIRMATION" means, with respect to any action proposed to be
taken, a written confirmation from each of the Rating Agencies that such action
would not result in (i) a reduction of the rating for any Class of Certificates
below the then current rating for such Class of Certificates or (ii) a
withdrawal or suspension of the rating of any Class of Certificates.
"REGULAR DISTRIBUTION DATES" means each January 2 and July 2, commencing
on January 2, 1998; PROVIDED, HOWEVER, that, if any such day shall not be a
Business Day, the related distribution shall be made on the next succeeding
Business Day without additional interest.
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"REPLACEMENT LIQUIDITY FACILITY" means, for any Trust, an irrevocable
revolving credit agreement in substantially the form of the initial Liquidity
Facility for such Trust, including reinstatement provisions or in such other
form (which may include a letter of credit) as shall permit the Rating Agencies
to confirm in writing their respective ratings then in effect for the
Certificates (before downgrading of such ratings, if any, as a result of the
downgrading of the Liquidity Provider), in a face amount equal to the Required
Amount for such Liquidity Facility and issued by a Replacement Liquidity
Provider, PROVIDED that, if a form of Liquidity Facility that is not
substantially in the form of the replaced Liquidity Facility is to be used,
Northwest shall have received a satisfactory opinion of tax counsel satisfactory
to Northwest with respect to such form of Replacement Liquidity Facility (and a
copy of such opinion shall be furnished to the Subordination Agent).
"REPLACEMENT LIQUIDITY PROVIDER" means a Person having unsecured debt
ratings which are equal to or higher than the Threshold Rating.
"REQUIRED AMOUNT" means, with respect to each Liquidity Facility and each
Cash Collateral Account related thereto, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the related Class of Certificates, that would be payable on
such Class of Certificates on each of the three successive Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two Regular Distribution Dates, in each
case calculated on the basis of the Pool Balance of such Class of Certificates
on such date and without regard to expected future payments of principal on such
Class of Certificates.
"RESPONSIBLE OFFICER" means (i) with respect to the Subordination Agent and
each of the Trustees, any officer in the corporate trust administration
department of the Subordination Agent or such Trustee or any other officer
customarily performing functions similar to those performed by the Persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject and (ii) with respect to each Liquidity Provider, any authorized officer
or agent of such Liquidity Provider.
"ROYAL BANK" has the meaning assigned to it in the preamble to this
Agreement.
"SCHEDULED PAYMENT" means, with respect to any Equipment Note, (i) any
payment of principal and interest on such Equipment Note (other than an Overdue
Scheduled
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Payment) due from the obligor thereon or (ii) any payment of interest on the
corresponding Class of Certificates with funds drawn under any Liquidity
Facility, which payment represents the installment of principal at the stated
maturity of such installment of principal on such Equipment Note, the payment of
regularly scheduled interest accrued on the unpaid principal amount of such
Equipment Note, or both; PROVIDED that any payment of principal of, premium, if
any, or interest resulting from the redemption or purchase of any Equipment Note
shall not constitute a Scheduled Payment. The Certificates of any Class shall
be deemed to be comprised of interest and principal components, with the
interest component equaling interest accrued at the Stated Interest Rate for
such Class of Certificates from (i) the later of (1) the date of the issuance
thereof and (2) the most recent but preceding Regular Distribution Date to (ii)
the Regular Distribution Date on which such Scheduled Payment is being made,
such interest to be considered payable in arrears on such Regular Distribution
Date and to be calculated and allocated in the same manner as interest on the
Equipment Notes.
"SCHEDULED PAYMENT DATE" means, with respect to any Scheduled Payment, the
date on which such Scheduled Payment is scheduled to be made.
"SERIES A EQUIPMENT NOTES" means the 7.068% Series A Equipment Notes issued
pursuant to each Indenture by the related Owner Trustee and authenticated by the
Loan Trustee thereunder, and any such Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of such Indenture.
"SERIES B EQUIPMENT NOTES" means the 7.248% Series B Equipment Notes issued
pursuant to each Indenture by the related Owner Trustee and authenticated by the
Loan Trustee thereunder, and any such Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of such Indenture.
"SERIES C EQUIPMENT NOTES" means the 7.039% Series C Equipment Notes issued
pursuant to the Indentures relating to certain of the Aircraft (as specified in
such Indentures) by the related Owner Trustee and authenticated by the Loan
Trustee thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"SPECIAL DISTRIBUTION DATE" means, with respect to any Special Payment, the
date chosen by the Subordination Agent pursuant to Section 2.4(a) for the
distribution of such Special Payment in accordance with this Agreement;
PROVIDED, HOWEVER, that, if any such day shall not be a Business Day,
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the related distribution shall be made on the next succeeding Business Day
without additional interest.
"SPECIAL PAYMENT" means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture), including Overdue Scheduled Payments, payments in
respect of the redemption or repurchase of any Equipment Note and payments in
respect of the sale of any Equipment Note to the related Owner Trustee, Owner
Participant or any other Person.
"SPECIAL PAYMENTS ACCOUNT" means the Eligible Deposit Account created
pursuant to Section 2.2 as a sub-account to the Collection Account.
"STANDARD & POOR'S" means Standard & Poor's Rating Group, a division of
McGraw-Hill Inc.
"STATED AMOUNT" with respect to any Liquidity Facility, means the
Commitment (as defined in such Liquidity Facility) of the applicable Liquidity
Provider thereunder.
"STATED INTEREST RATE" means (i) with respect to the Class A Certificates,
7.068% per annum, (ii) with respect to the Class B Certificates, 7.248% per
annum, and (iii) with respect to the Class C Certificates, 7.039% per annum.
"STATE STREET" has the meaning assigned to it in the preamble to this
Agreement.
"STATE STREET OF CONNECTICUT" has the meaning assigned to it in the
preamble to this Agreement.
"SUBORDINATION AGENT" has the meaning assigned to it in the preamble to
this Agreement.
"TAX" and "TAXES" mean any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, loss, damage, liability, expense, additions to tax and additional
amounts or costs incurred or imposed with respect thereto) imposed or otherwise
assessed by the United States or by any state, local or foreign government (or
any subdivision or agency thereof) or other taxing authority, including, without
limitation: taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth and similar charges; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value added, taxes
on goods and services, gains taxes, license, registration and
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documentation fees, customs duties, tariffs, and similar charges.
"THRESHOLD RATING" means the short-term unsecured debt rating of P-1 by
Moody's and A-1 by Standard & Poor's, and F-1+ by Fitch PROVIDED that, if Fitch
does not provide short-term unsecured debt ratings for such financial
institution and Moody's and Standard & Poor's do provide such ratings, then such
financial institution shall be required only to have short-term unsecured debt
ratings equal to or higher than the Threshold Ratings provided by Moody's and
Standard & Poor's or, in the event a person's short-term unsecured debt is not
rated by either Moody's or Standard Poor's, the long-term unsecured debt rating
by Moody's and Standard & Poor's at least equal to the initial rating by each of
Moody's and Standard Poor's on the Class A Certificates.
"TREASURY REGULATIONS" means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRIGGERING EVENT" means (x) the occurrence of an Indenture Default under
all of the Indentures resulting in a PTC Event of Default with respect to the
most senior Class of Certificates then Outstanding, (y) the Acceleration of, or
a failure to pay at final maturity, all of the outstanding Equipment Notes or
(z) the occurrence of a Northwest Bankruptcy Event.
"TRUST" means any of the Class A Trust, the Class B Trust or the Class C
Trust.
"TRUST ACCOUNTS" has the meaning assigned to such term in Section 2.2(a).
"TRUST AGREEMENT" means any of the Class A Trust Agreement, Class B Trust
Agreement or Class C Trust Agreement.
"TRUSTEE" means any of the Class A Trustee, the Class B Trustee or the
Class C Trustee.
"TRUSTEE INCUMBENCY CERTIFICATE" has the meaning assigned to such term in
Section 2.5(a).
"TRUSTEE REPRESENTATIVES" has the meaning assigned to such term in Section
2.5(a).
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"UNDERWRITERS" means Credit Suisse First Boston Corporation, Lehman
Brothers Inc. and Morgan Stanley & Co. Incorporated.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as of
September 16, 1997, by and among the Underwriters, NWA Corp. and Northwest,
relating to the purchase of the Certificates by the Underwriters, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"WRITTEN NOTICE" means, from (i) any Trustee or Liquidity Provider, a
written instrument executed by the Designated Representative of such Person, and
(ii) the Subordination Agent, a written instrument executed by a Person
designated in the Officer's Certificate of the Subordination Agent delivered on
the Closing Date. An invoice delivered by a Liquidity Provider pursuant to
Section 3.1 in accordance with its normal invoicing procedures shall constitute
Written Notice under such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 AGREEMENT TO TERMS OF SUBORDINATION; PAYMENTS FROM MONIES
RECEIVED ONLY. (a) Each Trustee hereby acknowledges and agrees to the terms of
subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
(b) Except as otherwise expressly provided in the next succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments or payments under Section 7 of the
Participation Agreements, and only to the extent that the Subordination Agent
shall have received sufficient income or proceeds therefrom to enable it to make
such payments in accordance with the terms hereof. Each of the Trustees and the
Subordination Agent hereby agrees and, as provided in each Trust Agreement, each
Certificateholder, by its acceptance of a Certificate, and each Liquidity
Provider, by entering into the Liquidity Facility to which it is a party, has
agreed to look solely to such amounts
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to the extent available for distribution to it as provided in this Agreement and
that none of the Trustees, Owner Trustees, Loan Trustees, Owner Participants nor
the Subordination Agent is personally liable to any of them for any amounts
payable or any liability under this Agreement, any Trust Agreement, any
Liquidity Facility or such Certificate, except (in the case of the Subordination
Agent) as expressly provided herein or (in the case of the Trustees) as
expressly provided in each Trust Agreement or (in the case of the Owner Trustees
and the Loan Trustees) as expressly provided in any Operative Agreement.
SECTION 2.2 TRUST ACCOUNTS. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "TRUST ACCOUNTS" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to
Section 2.4 hereof, as the case may be, next following the date of such
investment; PROVIDED, HOWEVER, that following the making of a Downgrade Drawing
or a Non-Extension Drawing, the Subordination Agent shall invest and reinvest
such amounts at the direction of Northwest funding such Drawing and the
Subordination Agent shall use reasonable efforts to cause such amounts to be
invested in Specified Investments which yield at least an amount equal to the
interest (excluding the Applicable Margin) that is payable to such Liquidity
Provider in respect of such amounts pursuant to Section 3.7 of the relevant
Liquidity Facility (it being understood that it may not be feasible to obtain
such a yield). Unless otherwise expressly provided in this Agreement
(including, without limitation, with respect to Investment Earnings on deposit
in the Cash Collateral Accounts, Section 3.6(f) hereof), any Investment Earnings
shall be deposited in the Collection Account when received by the Subordination
Agent and shall be applied by the Subordination Agent in the same manner as the
principal amount of such
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investment is to be applied and any losses shall be charged against the
principal amount invested, in each case net of the Subordination Agent's
reasonable fees and expenses in making such investments. The Subordination
Agent shall not be liable for any loss resulting from any investment,
reinvestment or liquidation required to be made under this Agreement other than
by reason of its willful misconduct or gross negligence or, with respect to the
handling or transfer of funds, ordinary negligence. Eligible Investments and
any other investment required to be made hereunder shall be held to their
maturities except that any such investment may be sold (without regard to its
maturity) by the Subordination Agent without instructions whenever such sale is
necessary to make a distribution required under this Agreement. Uninvested
funds held hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise provided
herein with respect to Investment Earnings). The Trust Accounts shall be held
in trust by the Subordination Agent under the sole dominion and control of the
Subordination Agent for the benefit of the Trustees, the Certificateholders and
the Liquidity Providers, as the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
to which each Rating Agency may consent) establish a new Collection Account,
Special Payments Account or Cash Collateral Account, as the case may be, as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be. So long as the Subordination Agent is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
SECTION 2.3 DEPOSITS TO THE COLLECTION ACCOUNT AND SPECIAL PAYMENTS
ACCOUNT. (a) The Subordination Agent shall, upon receipt thereof, deposit in
the Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or more
Special Payments are made to the Subordination Agent as holder of the Equipment
Notes, deposit in the Special Payments Account the aggregate amount of such
Special Payments.
SECTION 2.4 DISTRIBUTIONS OF SPECIAL PAYMENTS. (a) NOTICE OF SPECIAL
PAYMENT. Except as provided in Section 2.4(e), upon receipt by the
Subordination Agent, as registered holder of the Equipment Notes, of any notice
of a Special Payment (or, in the absence of any such notice, upon receipt by the
Subordination Agent of a Special Payment), the Subordination Agent shall
promptly give notice thereof to each Trustee and the Liquidity
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Providers. The Subordination Agent shall promptly calculate the amount of the
redemption or purchase of Equipment Notes or the amount of any Overdue Scheduled
Payment, as the case may be, comprising such Special Payment under the
applicable Indenture or Indentures and shall promptly send to each Trustee and
the Liquidity Provider a Written Notice of such amount and the amount allocable
to each Trust. Such Written Notice shall also set the distribution date for
such Special Payment (a "SPECIAL DISTRIBUTION DATE"), which shall be a Business
Day which follows the later to occur of (x) the 10th day after the date of such
Written Notice or (y) the date the Subordination Agent has received or expects
to receive such Special Payment. Amounts on deposit in the Special Payments
Account shall be distributed in accordance with Sections 2.4(b) and 2.4(c)
hereof, as applicable.
(b)(i) REDEMPTIONS AND PURCHASES OF EQUIPMENT NOTES. So long as no
Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption
or purchase (including, without limitation, a purchase resulting from the sale
of the Equipment Notes permitted by Article IV hereof) of all of the Equipment
Notes issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in the following order of priority:
FIRST, such amount as shall be required to pay (A) all accrued and
unpaid Liquidity Expenses then in arrears PLUS (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses not in
arrears to such Special Payment Date MULTIPLIED BY (y) a fraction, the
numerator of which is the aggregate outstanding principal amount of
Equipment Notes being redeemed, purchased or prepaid on such Special
Payment Date and the denominator of which is the aggregate outstanding
principal amount of all Equipment Notes, shall be distributed to the
Liquidity Providers PARI PASSU on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
SECOND, such amount as shall be required to pay (A) all accrued and
unpaid interest then in arrears on all Liquidity Obligations PLUS (B) the
product of (x) the aggregate amount of all accrued and unpaid interest on
all Liquidity Obligations not in arrears to such Special Payment Date (at
the rate provided in the applicable Liquidity Facility) MULTIPLIED BY (y) a
fraction, the numerator of which is the aggregate outstanding principal
amount of Equipment Notes being redeemed, purchased or prepaid on such
Special Payment Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes, shall be distributed
to the Liquidity Providers PARI PASSU on the basis of the amount of such
accrued and unpaid interest owed to each Liquidity Provider;
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THIRD, such amount as shall be required (A) to pay or reimburse the
Liquidity Providers in an amount equal to the amount of any unreimbursed
Interest Drawings under the Liquidity Facilities shall be distributed to
the Liquidity Providers or (B) so long as no Liquidity Event of Default
shall have occurred and be continuing, to replenish the Cash Collateral
Accounts up to their respective Required Amounts shall be deposited in the
Cash Collateral Accounts, in each such case, PARI PASSU on the basis of the
amounts of such unreimbursed Interest Drawings and deficiencies;
FOURTH, such amount as shall be required to pay in full Expected
Distributions to the holders of Class A Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
FIFTH, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
SIXTH, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee; and
SEVENTH, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
(ii) Upon the occurrence of a Triggering Event (whether or not
continuing), the Subordination Agent shall make distributions pursuant to
this Section 2.4(b) of amounts on deposit in the Special Payments Account
on account of the redemption or purchase of all of the Equipment Notes
issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in accordance with Section 3.3 hereof.
(c) OTHER SPECIAL PAYMENTS. Except as provided in clause (e) below,
any amounts on deposit in the Special Payments Account other than in respect of
amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the
Special Distribution Date therefor in accordance with Article III hereof.
(d) INVESTMENT OF AMOUNTS IN SPECIAL PAYMENTS ACCOUNT. Any amounts on
deposit in the Special Payments Account prior to the distribution thereof
pursuant to Section 2.4(b) or (c) shall be invested in accordance with Section
2.2(b). Investment Earnings on such investments shall be distributed in
accordance with Section 2.4(b) or (c), as the case may be.
(e) CERTAIN PAYMENTS. The Subordination Agent will distribute
promptly upon receipt thereof (i) any indemnity
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payment received by it from the Owner Participant, the Owner Trustee or
Northwest in respect of any Trustee or any Liquidity Provider (collectively, the
"PAYEES") and (ii) any compensation (including, without limitation, any fees
payable to any Liquidity Provider under Section 2.03 of any Liquidity Facility)
received by it from the Owner Participant, the Owner Trustee or Northwest under
any Operative Agreement in respect of any Payee, directly to the Payee entitled
thereto.
SECTION 2.5 DESIGNATED REPRESENTATIVES. (a) With the delivery of
this Agreement, each Trustee shall furnish to the Subordination Agent, and from
time to time thereafter may furnish to the Subordination Agent, at such
Trustee's discretion, or upon the Subordination Agent's request (which request
shall not be made more than one time in any 12-month period), a certificate (a
"TRUSTEE INCUMBENCY CERTIFICATE") of a Responsible Officer of such Trustee
certifying as to the incumbency and specimen signatures of the officers of such
Trustee and the attorney-in-fact and agents of such Trustee (the "TRUSTEE
REPRESENTATIVES") authorized to give Written Notices on behalf of such Trustee
hereunder. Until the Subordination Agent receives a subsequent Trustee
Incumbency Certificate, it shall be entitled to rely on the last Trustee
Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, each Liquidity Provider shall
furnish to the Subordination Agent, and from time to time thereafter may furnish
to the Subordination Agent, at such Liquidity Provider's discretion, or upon the
Subordination Agent's request (which request shall not be made more than one
time in any 12-month period), a certificate (an "LP INCUMBENCY CERTIFICATE") of
any authorized signatory of such Liquidity Provider certifying as to the
incumbency and specimen signatures of any officer, attorney-in-fact, agent or
other designated representative of such Liquidity Provider (the "LP
REPRESENTATIVES" and, together with the Trustee Representatives, the "DESIGNATED
REPRESENTATIVES") authorized to give Written Notices on behalf of such Liquidity
Provider hereunder. Until the Subordination Agent receives a subsequent LP
Incumbency Certificate, it shall be entitled to rely on the last LP Incumbency
Certificate delivered to it hereunder.
SECTION 2.6 CONTROLLING PARTY. (a) The Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture at any given time,
the Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action with respect to such Indenture or the Equipment Notes issued
thereunder, so long as no Indenture Default has occurred and is continuing
thereunder, by the holders of at least a majority of the outstanding principal
amount of such Equipment Notes (PROVIDED that, for so long as the Subordination
Agent is the registered holder of the Equipment Notes, the Subordination Agent
shall act with respect to this clause (i) in accordance with the directions of
the Trustees representing holders of Certificates
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representing an undivided interest in such principal amount of Equipment Notes),
and (ii) after the occurrence and during the continuance of an Indenture Default
thereunder (which has not been cured by the applicable Owner Trustee or the
applicable Owner Participant pursuant to Section 4.3 of such Indenture), in
taking, or refraining from taking, any action with respect to such Indenture or
such Equipment Notes, including exercising remedies thereunder (including
accelerating the Equipment Notes issued thereunder or foreclosing the Lien on
the Aircraft securing such Equipment Notes), by the Controlling Party.
(b) The Person who shall be the "CONTROLLING PARTY" with respect to
any Indenture shall be: (w) the Class A Trustee; (x) upon payment of Final
Distributions to the holders of Class A Certificates, the Class B Trustee; and
(y) upon payment of Final Distributions to the holders of Class B Certificates,
the Class C Trustee. For purposes of giving effect to the foregoing, the
Trustees (other than the Controlling Party) irrevocably agree (and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party and any vote so exercised shall be binding
upon the Trustees and all Certificateholders.
The Subordination Agent shall give written notice to all of the other
parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; PROVIDED, HOWEVER, that nothing herein contained
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, the Liquidity Provider with the
then greatest amount of unreimbursed Liquidity Obligations payable to it under
the Liquidity Facilities shall have the right to elect, by Written Notice to the
Subordination Agent, each of the Trustees and each of the other Liquidity
Providers, to become the Controlling Party hereunder with respect to any
Indenture at any time after the 18 months from the Acceleration of the Equipment
Notes under such Indenture, if at the time of such election the Liquidity
Obligations have not been paid in full; provided that if there is more than one
Liquidity Provider, the Liquidity Provider with the greatest amount of
unreimbursed Liquidity Obligations shall have such right.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
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(e) The Controlling Party shall not be entitled to require or obligate
any Non-Controlling Party to provide funds necessary to exercise any right or
remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 WRITTEN NOTICE OF DISTRIBUTION. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A Certificates, the Class A
Trustee shall separately set forth the amounts to be paid in accordance
with clause "FOURTH" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clause "FIFTH" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clause "SIXTH" of Section 3.2 or Section 2.4(b), as the case may be,
hereof; and
(iv) With respect to each Liquidity Facility, the Liquidity
Provider thereunder shall separately set forth the amounts to be paid in
accordance with clauses "FIRST", "SECOND" and "THIRD" of Section 3.2 or
Section 2.4(b), as the case may be, hereof.
The notices required under this Section 3.1(a) are in the form of Schedule 3
hereto or may be in the form of a similar document provided to the Subordination
Agent by the parties referenced therein or by any one of them pursuant to an
agreement between the parties referred to therein, which schedule or similar
document may state that, unless there has been a prepayment of the Certificates,
such schedule or similar document is to remain in effect until any substitute
notice or amendment shall be given to the Subordination Agent by the party
providing such notice.
(b) Following the occurrence of a Triggering Event, the Subordination
Agent shall request the following information from the following Persons, and
each of the following Persons shall, upon the request of the Subordination
Agent, deliver a
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Written Notice to the Subordination Agent setting forth for such Person the
following information:
(i) With respect to the Class A Certificates, the Class A
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (relating to indemnity payments made by the Class A
Certificateholders) and "SIXTH" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (relating to indemnity payments made by the Class B
Certificateholders) and "SEVENTH" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (relating to indemnity payments made by the Class C
Certificateholders) and "EIGHTH" of Section 3.3 hereof; and
(iv) With respect to each Liquidity Facility, the Liquidity
Provider thereunder shall separately set forth the amounts to be paid in
accordance with clauses "SECOND, "THIRD" and "FOURTH" of Section 3.3
hereof.
(c) At such time as a Trustee or a Liquidity Provider shall have
received all amounts owing to it (and, in the case of a Trustee, the
Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable, and, in the case of a Liquidity Provider, its commitment
under the related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination Agent and each
other party to this Agreement.
(d) As provided in Section 6.5 hereof, the Subordination Agent shall
be fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs
(a) through (c) above and shall have no independent obligation to verify,
calculate or recalculate any amount set forth in any Written Notice delivered in
accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee or a Liquidity Provider,
as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if made
prior to 10:00 A.M. (New York City time) shall be effective on the date
delivered (or if delivered later shall be effective as of the next Business
Day). Subject to the terms of this Agreement, the Subordination Agent shall as
promptly as practicable comply with any such instructions; PROVIDED, HOWEVER,
that any transfer of funds pursuant to any instruction received after 10:00 A.M.
(New York City time) on any Business Day may be made on the next succeeding
Business Day.
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(f) In the event the Subordination Agent shall not receive from any
Person any information set forth in paragraphs (a) or (b) above which is
required to enable the Subordination Agent to make a distribution to such Person
pursuant to Section 3.2 or 3.3 hereof, the Subordination Agent shall request
such information in writing and, failing to receive any such information, the
Subordination Agent shall, after written notice to such person, not make such
distribution(s) to such Person. In such event, the Subordination Agent shall
make distributions pursuant to clauses "FIRST" through "SEVENTH" of Section 3.2
and clauses "FIRST" through "EIGHTH" of Section 3.3 to the extent it shall have
sufficient information to enable it to make such distributions, and shall
continue to hold any funds remaining, after making such distributions, until the
Subordination Agent shall receive all necessary information to enable it to
distribute any funds so withheld.
(g) On such dates (but, prior to a Triggering Event, not more
frequently than monthly) as any Liquidity Provider or any Trustee shall request,
the Subordination Agent shall send to such party a written statement reflecting
all amounts on deposit with the Subordination Agent pursuant to Section 3.1(f)
hereof.
SECTION 3.2 DISTRIBUTION OF AMOUNTS ON DEPOSIT IN THE COLLECTION
ACCOUNT. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and
3.6(b), amounts on deposit in the Collection Account (or, in the case of any
amount described in Section 2.4(c), on deposit in the Special Payments Account)
shall be promptly distributed on each Distribution Date (or, in the case of any
amount described in Section 2.4(c), on the Special Distribution Date therefor)
in the following order of priority and in accordance with the information
provided to the Subordination Agent pursuant to Section 3.1(a) hereof:
FIRST, such amount as shall be required to pay all accrued and unpaid
Liquidity Expenses owed to each Liquidity Provider shall be distributed to
the Liquidity Providers PARI PASSU on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
SECOND, such amount as shall be required to pay in full the aggregate
amount of interest accrued on all Liquidity Obligations (at the rate
provided in the applicable Liquidity Facility) shall be distributed to the
Liquidity Providers PARI PASSU on the basis of the amount of Liquidity
Obligations owed to each Liquidity Provider;
THIRD, such amount as shall be required (A) to pay or reimburse the
Liquidity Providers in an amount equal to the amount of all Liquidity
Obligations then due (other than amounts payable pursuant to clause "FIRST"
or "SECOND" of this Section 3.2) shall be distributed to the Liquidity
Providers, and (B) if applicable, to replenish the Cash Collateral Accounts
up to their respective Required Amounts
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shall be deposited in the Cash Collateral Accounts, in each such case, PARI
PASSU on the basis of the amounts of such unreimbursed Liquidity
Obligations and/or deficiencies;
FOURTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
FIFTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
SIXTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C Certificates on such
Distribution Date shall be distributed to the Class C Trustee; and
SEVENTH, such amount as shall be required to pay in full the aggregate
unpaid amount of fees and expenses payable as of such Distribution Date to
the Subordination Agent and each Trustee pursuant to the terms of this
Agreement and the Trust Agreements, as the case may be, shall be
distributed to the Subordination Agent and such Trustee; and
EIGHTH, the balance, if any, of any such payment remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III (including the priorities set forth
therein).
SECTION 3.3 DISTRIBUTION OF AMOUNTS ON DEPOSIT FOLLOWING A TRIGGERING
EVENT. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b) hereof,
upon the occurrence of a Triggering Event and at all times thereafter, all funds
in the Collection Account or the Special Payments Account shall be promptly
distributed by the Subordination Agent in the following order of priority:
FIRST, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any amounts
of the nature described in clause (i) above actually incurred by it under
the applicable Trust Agreement (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) any Liquidity Provider or
Certificateholder for payments, if any, made by it to the Subordination
Agent or any Trustee in respect of amounts described in clause (i)
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above, shall be distributed to such Liquidity Provider or to the applicable
Trustee for the account of such Certificateholder, in each such case, PARI
PASSU on the basis of all amounts described in clauses (i) through (iii)
above;
SECOND, such amount remaining as shall be required to pay all accrued
and unpaid Liquidity Expenses (including fees in respect of a Downgrade
Drawing) shall be distributed to each Liquidity Provider PARI PASSU on the
basis of the amount of Liquidity Expenses owed to each Liquidity Provider;
THIRD, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations (other than interest in
respect of a Downgrade Drawing) as provided in the Liquidity Facilities
shall be distributed to each Liquidity Provider PARI PASSU on the basis of
the amount of such accrued and unpaid interest owed to each Liquidity
Provider;
FOURTH, such amount remaining as shall be required (A) to pay in full
the outstanding amount of all Liquidity Obligations, whether or not then
due (other than amounts payable pursuant to clause "SECOND" or "THIRD" of
this Section 3.3) shall be distributed to each Liquidity Provider that has
not funded a Cash Collateral Account in accordance with Section 3.6(c) or
3.6(i) hereof, and/or (B) if applicable, so long as no Performing Note
Deficiency exists or Liquidity Event of Default has occurred and is
continuing, to replenish the Cash Collateral Accounts up to their
respective Required Amounts shall be deposited in the Cash Collateral
Accounts, in each case, PARI PASSU on the basis of the amount of Liquidity
Obligations owed to each Liquidity Provider and/or such deficiencies;
FIFTH, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously reimbursed),
shall be applied by the Subordination Agent in reimbursement of such
amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, PARI PASSU on the
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basis of all amounts described in clauses (i) through (iii) above;
SIXTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A Certificates shall be
distributed to the Class A Trustee;
SEVENTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee;
EIGHTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C Certificates shall be
distributed to the Class C Trustee;
NINTH, such amount remaining shall be retained in the Collection
Account until the immediately succeeding Distribution Date or, if all
Classes of Certificates shall have been paid in full, shall be distributed
to the Owner Trustee to the extent that the amount received from the Loan
Trustees and deposited in the Collection Account exceed the amounts
described in clauses "first" through "eighth" above; and
TENTH, such amount remaining shall be distributed to the
Certificateholders of the related Trust.
SECTION 3.4 OTHER PAYMENTS. Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent in the order
of priority specified in Section 3.3 hereof.
SECTION 3.5 PAYMENTS TO THE TRUSTEES AND THE LIQUIDITY PROVIDERS.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent
shall provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer of funds to the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6 LIQUIDITY FACILITIES. (a) INTEREST DRAWINGS. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the
Class A Certificates, the Class B Certificates or the Class C Certificates (at
the Stated Interest Rate for such Class of Certificates), then, prior to 12:00
noon (New York City time) on
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the Business Day following such Distribution Date, the Subordination Agent shall
request a drawing (each such drawing, an "INTEREST DRAWING") under the Liquidity
Facility with respect to such Class of Certificates in an amount equal to the
lesser of (i) an amount sufficient to pay the amount of such accrued interest
(at the Stated Interest Rate for such Class of Certificates) and (ii) the
Available Amount under such Liquidity Facility, and shall pay such amount to the
Trustee with respect to such Class of Certificates in payment of such accrued
interest.
(b) APPLICATION OF INTEREST DRAWINGS. Notwithstanding anything to the
contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee, (ii)
all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) DOWNGRADE DRAWINGS. If at any time the debt rating of any
Liquidity Provider issued by either Rating Agency is lower than the applicable
Threshold Rating, within 30 days after receiving notice of such downgrading (but
no later than the expiration date of the Liquidity Facility issued by the
downgraded Liquidity Provider (the "DOWNGRADED FACILITY")), such Liquidity
Provider may arrange, or the Subordination Agent (in consultation with
Northwest), may arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility to the Subordination Agent. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination Agent shall, on such 30th day (or if such 30th day
is not a Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of such Downgraded Facility), request a drawing in accordance
with and to the extent permitted by such Downgraded Facility (such drawing, a
"DOWNGRADE DRAWING") of all available and undrawn amounts thereunder. Amounts
drawn pursuant to a Downgrade Drawing shall be maintained and invested as
provided in Section 3.6(f) hereof. The Liquidity Provider may also arrange for
a Replacement Liquidity Provider to issue and deliver a Replacement Liquidity
Facility at any time after such Downgrade Drawing so long as such
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Downgrade Drawing has not been reimbursed in full to the Liquidity Provider.
(d) NON-EXTENSION DRAWINGS. If any Liquidity Facility with respect to
any Class of Certificates is scheduled to expire on a date (the "STATED
EXPIRATION DATE") prior to the date that is 15 days after the Final Legal
Distribution Date for such Class of Certificates, then, no earlier than the
180th day and no later than the 90th day prior to the then Stated Expiration
Date, the Subordination Agent shall request that such Liquidity Provider extend
the Stated Expiration Date for a period of 364 days after the Stated Expiration
Date (unless the obligations of such Liquidity Provider thereunder are earlier
terminated in accordance with such Liquidity Facility). The Liquidity Provider
shall advise the Subordination Agent, no earlier than 90 days and no later than
60 days prior to such Stated Expiration Date, whether, in its sole discretion,
it agrees to so extend the Stated Expiration Date. If, on or before such 25th
day prior to the Stated Expiration Date, such Liquidity Facility shall not have
been so extended or replaced in accordance with Section 3.6(e), or if the
Liquidity Provider fails irrevocably and unconditionally to advise the
Subordination Agent on or before the 25th day prior to the Stated Expiration
Date then in effect that such Stated Expiration Date shall be so extended, the
Subordination Agent shall, on such 25th day (or as soon as possible thereafter),
in accordance with and to the extent permitted by the terms of the expiring
Liquidity Facility (a "NON-EXTENDED FACILITY"), request a drawing under such
expiring Liquidity Facility (such drawing, a "NON-EXTENSION DRAWING") of all
available and undrawn amounts thereunder. Amounts drawn pursuant to any
Non-Extension Drawing shall be maintained and invested in accordance with
Section 3.6(f) hereof.
(e) ISSUANCE OF REPLACEMENT LIQUIDITY FACILITY. At any time, the
Subordination Agent may, at its option, in consultation with Northwest, arrange
for a Replacement Liquidity Facility to replace the Liquidity Facility for any
Class of Certificates; PROVIDED that, the initial Liquidity Provider may not be
replaced unless there shall have become due to the initial Liquidity Provider
amounts pursuant to Section 3.1, 3.2 or 3.3 of the Liquidity Facilities and the
replacement of the initial Liquidity Provider would reduce or eliminate the
obligation to pay such amounts. In any such consultation, the Subordination
Agent shall accept the recommendations of Northwest in the absence of a good
faith reason not to do so. If such Replacement Liquidity Facility is provided
at any time after [an advance has been made by the then current Liquidity
Provider], all funds on deposit in the relevant Cash Collateral Account will be
returned to the Liquidity Provider being replaced. No such Replacement
Liquidity Facility executed in connection therewith shall become effective and
no such Replacement Liquidity Facility shall be deemed a "Liquidity Facility"
under the Operative Agreements, unless and until (i) the conditions referred to
in the immediately following paragraph shall have been satisfied and
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(ii) if such Replacement Liquidity Facility shall materially adversely affect
the rights, remedies, interests or obligations of the Class A
Certificateholders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the applicable Trustee
shall have consented, in writing, to the execution and issuance of such
Replacement Liquidity Facility.
In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, obtain written confirmation from each Rating
Agency that such Replacement Liquidity Facility will not cause a reduction of
the rating then in effect for any Class of Certificates by such Rating Agency
(without regard to the ratings of any Liquidity Provider being replaced pursuant
to Section 3.6(c) hereof), (y) pay all Liquidity Obligations then owing to the
replaced Liquidity Provider (which payment shall be made first from available
funds in the Cash Collateral Account as described in clause (vii) of Section
3.6(f) hereof and thereafter from any other available source, including, without
limitation, a drawing under the Replacement Liquidity Facility, it being
understood that no Replacement Liquidity Facility shall become effective (other
than insofar as necessary to permit the repayment of amounts owed to the
replaced Liquidity Provider) until all amounts owed to the replaced Liquidity
Provider have been paid) and (z) cause the issuer of the Replacement Liquidity
Facility to deliver the Replacement Liquidity Facility to the Subordination
Agent, together with a legal opinion opining that such Replacement Liquidity
Facility is an enforceable obligation of such Replacement Liquidity Provider.
Upon satisfaction of the conditions set forth in this Section 3.6(e), (i) the
replaced Liquidity Facility shall terminate and (ii) such Replacement Liquidity
Provider shall be deemed to be a Liquidity Provider with the rights and
obligations of a Liquidity Provider hereunder and under the other Operative
Agreements and such Replacement Liquidity Facility shall be deemed to be a
Liquidity Facility hereunder and under the other Operative Agreements.
(f) CASH COLLATERAL ACCOUNTS; WITHDRAWALS; INVESTMENTS. In the event
the Subordination Agent shall draw all available amounts under the Class A
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c) or a Final Drawing shall be made as provided
in the Liquidity Facility, amounts so drawn shall be deposited by the
Subordination Agent in the Class A Cash Collateral Account, the Class B Cash
Collateral Account or the Class C Cash Collateral Account, respectively.
Amounts so deposited shall be invested in Eligible Investments in accordance
with Section 2.2(b) hereof. Investment Earnings on amounts on deposit in the
Cash Collateral Accounts as a result of any drawings under Section 3.6(c) hereof
(other than to the extent it becomes a Final Drawing) shall be paid to the
respective Liquidity Provider entitled thereto prior to giving effect to the
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distributions below on each Distribution Date commencing on the first
Distribution Date after any such drawing. Investment Earnings on amounts on
deposit in the Cash Collateral Accounts as a result of any drawings under
Section 3.6(i) hereof (and amounts which become a Final Drawing) shall be
deposited in the Collection Account. The Subordination Agent shall deliver a
written statement to the respective Liquidity Provider to be paid one day prior
to each Distribution Date setting forth the aggregate amount of Investment
Earnings held in the Cash Collateral Accounts as of such date. In addition,
from and after the date funds are so deposited, the Subordination Agent shall
make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class A Certificates (at the Stated Interest Rate for the
Class A Certificates) from any other source, withdraw from the Class A Cash
Collateral Account, and pay to the Class A Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate for the Class A Certificates) on such Class A
Certificates and (y) the amount on deposit in the Class A Cash Collateral
Account;
(ii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class B Certificates (at the Stated Interest Rate for the
Class B Certificates) from any other source, withdraw from the Class B Cash
Collateral Account, and pay to the Class B Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate for the Class B Certificates) on such Class B
Certificates and (y) the amount on deposit in the Class B Cash Collateral
Account;
(iii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class C Certificates (at the Stated Interest Rate for the
Class C Certificates) from any other source, withdraw from the Class C Cash
Collateral Account, and pay to the Class C Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate for the Class C Certificates) on such Class C
Certificates and (y) the amount on deposit in the Class C Cash Collateral
Account;
(iv) on each date on which the Pool Balance of the Class A Trust
shall have been reduced by payments made to the Class A Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class A Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool Balance
on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in
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the Class A Cash Collateral Account on such date), the Required Amount
(with respect to the Class A Liquidity Facility) will be on deposit in the
Class A Cash Collateral Account and shall FIRST, pay such amount to the
Class A Liquidity Provider until the Liquidity Obligations (with respect to
the Class A Certificates) shall have been paid in full, and SECOND, deposit
any remaining amount in the Collection Account;
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class B Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool Balance
on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class B Cash Collateral Account on
such date), the Required Amount (with respect to the Class B Liquidity
Facility) will be on deposit in the Class B Cash Collateral Account and
shall FIRST, pay such amount to the Class B Liquidity Provider until the
Liquidity Obligations (with respect to the Class B Certificates) shall have
been paid in full, and SECOND, deposit any remaining amount in the
Collection Account;
(vi) on each date on which the Pool Balance of the Class C Trust
shall have been reduced by payments made of the Class C Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class C Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool Balance
on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class C Cash Collateral Account on
such date), the Required Amount (with respect to the Class C Liquidity
Facility) will be on deposit in the Class C Cash Collateral Account and
shall FIRST, pay such amount to the Class C Liquidity Provider until the
Liquidity Obligations (with respect to the Class C Certificates) shall have
been paid in full, and SECOND, deposit any remaining amount in the
Collection Account;
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to each replaced Liquidity Provider pari passu until all Liquidity
Obligations owed to such Person shall have been paid in full, and shall
deposit any remaining amount in the Collection Account; and
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(viii) following the payment of Final Distributions with respect to
any Class of Certificates, on the date on which the Subordination Agent
shall have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity Provider
have been paid in full, the Subordination Agent shall withdraw all amounts
on deposit in the Cash Collateral Account in respect of such Class of
Certificates and shall deposit such amount in the Collection Account.
(g) REINSTATEMENT. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider, but not to exceed the Required
Amount for such Liquidity Facility; PROVIDED, HOWEVER, that such Liquidity
Facility shall not be so reinstated in part or in full at any time if (x) both
(i) a Triggering Event shall have occurred and (ii) a Performing Note Deficiency
exists or (y) a Liquidity Event of Default shall have occurred and be continuing
under such Liquidity Facility. In the event that at any time prior to both the
occurrence of a Triggering Event and the existence of a Performing Note
Deficiency funds are withdrawn from any Cash Collateral Account pursuant to
clauses (i), (ii) or (iii) of Section 3.6(f) hereof, then funds received by the
Subordination Agent prior to both the occurrence of a Triggering Event and the
existence of a Performing Note Deficiency shall be deposited in such Cash
Collateral Account as provided in clause "THIRD" of Section 2.4(b), clause
"THIRD" of Section 3.2 or clause "FOURTH" of Section 3.3, as applicable, and
applied in accordance with Section 3.6(f) hereof.
(h) REIMBURSEMENT. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) FINAL DRAWING. If any action is required under a Liquidity
Facility to be taken by the Subordination Agent in order to make a Final Drawing
thereunder, the Subordination Agent shall not fail to take such action. Upon
receipt of the proceeds of a Final Drawing under the related Liquidity Facility,
the Subordination Agent shall maintain and invest such proceeds in accordance
with Section 3.6(f) hereof.
(j) REDUCTION OF STATED AMOUNT. Promptly following each date on which
the Required Amount of the Liquidity Facility for a Class of Certificates is
reduced as a result of a distribution to the Certificateholders of such Class of
Certificates, the Subordination Agent shall, if such Liquidity Facility provides
for reductions of the Stated Amount of such Liquidity Facility and if such
reductions are not automatic,
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request the Liquidity Provider for such Class of Certificates to reduce such
Stated Amount to an amount equal to the Required Amount with respect to such
Liquidity Facility (as calculated by the Subordination Agent after giving effect
to such payment). Each such request shall be made in accordance with the
provisions of the applicable Liquidity Facility.
(k) RELATION TO SUBORDINATION PROVISIONS. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in each
case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 DIRECTIONS FROM THE CONTROLLING PARTY. (a)(i) Following
the occurrence and during the continuation of an Indenture Default under any
Indenture, the Controlling Party shall direct the Loan Trustee under such
Indenture in the exercise of remedies available to the holders of the Equipment
Notes issued pursuant to such Indenture, including, without limitation, the
ability to vote all such Equipment Notes in favor of declaring all of the unpaid
principal amount of such Equipment Notes and accrued interest thereon to be due
and payable under, and in accordance with, the provisions of such Indenture.
Subject to the Owner Trustees' and the Owner Participants' rights set forth in
the Indentures to purchase the Equipment Notes, if the Equipment Notes issued
pursuant to any Indenture have been Accelerated following an Indenture Default
with respect thereto, the Controlling Party may sell, assign, contract to sell
or otherwise dispose of and deliver all (but not less than all) of such
Equipment Notes to any Person at public or private sale, at any location at the
option of the Controlling Party, all upon such terms and conditions as it may
reasonably deem advisable in accordance with applicable law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights set forth in the Indentures to purchase the Equipment Notes, and
notwithstanding the foregoing, so long as any Certificates remain Outstanding,
during the period ending on the date which is nine months after the earlier of
(x) the Acceleration of the Equipment Notes issued pursuant to any Indenture or
(y) the occurrence of a Northwest Bankruptcy Event, without the consent of each
Trustee, (A) no Aircraft subject to the Lien of such Indenture or such Equipment
Notes may be sold if the net proceeds from such sale would be less than the
Minimum Sale Price for such Aircraft or such Equipment Notes, and (B) the amount
and payment dates of rentals payable by Northwest under the Lease for such
Aircraft may not be adjusted, if, as a result of such adjustment, the discounted
present value of all such
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rentals would be less than 75% of the discounted present value of the rentals
payable by Northwest under such Lease before giving effect to such adjustment,
in each case, using the weighted average interest rate of the Equipment Notes
issued pursuant to such Indenture as the discount rate.
(iii) At the request of the Controlling Party, the Subordination
Agent may from time to time during the continuance of an Indenture Default (and
before the occurrence of a Triggering Event) commission LTV Appraisals with
respect to the related Aircraft.
(iv) After a Triggering Event occurs and any Equipment Note
becomes a Non-Performing Equipment Note, the Subordination Agent shall obtain
LTV Appraisals for the Aircraft as soon as practicable and additional LTV
Appraisals on or prior to each anniversary of the date of such initial LTV
Appraisals; PROVIDED that, if the Controlling Party reasonably objects to the
appraised value of the Aircraft shown in any such LTV Appraisals, the
Controlling Party shall have the right to obtain or cause to be obtained at its
expense substitute LTV Appraisals (including any LTV Appraisals based upon
physical inspection of the Aircraft).
(b) The Controlling Party shall take such actions as it may reasonably
deem most effectual to complete the sale or other disposition of such Aircraft
or Equipment Notes. In addition, in lieu of any sale, assignment, contract to
sell or other disposition, the Subordination Agent, on behalf of the Controlling
Party, may maintain possession of such Equipment Notes and continue to apply
monies received in respect of such Equipment Notes in accordance with Article
III hereof. In addition, in lieu of such sale, assignment, contract to sell or
other disposition, or in lieu of such maintenance of possession, the Controlling
Party may instruct the Loan Trustee under such Indenture to foreclose on the
Lien on the related Aircraft or to take any other remedial action permitted
under such Indenture or applicable law.
SECTION 4.2 REMEDIES CUMULATIVE. Each and every right, power and
remedy given to the Trustees, the Controlling Party or the Subordination Agent
specifically or otherwise in this Agreement 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,
subject always to the terms and conditions hereof, be exercised from time to
time and as often and in such order as may be deemed expedient by any Trustee,
the Controlling Party or the Subordination Agent, as appropriate, 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 any Trustee, the
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Controlling Party or the Subordination Agent in the exercise of any right,
remedy or power or in the pursuit of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default or to be an
acquiescence therein.
SECTION 4.3 DISCONTINUANCE OF PROCEEDINGS. In case any party to this
Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement 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 Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such proceedings, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceedings had been
instituted.
SECTION 4.4 RIGHT OF CERTIFICATEHOLDERS TO RECEIVE PAYMENTS NOT TO BE
IMPAIRED. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments pursuant to Section 2.4,
3.2 or 3.3 hereof when due, or to institute suit for the enforcement of any such
payment on or after the applicable Distribution Date, shall not be impaired or
affected without the consent of such Certificateholder or such Liquidity
Provider, respectively.
SECTION 4.5 UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Agreement or in any suit against any
Controlling Party or the Subordination Agent for any action taken or omitted by
it as Controlling Party or Subordination Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a suit instituted by the Subordination Agent, a
Liquidity Provider or a Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 NOTICE OF INDENTURE DEFAULT OR TRIGGERING EVENT. (a) In
the event the Subordination Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering Event, as promptly as practicable, and
in any event
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within 10 days after obtaining knowledge thereof, the Subordination Agent shall
transmit by mail to the Rating Agencies, the Liquidity Providers and the
Trustees notice of such Indenture Default or Triggering Event, unless such
Indenture Default or Triggering Event shall have been cured or waived. For all
purposes of this Agreement, in the absence of actual knowledge on the part of a
Responsible Officer, the Subordination Agent shall not be deemed to have
knowledge of any Indenture Default or Triggering Event unless notified in
writing by one or more Trustees, one or more Liquidity Providers or one or more
Certificateholders.
(b) OTHER NOTICES. The Subordination Agent will furnish to each
Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
SECTION 5.2 INDEMNIFICATION. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise 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
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3 NO DUTIES EXCEPT AS SPECIFIED IN INTERCREDITOR AGREEMENT.
The Subordination Agent shall not have any duty or obligation to take or refrain
from taking any action under, or in connection with, this Agreement, except as
expressly provided by the terms of this Agreement; and no implied duties or
obligations shall be read into this Agreement against the Subordination Agent.
The Subordination Agent agrees that it
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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 7.1
hereof) promptly take such action as may be necessary to duly discharge all
Liens on any of the Trust Accounts or any monies deposited therein which result
from claims against it in its individual capacity not related to its activities
hereunder or as a result of a breach of its obligations that constitute willful
misconduct or gross negligence hereunder or any other Operative Agreement.
SECTION 5.4 NOTICE FROM THE LIQUIDITY PROVIDERS AND TRUSTEES. If a
Responsible Officer of any Liquidity Provider or Trustee has actual notice of an
Indenture Default or a Triggering Event, such Person shall promptly use its best
efforts give notice thereof to all other Liquidity Providers and Trustees and to
the Subordination Agent, PROVIDED, HOWEVER, that no such Person shall have any
liability hereunder as a result of its failure to deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 AUTHORIZATION; ACCEPTANCE OF TRUSTS AND DUTIES. Each of
the Class A Trustee, Class B Trustee and Class C Trustee hereby designates and
appoints the Subordination Agent as the agent and trustee of such Trustee under
the applicable Liquidity Facility and authorizes the Subordination Agent to
enter into the applicable Liquidity Facility as agent and trustee for such
Trustee. Each of the Liquidity Providers and the Trustees hereby designates and
appoints the Subordination Agent as the Subordination Agent under this
Agreement.
State Street of Connecticut hereby accepts the duties hereby created
and applicable to it as the Subordination Agent and agrees to perform the same
but only upon the terms of this Agreement and agrees to receive and disburse all
monies received by it in accordance with the terms hereof. The Subordination
Agent shall not be answerable or accountable under any circumstances, except (a)
for its own willful misconduct or gross negligence or, with respect to the
handling or transfer of funds, ordinary negligence, (b) as provided in Section
2.2 hereof and (c) for liabilities that may result from the material inaccuracy
of any representation or warranty of the Subordination Agent made in its
individual capacity in any Operative Agreement. The Subordination Agent shall
not be liable for any error of judgment made in good faith by a Responsible
Officer of the Subordination Agent, unless it is proved that the Subordination
Agent was negligent in ascertaining the pertinent facts.
SECTION 6.2 ABSENCE OF DUTIES. The Subordination Agent shall have no
duty to see to any recording or filing of
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this Agreement or any other document, or to see to the maintenance of any such
recording or filing.
SECTION 6.3 NO REPRESENTATIONS OR WARRANTIES AS TO DOCUMENTS. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4 NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid
to or retained by the Subordination Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity Provider as
provided in Articles II and III hereof need not be segregated in any manner
except to the extent required by such Articles II and III and by law, and the
Subordination Agent shall not (except as otherwise provided in Section 2.2
hereof) be liable for any interest thereon; PROVIDED, HOWEVER, that any payments
received or applied hereunder by the Subordination Agent shall be accounted for
by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.5 RELIANCE; AGENTS; ADVICE OF COUNSEL. The Subordination
Agent shall not incur 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. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers or the Trustees the manner of ascertainment of which is not
specifically described herein, the Subordination Agent may for all purposes
hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Subordination Agent shall assume, and shall be
fully protected in assuming, that each of the Liquidity Providers and each of
the Trustees are authorized to enter into this Agreement and to take all action
to be taken by them pursuant to the provisions hereof, and shall not inquire
into the authorization of each of the
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Liquidity Providers and each of the Trustees with respect thereto. In the
administration of the trusts hereunder, the Subordination Agent may execute any
of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained by it, and the
Subordination Agent shall not be liable for the acts or omissions of any agent
appointed with due care or for anything done, suffered or omitted in good faith
by it in accordance with the advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.6 CAPACITY IN WHICH ACTING. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7 COMPENSATION. The Subordination Agent shall be entitled
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such compensation, to the extent that such compensation shall not be paid by
others. The Subordination Agent agrees that it shall have no right against any
Trustee or Liquidity Provider for any fee as compensation for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive
the termination of this Agreement.
SECTION 6.8 MAY BECOME CERTIFICATEHOLDER. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9 SUBORDINATION AGENT REQUIRED; ELIGIBILITY. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any State
thereof or of the District of Columbia and having a combined capital and surplus
of at least $100,000,000), if there is such an institution willing and able to
perform the duties of the Subordination Agent hereunder upon reasonable or
customary terms. Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any State thereof or
of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition at least
annually, pursuant to law
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or to the requirements of any of the aforesaid supervising or examining
authorities, then, for the purposes of this Section 6.9, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Subordination Agent shall cease to be eligible
in accordance with the provisions of this Section, the Subordination Agent shall
resign immediately in the manner and with the effect specified in Section 8.1.
SECTION 6.10 MONEY TO BE HELD IN TRUST. All Equipment Notes, monies
and other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled to
such Equipment Notes, monies and other property. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 SCOPE OF INDEMNIFICATION. The Subordination Agent shall
be indemnified hereunder to the extent and in the manner described in
Section 7(c) of the Participation Agreements. The indemnities contained in such
Section 7(c) shall survive the termination of this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 REPLACEMENT OF SUBORDINATION AGENT; APPOINTMENT OF
SUCCESSOR. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Liquidity Provider or the Controlling
Party (or, prior to the occurrence of a Triggering Event, the Person who would
be the Controlling Party if a Triggering Event had occurred) may remove the
Subordination Agent for cause by so notifying the Subordination Agent and may
appoint a successor Subordination Agent. The Controlling Party (or, prior to
the occurrence of a Triggering Event, the Person who would be the Controlling
Party if a Triggering Event had occurred) shall remove the Subordination Agent
if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
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(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of acting.
If the Subordination Agent resigns or is removed or if a vacancy
exists in the office of Subordination Agent for any reason (the Subordination
Agent in such event being referred to herein as the retiring Subordination
Agent), the Controlling Party (or, prior to the occurrence of a Triggering
Event, the Person who would be the Controlling Party if a Triggering Event had
occurred) in consultation with Northwest shall promptly appoint a successor
Subordination Agent.
Any corporation into which the Subordination Agent 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 Subordination Agent
shall be a party, or any corporation to which substantially all the corporate
trust business of the Subordination Agent may be transferred, shall, subject to
the terms of Section 6.9 hereof, be the Subordination Agent hereunder and under
the other Operative Agreements to which the Subordination Agent is a party
without further act, except that such Person shall give prompt subsequent notice
of such transaction to the Liquidity Provider and each Trustee,
A successor Subordination Agent shall deliver a written acceptance of
its appointment as Subordination Agent hereunder to the retiring Subordination
Agent, upon which the resignation or removal of the retiring Subordination Agent
shall become effective, and the successor Subordination Agent shall have all the
rights, powers and duties of the Subordination Agent under this Agreement. The
successor Subordination Agent shall send a written notice of its succession to
the Liquidity Providers and the Trustees. The retiring Subordination Agent
shall promptly transfer its rights under each of the Liquidity Facilities and
all of the property held by it as Subordination Agent to the successor
Subordination Agent.
If a successor Subordination Agent does not take office within 60 days
after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof (to
the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers or Northwest may petition any court of competent
jurisdiction for the removal of the Subordination Agent and the appointment of a
successor Subordination Agent.
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Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 AMENDMENTS, WAIVERS, ETC. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting
with the consent of holders of Certificates of the related Class evidencing
interests in the related Trust aggregating not less than a majority in interest
in such Trust), the Subordination Agent and each Liquidity Provider; PROVIDED,
HOWEVER, that this Agreement may be supplemented, amended or modified without
the consent of any Trustee (i) if such supplement or amendment cures an
ambiguity or inconsistency or does not materially adversely affect such Trustee
or the holders of the related Class of Certificates or (ii) to provide for a
drawing (a "NON-EXTENSION DRAWING") under a Replacement Facility which is
scheduled to expire prior to the date which is 15 days after the Final Legal
Distribution Date and for the deposit of such Non-Extension Drawing in the Class
A Cash Collateral Account PROVIDED, in the case of this clause (ii), that the
Subordination Agent shall have received a Ratings Confirmation after giving
effect to such amendment or modification. Notwithstanding the foregoing,
without the consent of each Certificateholder and each Liquidity Provider, no
supplement, amendment or modification of this Agreement may (i) reduce the
percentage of the interest in any Trust evidenced by the Certificates issued by
such Trust necessary to consent to modify or amend any provision of this
Agreement or to waive compliance therewith or (ii) modify Section 2.4, 3.2 or
3.3 hereof, relating to the distribution of monies received by the Subordination
Agent hereunder from the Equipment Notes or pursuant to the Liquidity
Facilities. Nothing contained in this Section shall require the consent of a
Trustee at any time following the payment of Final Distributions with respect to
the related Class of Certificates.
(b) In the event that the Subordination Agent, as the registered
holder of any Equipment Notes, receives a request for its consent to any
amendment, modification or waiver under such Equipment Notes, the Indenture
pursuant to which such Equipment Notes were issued, or the Lease, Participation
Agreement or other related document, (i) if no Indenture Default shall have
occurred and be continuing, the Subordination Agent shall request instructions
with respect to each Series of Equipment Notes from the Trustee of the Trust
which holds such Equipment Notes and shall vote or consent in accordance with
the instructions of such Trustee and (ii) if any Indenture Default (which has
not been
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cured by the applicable Owner Trustee or the applicable Owner Participant
pursuant to Section 4.03 of such Indenture) shall have occurred and be
continuing with respect to such Indenture, the Subordination Agent will exercise
its voting rights as directed by the Controlling Party; PROVIDED that no such
amendment, modification or waiver shall, without the consent of each Liquidity
Provider, reduce the amount of rent, supplemental rent or stipulated loss values
payable by Northwest under the Lease; and PROVIDED FURTHER that no amendment of
or supplement to any Indenture, any Lease or any Participation Agreement or
waiver or modification of the terms of, or consent under, any thereof, shall,
without the consent of each Liquidity Provider, have any of the effects listed
in the provisos to Section 7.11 or 13.02 or Section 8.01(c) of the Indenture.
SECTION 9.2 SUBORDINATION AGENT PROTECTED. If, in the reasonable
opinion of the institution acting as the Subordination Agent hereunder, any
document required to be executed pursuant to the terms of Section 9.1 affects
any right, duty, immunity or indemnity with respect to it under this Agreement
or any Liquidity Facility, the Subordination Agent may in its discretion decline
to execute such document.
SECTION 9.3 EFFECT OF SUPPLEMENTAL AGREEMENTS. Upon the execution of
any amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Agreement of the parties hereto and beneficiaries
hereof shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental agreement shall be and be deemed to be part
of the terms and conditions of this Agreement for any and all purposes. In
executing or accepting any supplemental agreement permitted by this Article IX,
the Subordination Agent shall be entitled to receive, and shall be fully
protected in relying upon, an opinion of counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
SECTION 9.4 NOTICE TO RATING AGENCIES. Promptly following its
receipt of each amendment, consent, modification, supplement or waiver
contemplated by this Article IX, the Subordination Agent shall send a copy
thereof to each Rating Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 TERMINATION OF INTERCREDITOR AGREEMENT. Following
payment of Final Distributions with respect to each
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Class of Certificates and the payment in full of all Liquidity Obligations to
the Liquidity Providers and PROVIDED that there shall then be no other amounts
due to the Certificateholders, the Trustees, the Liquidity Providers and the
Subordination Agent hereunder or under the Trust Agreements, and that the
commitment of the Liquidity Providers under the Liquidity Facilities shall have
expired or been terminated, this Agreement and the trusts created hereby shall
terminate and this Agreement shall be of no further force or effect. Except as
aforesaid or otherwise provided, this Agreement and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.2 INTERCREDITOR AGREEMENT FOR BENEFIT OF TRUSTEES,
LIQUIDITY PROVIDERS AND SUBORDINATION AGENT. Nothing in this Agreement, whether
express or implied, shall be construed to give to any Person other than the
Trustees, the Liquidity Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.
SECTION 10.3 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
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to at its office
at:
State Street Bank and Trust Company of Connecticut, National
Association
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
(ii) if to any Trustee, addressed to it at its office at:
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
(iii) if to any Liquidity Provider, addressed to it at its office
at:
Royal Bank of Canada
One Financial Square
New York, New York 10005-3531
Attention: Loans Administration
Telecopy: 212-428-2301
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Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received, if such notice is received, if such notice is mailed by certified
mail, postage prepaid or by courier service or is sent by confirmed telecopy
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 Agreement.
SECTION 10.4 SEVERABILITY. Any provision of this Agreement 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 10.5 NO ORAL MODIFICATIONS OR CONTINUING WAIVERS. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6 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 successors and assigns of each, all as herein provided.
SECTION 10.7 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 10.8 COUNTERPART FORM. 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 agreement.
SECTION 10.9 SUBORDINATION. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Section 510 of
the United States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior to the
payment in full to the Liquidity Providers of all
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Liquidity Obligations then due and payable, any party hereto shall have received
any payment or distribution in respect of Equipment Notes or any other amount
under the Indentures or other Operative Agreements which, had the subordination
provisions of this Agreement been properly applied to such payment, distribution
or other amount, would not have been distributed to such Person, then such
payment, distribution or other amount shall be received and held in trust by
such Person and paid over or delivered to the Subordination Agent for
application as provided herein.
(c) If any Trustee, any Liquidity Provider or the Subordination Agent
receives any payment in respect of any obligations owing hereunder (or, in the
case of the Liquidity Providers, in respect of the Liquidity Obligations), which
is subsequently invalidated, declared preferential, set aside and/or required to
be repaid to a trustee, receiver or other party, then, to the extent of such
payment, such obligations (or, in the case of the Liquidity Providers, such
Liquidity Obligations) intended to be satisfied shall be revived and continue in
full force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances, notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain assets and the
Liquidity Obligations are not so secured. The Trustees expressly agree (on
behalf of themselves and the holders of Certificates) not to assert priority
over the holders of Liquidity Obligations due to their status as secured
creditors in any bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a lien on any property to secure any amounts owing to
it hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other
obligor with respect to any amounts owing to it hereunder, including, in
the case of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any of
the Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
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<PAGE>
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated
party or a surety under applicable law;
PROVIDED, HOWEVER, that the taking of any such actions by any of the Trustees,
the Liquidity Providers or the Subordination Agent shall not prejudice the
rights or adversely affect the obligations of any other party under this
Agreement.
SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF IMMUNITY. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceedings may be brought in
such courts, and waives any objection that it may now or hereafter have
that the venue of any such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form and mail), postage prepaid, to each
party hereto at its address set forth in Section 10.3 hereof, or at such
other address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED,
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including, without limitation, contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Each of the parties
warrants and represents that it has reviewed this waiver with its legal counsel,
and that it knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgement entered by any such court under
the United States Foreign Sovereign Immunities Act of 1976 or any similar
successor legislation.
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<PAGE>
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, and acknowledge that this Agreement has
been made and delivered in the City of New York, and this Agreement has become
effective only upon such execution and delivery.
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity but
solely as Trustee for each of the
Trusts
By /s/ Donald E. Smith
-------------------------------
Name: Donald E. Smith
Title: Vice President
ROYAL BANK OF CANADA, as Class A
Liquidity Provider, Class B
Liquidity Provider and Class C
Liquidity Provider
By /s/ Michael J. Madnick
-------------------------------
Name: Michael J. Madnick
Title: Manager
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity
except as expressly set forth
herein but solely as Subordination
Agent and trustee
By /s/ Donald E. Smith
-------------------------------
Name: Donald E. Smith
Title: Vice President
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Indenture Default SCHEDULE 1
Intercreditor Agreement
-----------------------
Indentures
----------
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<PAGE>
Indenture Default SCHEDULE 2
Intercreditor Agreement
-----------------------
Participation Agreements
------------------------
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Indenture Default SCHEDULE 3
Intercreditor Agreement
-----------------------
Schedule of Notices
-------------------
Pursuant to Section 3.1
-----------------------
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EXECUTION COPY
Exhibit 4(e)(1)
- --------------------------------------------------------------------------------
INDEMNITY AGREEMENT
Dated as of September 25, 1997
between
CREDIT SUISSE FIRST BOSTON,
New York Branch
and
NORTHWEST AIRLINES, INC.
- --------------------------------------------------------------------------------
<PAGE>
INDEMNITY AGREEMENT
INDEMNITY AGREEMENT dated as of September 25, 1997 (as amended,
modified or supplemented from time to time, this "AGREEMENT") among CREDIT
SUISSE FIRST BOSTON, a banking institution organized under the laws of
Switzerland acting through its New York Branch ("CSFB") and NORTHWEST AIRLINES,
INC., a Minnesota corporation (together with its successors and assigns,
"NORTHWEST").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation
("NORTHWEST"), Northwest Airlines Corporation, a Delaware corporation (the
"GUARANTOR") and State Street Bank and Trust Company, not in its individual
capacity except as otherwise expressly provided therein, but solely as trustee
(in such capacity, together with its successors in such capacity, the "PASS
THROUGH TRUSTEE") have entered into a Pass Through Trust Agreement dated as of
June 3, 1996, as supplemented by the Pass Through Trust Supplements dated as of
September 25, 1997 (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "PASS THROUGH TRUST AGREEMENTS") relating
to Northwest Airlines Pass Through Trusts 1997-1 pursuant to which the Northwest
Airlines Pass Through Certificates, Series 1997-1 referred to therein (the
"CERTIFICATES") are being issued;
WHEREAS, Northwest, the Guarantor and Credit Suisse First Boston
Corporation, Lehman Brothers Inc. and Morgan Stanley & Co., Incorporated
(collectively, the "UNDERWRITERS") have entered into an Underwriting Agreement
dated as of September 16, 1997 (the "UNDERWRITING AGREEMENT") pursuant to which
the Pass Through Trustee will issue and sell the Certificates to the
Underwriters;
WHEREAS, Northwest, the Guarantor, the Pass Through Trustee, State
Street Bank and Trust Company, not in its individual capacity, except as
expressly stated in each Indenture (as defined below) but solely as indenture
trustee under such Indenture (in such capacity, together with its successors in
such capacity, the "INDENTURE TRUSTEE"), State Street Bank and Trust Company of
Connecticut, National Association, as subordination agent (the "SUBORDINATION
AGENT") under the Intercreditor Agreement (as defined in the Participation
Agreements referred to below), the initial Owner Participants (as defined in the
Participation Agreements) and the Owner Trustees (as defined in the
Participation Agreements) are entering into the Participation Agreements set
forth on Schedule I-A hereto (the "PARTICIPATION AGREEMENTS"), pursuant to which
the Pass Through Trustee has agreed to acquire the Secured Certificates (as
defined in the Participation Agreements) issued under the Trust Indenture and
Security Agreements set forth on Schedule I-B hereto (the "Indentures"); and
WHEREAS, in connection with financing of six aircraft to be operated
by Northwest, the Indenture Trustee and the Pass Through Trustee intend that the
purchase price
<PAGE>
2
for the Secured Certificates be deposited, on behalf of the Certificate Holders
(as defined in the Participation Agreements) with State Street Bank and Trust
Company, in its individual capacity ("SSB"), and SSB, the Indenture Trustee and
the Owner Trustees are entering into the Collateral Account Control Agreements
set forth on Schedule I-C hereto (the "COLLATERAL AGREEMENTS"), pursuant to
which Northwest shall, subject to the written approval of the Indenture Trustee
(except for instructions pursuant to this Agreement), give SSB instructions with
regard to the disposition or investment of the Liquid Collateral (as defined in
the Collateral Agreement).
NOW, THEREFORE, in consideration of 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 (capitalized
herein not defined herein shall have the meanings set forth in Annex A hereto):
SECTION 1. CERTIFICATES OF DEPOSIT AND PAYMENTS.
1.01 PURCHASE AND SALE OF CERTIFICATES OF DEPOSIT. Northwest hereby
instructs the Indenture Trustee, and the Indenture Trustee agrees, to purchase
from CSFB the certificates of deposit set forth on Schedule I-C hereto (each, an
"INITIAL CD," and collectively, the "INITIAL CDS") on the date hereof at a
purchase price equal to the face amount of the Initial CDs. Pursuant to the
terms and conditions of this Agreement, CSFB hereby agrees to issue and sell to
the Indenture Trustee the Initial CDs set forth on Schedule I-C hereto and each
in the name of the Indenture Trustee. The Indenture Trustee shall not have any
right to sell, assign or otherwise transfer any CDs (as defined below) except as
permitted by this Agreement.
1.02 NEW CERTIFICATES OF DEPOSIT. Northwest hereby agrees to
instruct the Indenture Trustee, and the Indenture Trustee agrees, to purchase,
upon the maturity of any Initial CD or any New CD (as defined herein), a new
certificate of deposit (a "NEW CD" and together with the Initial CDs,
collectively, "CDS") having the face amount and the interest rate specified in
Section 1.03 of this Agreement and the maturity date specified by the Indenture
Trustee (maturity not earlier than seven calendar days from the issuance date
thereof); PROVIDED that (i) any CD issued prior to any Regular Distribution Date
(as defined in the Pass Through Trust Agreements) may not mature later than such
Regular Distribution Date and (ii) if any CD is scheduled to mature on the Final
Payment Date (as defined below), no New CD will be purchased upon the maturity
of such CD. Pursuant to the terms and conditions of this Agreement, CSFB hereby
agrees to issue and sell to the Indenture Trustee such New CDs. The "FINAL
PAYMENT DATE" means, with respect to any CD related to any Indenture, the
earliest to occur of (i) the Delivery Date under (and as defined in) the related
Participation Agreement, (ii) the date of assumption of the Secured Certificates
issued under such Indenture by Northwest and (iii) the date of redemption of the
Secured Certificates pursuant to Section 2.10(c), (d) or (e) of such Indenture.
<PAGE>
3
1.03 FACE AMOUNT AND INTEREST RATE OF NEW CDS. (a) The face amount
of each New CD related to any Indenture issued on a date other than a Regular
Distribution Date shall be equal to the sum of the face amount of the CD related
to such Indenture maturing on the issuance date of such New CD plus interest
payable on such CD. The face amount of each New CD related to any Indenture
issued on a Regular Distribution Date shall be equal to the face amount of the
Initial CD related to such Indenture.
(b) The interest rate for each New CD related to any Indenture issued
on a date other than a Regular Distribution Date shall be a fixed rate per annum
so that the amount payable (including interest) upon maturity of such New CD
shall be equal to the aggregate outstanding principal amount of the Secured
Certificates issued under such Indenture and interest accrued thereon from and
including the immediately preceding Regular Distribution Date (or, if no Regular
Distribution Date occurred, the date of issuance of such Secured Certificates)
to (but excluding) the maturity date of such New CD. The interest rate for each
New CD related to any Indenture issued on a Regular Distribution Date shall be
equal to the interest rate for the Initial CD related to such Indenture.
1.04 PAYMENTS IN RESPECTS OF CDS. (a) Upon not less than three
Business Day's notice in writing to CSFB, Northwest may at its option request
CSFB to pay the face amount of any CD and interest accrued thereon on a Business
Day specified in such notice (a "PREPAYMENT DATE") prior to the stated maturity
date of such CD. Such notice, once given, shall be irrevocable. On the
Prepayment Date for such CD, CSFB shall pay the Indenture Trustee the face
amount of such CD and interest accrued thereon from the issuance date thereof to
(but excluding) such Prepayment Date in accordance with the provisions of
Section 1.04(b).
(b) All payments (including, without limitation, those payments made
in respect of Taxes (as defined and provided for below)) made by CSFB hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer directly to the Indenture Trustee at State Street Bank and Trust
Company, Boston, Massachusetts, ABA No. 011-00-0028, Account No. 9903-943-0,
Attention: Corporate Trust Department, Reference: Northwest/NW 1997 G,
Northwest/NW 1997 H, Northwest/NW 1997 I, Northwest/NW 1997 J, Northwest/NW 1997
K or Northwest/NW 1997 L, as the case may be, or to such other account as the
Indenture Trustee may direct from time to time in writing to CSFB. CSFB hereby
waives any and all rights of set-off, combination of accounts, right of
retention or similar right (whether arising under applicable law, contract or
otherwise) it may have against the CDs howsoever arising. All payments on or in
respect of each CD shall be made free and clear of and without reduction for or
on account of any and all taxes, levies or other impositions or charges
(collectively, "TAXES"). However, if CSFB shall be required by law to deduct or
withhold any Taxes from or in respect of any sum payable hereunder, CSFB shall
(i) make such deductions or withholding, (ii) pay the full amount deducted or
withheld (including in respect of such additional amounts) to the competent
taxation authority and
<PAGE>
4
(iii) if the Taxes required to be deducted or withheld are imposed by
Switzerland or any political subdivision thereof, pay such additional amounts as
may be necessary in order that the actual amount received by the designated
recipient of such sum under this Agreement after such deduction or withholding
equals the sum it would have received had no such deduction or withholding been
required. If the date on which any payment due on any CD would otherwise fall
on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and no additional interest shall accrue in respect of
such extension.
SECTION 2. INDEMNITY PAYMENTS.
2.01 INDEMNITY PAYMENTS. Northwest agrees to pay (each such payment,
an "INDEMNITY PAYMENT") to CSFB no later than 12:00 Noon (New York City time) on
the first Business Day prior to each Regular Distribution Date, each Prepayment
Date and each Final Payment Date (each such date, an "INDEMNITY PAYMENT DATE"):
(a) in the case of each Regular Distribution Date, an amount equal to
the excess, if any, of (i) the aggregate amount of interest accrued on the
CDs (related to the Indentures for which the Final Payment Date has not
occurred) during the Relevant Period for, and due and payable on, such
Regular Distribution Date over (ii) the sum of the Notional Earnings for
each Notional Amount during such Relevant Period; and
(b) in the case of a Prepayment Date or a Final Payment Date which is
not an Regular Distribution Date, an amount equal to the excess, if any, of
(i) the aggregate amount of interest accrued on the related CDs during the
Relevant Period for, and due and payable on, the Prepayment Date or the
Final Payment Date, as the case may be, over (ii) the sum of the Notional
Earnings on the amount of each Notional Amount outstanding on the
Prepayment Date or the Final Payment Date, as the case may be, (prior to
giving effect to the payment in respect of such CDs) during such Relevant
Period.
Not later than three Business Days prior to each Indemnity Payment Date (in the
case of an Indemnity Payment Date that is a Prepayment Date, two Business Days
prior to such Indemnity Payment Date), CSFB shall provide to Northwest an
estimate of the Indemnity Payment payable on such Indemnity Payment Date in
accordance with the immediately preceding sentence. Not later than one Business
Day prior to each Indemnity Payment Date, CSFB shall provide Northwest with an
invoice specifying the Indemnity Payment payable on such Indemnity Payment Date,
which invoice shall be prima facie evidence of such Indemnity Payment. If CSFB
receives an Indemnity Payment prior to 12:00 Noon (New York City time) on the
due date thereof, CSFB shall pay to Northwest an amount equal to one-day's
interest on such Indemnity Payment at a per annum rate equal to the Federal
Funds Index Rate for such a day. Notwithstanding the foregoing, Northwest shall
not be obligated to pay
<PAGE>
5
any amount of an Indemnity Payment to the extent attributable to the failure of
CSFB to pay interest on the CDs, or pay any other amount, on the date when it is
required to do so under this Agreement.
2.02 OVERDUE AMOUNTS. Northwest agrees to pay to CSFB interest on
any amount that shall not be paid by Northwest when due under this Agreement (an
"OVERDUE AMOUNT") at the Applicable Rate therefor plus 3.0%. Such interest
shall accrue on the portion of such overdue amount remaining unpaid from time to
time, from (and including) the date that such amount is not paid when due (or,
in the case of Indemnity Payments, from but excluding the date that such amount
is not paid when due) to (but excluding) the date when such overdue amount is
paid in full, shall be payable at the end of each Interest Period (or, if
earlier, upon demand from time to time of CSFB) and shall be calculated on the
basis of a year of 360 days and actual days elapsed.
2.03 REDUCTION OF NOTIONAL AMOUNTS. If one or more CDs are paid on
any day in accordance with this Agreement, the Notional Amounts shall be deemed
to be reduced by an amount equal to the excess of (i) the aggregate amount of
the CDs paid on such day over (ii) the aggregate face amount of New CDs
purchased on such day; PROVIDED that the Notional Amounts shall be deemed to be
increased by the aggregate face amount of New CDs on the next succeeding
Business Day (or thereafter). Such reduction shall be applied to the Notional
Amounts in the same order that the then Index Period for each Notional Amount
terminates (I.E. the reduction shall be applied first to the Notional Amount
which shall then have an Index Period ending on or closest to the applicable day
of payment); PROVIDED that if the last day of the then Index Period for two or
more Notional Amounts shall be the same, then the reduction shall be applied to
such Notional Amounts pro rata in accordance with the amount of such Notional
Amounts. Any increase in the Notional Amounts shall be applied in inverse order
to the Notional Amounts deemed reduced as a result of payment of the relevant CD
or CDs (pro rata as appropriate).
2.04 SUBSEQUENT INDEX PERIOD. No later than three Business Days
prior to the end of the Initial Index Period, and each Subsequent Index Period,
for any Notional Amount, Northwest may, by written notice to CSFB, select an
additional period (each, a "SUBSEQUENT INDEX PERIOD") for such Notional Amount
of no more than 30 days; PROVIDED that if Northwest shall not select a
Subsequent Index Period for such Notional Amount by 2:00 p.m. (New York City
time) on such third Business Day, Northwest shall have deemed to have selected a
Subsequent Index Period for such Notional Amount from and including the last day
of the Initial Index Period or the immediately preceding Subsequent Index Period
(as the case may be) through but excluding the next Business Day thereafter.
Upon the selection (or deemed selection) of a Subsequent Index Period for a
Notional Amount, CSFB shall promptly determine and then provide written notice
to Northwest of the Index Rate for such Subsequent Index Period for such
Notional Amount. The Index Rate for any one day Subsequent Index Period shall
be the Federal Funds Index Rate for such day (as determined
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6
by CSFB). The Index Rate for any Subsequent Index Period in excess of one day
shall be an interest rate per annum determined by CSFB in the same manner as the
indicative interest rates per annum for Subsequent Index Periods in excess of
one day heretofore provided to Northwest by CSFB were determined.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Northwest represents and
warrants to CSFB that:
(a) Northwest is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Minnesota and has the
corporate power and authority to conduct the business in which it is
currently engaged and to own or hold under lease its properties and to
enter into and perform its obligations under this Agreement. Northwest is
duly qualified to do business as a foreign corporation in good standing in
each jurisdiction in which the nature and extent of the business conducted
by it, or the ownership of its properties, requires such qualification
except where the failure to be so qualified would not give rise to a
Material Adverse Change to Northwest.
(b) Northwest has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the containing of any
consent or approval of stockholders required by its Certificate of
Incorporation or By-Laws) to authorize the execution and delivery of this
Agreement, and the performance of its obligations hereunder.
(c) The execution and delivery by Northwest of this Agreement, the
performance by Northwest of its obligations hereunder and the consummation
by Northwest of the transactions contemplated hereby, do not and will not
(i) violate any provision of the Certificate of Incorporation or By-Laws of
Northwest, (ii) violate any Law applicable to or binding on Northwest, or
(iii) violate or constitute any default under (other than any violation or
default that would not result in a Material Adverse Change to Northwest),
or result in the creation of any Lien (other than as permitted under any
lease and other than the Liens contemplated hereby) upon any of the
collateral hereunder under, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, lease, loan or other material
agreement, instrument or document to which Northwest is a party or by which
Northwest or any of its properties is bound or affected.
(d) The execution and delivery by Northwest of this Agreement, the
performance by Northwest of its obligations hereunder and the consummation
by Northwest of the transactions contemplated hereby do not and will not
require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect
<PAGE>
7
of, (i) any trustee or other holder of any debt of Northwest and (ii) any
Government Entity, other than filings, recordings, notices or other
ministerial actions pursuant to any routine recording, contractual or
regulatory requirements applicable to it.
(e) This Agreement has been duly authorized, executed and delivered
by Northwest and, assuming the due authorization, execution and delivery
thereof by the other party hereto, constitutes the legal, valid and binding
obligations of Northwest and is enforceable against Northwest in accordance
with the terms hereof, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in
a proceeding at law or in equity, and an implied covenant of good faith and
fair dealing.
(f) Except as set forth in Northwest's most recent Annual Report on
Form 10-K, as amended, filed by Northwest with the SEC on or prior to the
date hereof, or in any Quarterly Report on Form 10-Q or Current Report on
Form 8-K filed by Northwest with the SEC subsequent to such Form 10-K and
on or prior to the date hereof, no action, claim or proceeding is now
pending or, to the Actual Knowledge of Northwest threatened, against
Northwest before any court, governmental body, arbitration, board, tribunal
or administrative agency, which is reasonably likely to be determined
adversely to Northwest and if determined adversely to Northwest would
result in a Material Adverse Change.
(g) The audited consolidated balance sheet of Northwest with respect
to Northwest's most recent fiscal year included in Northwest's most recent
Annual Report on Form 10-K, as amended, filed by Northwest with the SEC,
and the related consolidated statements of operations and cash flows for
that period then ended have been prepared in accordance with GAAP and
fairly present in all material respects the financial condition of
Northwest and its consolidated subsidiaries as of such date and the results
of its operations and cash flows for such period, and since the date of
such balance sheet there has been no material adverse change in such
financial condition or operations of Northwest, except for matters
disclosed in (a) the financial statements or Annual Report on Form 10-K
referred to above or (b) any subsequent Quarterly Report on Form 10-Q or
Current Report on, Form 8-K filed by Northwest with the SEC on or prior to
the date hereof.
SECTION 4. NO SET-OFF. All amounts (including, without limitation,
those payments made in respect of Taxes) payable by Northwest to CSFB hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer to Citibank, N.A., ABA No. 021000089, Account Name: Credit Suisse First
Boston Corporation, Account No. 092-535-06, Reference: Northwest 1997-1 or to
such other account as CSFB may direct from time to time in writing to Northwest.
To the extent permitted by applicable law, Northwest
<PAGE>
8
hereby waives any and all rights of set-off, combination of accounts, right of
retention or similar right (whether arising under applicable law, contract or
otherwise) it may have against CSFB with respect to the Northwest's obligations
under this Agreement howsoever arising. All amounts payable hereunder shall be
made free and clear of and without reduction for or on account of any Taxes,
other than taxes based on or measured by net income, franchise taxes, or taxes
required to be withheld as a result of CSFB failing to provide Northwest with a
properly executed IRS Form 4224 (any such non-excluded taxes, collectively,
"INDEMNIFIED TAXES"). If Northwest shall be required by law to deduct or
withheld any Indemnified Taxes from or in respect of any sum payable hereunder,
then Northwest shall (i) pay such additional amounts to CSFB, as may be
necessary in order that the actual amount received by the CSFB, after such
required deduction or withholding equals the sum it would have received had no
such deductions or withholding been required to be made, (ii) make such
deductions or withholding, and (iii) pay the full amount deducted or withheld
(including in respect of such additional amounts) to the competent taxation
authority. If the date on which any Payment is due would otherwise fall on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and no additional interest shall accrue in respect of
such extension.
SECTION 5. INCREASED COSTS. In the event that any change in law or
governmental rule, regulation or order, or in the interpretation, administration
or application thereof (including the adoption of any new law or governmental
rule, regulation or order), or any determination of a court or by any central
bank or governmental authority, in each case that becomes effective after the
date hereof, or compliance by CSFB (at its applicable lending office) with any
guideline, request or directive issued or made after the date hereof by any such
central bank or Governmental authority whether or not having the force of law):
(i) subjects CSFB (or its applicable lending office) to any
additional Indemnified Tax with respect to its obligations, commitments or
extensions of credit hereunder or any payments to CSFB (or its applicable
lending office) of any Indemnity Payment, interest, fees or any other
amount payable under or in respect of this Agreement; or
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits in or for the account of, or advances or loans
by, or other credit extended by, CSFB;
and the result of any of the foregoing is that CSFB shall incur increased costs
which are attributable to this Agreement or any CD Agreement or to reduce any
amount received or receivable by CSFB (or its applicable lending office) with
respect to this Agreement; then, in any such case, Northwest shall pay to CSFB,
within 15 days after receipt of the statement
<PAGE>
9
referred to in the next sentence, such additional amount or amounts as may be
necessary to compensate CSFB for any such increased cost or reduction in amounts
received or receivable hereunder; PROVIDED that Northwest shall not be liable in
respect of any such increased cost during such period CSFB became aware and
failed to notify Northwest promptly in accordance with the next sentence if and
to the extent that prompt notice would have avoided or lessened payment by
Northwest hereunder relating to such period. CSFB, promptly after the
occurrence of such event, shall deliver to Northwest a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to CSFB under this Section 7, which statement shall be prima facie
evidence of such additional amounts.
SECTION 6. CAPITAL ADEQUACY. If the adoption after the date hereof
of any applicable law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change after the date hereof in any existing
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or the promulgation after the date hereof of any guidelines, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of CSFB or any
corporation controlling CSFB as a consequence of CSFB's commitments, obligations
or extensions of credit hereunder to a level below that which CSFB or such
controlling corporation could have achieved but for such adoption, change or
promulgation (taking into consideration the policies of CSFB or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Northwest from CSFB of the statement
referred to in the next sentence, Northwest shall pay to CSFB such additional
amount or amounts as will compensate CSFB or such controlling corporation on an
after-tax basis for such reduction. CSFB shall deliver to Northwest a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be prima facie evidence of such
additional amounts.
SECTION 7. FEES. In consideration of CSFB entering into this
Agreement and the CD Agreements, Northwest agrees to pay CSFB a nonrefundable
fee equal to $30,000 on the date hereof.
SECTION 8. BREAKAGE. If (a) any Notional Amount is reduced or
increased other than on the last day of an Index Period therefor or (b) any
Overdue Amount is paid on any day other than the last day of the Interest Period
therefor (each, a "BREAKAGE EVENT"), then Northwest shall compensate CSFB for
any reasonable loss, cost or expense (including, without limitation, any cost of
funding or reserves or loss incurred as a result of terminating, liquidating,
obtaining or re-establishing any hedge or related trading position) incurred by
CSFB in connection with such Breakage Event. A certificate of CSFB setting
forth in reasonable detail any amount or amounts that CSFB is entitled to
receive pursuant to this Section shall be delivered to Northwest and shall be
prima facie evidence of such amount or
<PAGE>
10
amounts. Northwest shall pay CSFB the amount shown as due on any such
certificate within 10 days after receipt thereof .
SECTION 9. EXPENSES; INDEMNITY. (a) Northwest shall pay all
reasonable out-of-pocket expenses incurred by CSFB, including the reasonable
fees, charges and disbursements of counsel for CSFB, in connection with the
preparation of this Agreement or any amendments, modifications or waivers of the
provisions hereof.
(b) The provisions of Section 7(c) of the Participation Agreements,
together with related definitions and ancillary provisions, are hereby
incorporated herein by reference, as if set forth herein in full, mutatis
mutandis; PROVIDED that as incorporated herein, (i) each reference therein to
"this Agreement" shall be deemed to be a reference to this Agreement, (ii) each
reference therein to "Indemnitee" shall be deemed to be a reference to CSFB
together with its affiliates, directors, officers, employees, agents, servants,
successors and assigns, (iii) each reference therein to "Lessee" shall be deemed
to be reference to Northwest, (iv) each reference therein to "Section 7" or
"Section 7(c)" shall be deemed to be a reference to this Section 9(b), (v) each
reference therein to "Operative Documents" shall be deemed to be a reference to
the "Operative Documents" under each of the Participation Agreements, (vi) each
reference therein to "Aircraft" shall be deemed to be a reference to the
"Aircraft" under each of the Participation Agreements and (vii) the term "Pass
Through Trust Agreements" shall be deemed to include this Agreement.
(c) All amounts due under this Section shall be paid no later than 10
days after written demand therefor.
SECTION 10. REMEDIES. Upon the breach by Northwest of any of its
obligations under this Agreement, CSFB may exercise any right or remedy that may
be available to it under applicable law. Northwest agrees to indemnity and hold
harmless CSFB for any reasonable cost or expense incurred by it in connection
with, or arising out of, the enforcement by CSFB of this Agreement against
Northwest.
SECTION 11. AMENDMENT, ETC. This Agreement may not be amended,
waived or otherwise modified except by an instrument in writing signed by the
party against whom the amendment, waiver or other modification is sought to be
enforced.
SECTION 12. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of CSFB, Credit
Suisse First Boston, 11 Madison Avenue, New York, NY 10010, Attention: Robert
Finney and Kevin Kappell (Telecopier: (212) 325-8319), (y) in the case of
Northwest, Northwest Airlines, Inc., for U.S. mail at 519 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700
<PAGE>
11
Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice
President - Finance and Treasurer (Telecopier: (612) 726-0665) or (z) in the
case of the Indenture Trustee, State Street Bank and Trust Company, Two
International Place, Boston, Massachusetts 02110, Attention: Corporate Trust
Department (Telecopier: (617) 664-5371) (or at such other address as either
party may specify from time to time in a written notice to the other party). On
or prior to the execution of this Agreement, Northwest has delivered to CSFB a
certificate containing specimen signatures of the representatives of Northwest
who are authorized to give notices and instructions with respect to this
Agreement. CSFB may conclusively rely on such certificate until CSFB receives
written notice from Northwest to the contrary.
SECTION 13. ENTIRE AGREEMENT. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between CSFB and Northwest with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
and undertakings, inducements or conditions, express or implied, oral or
written.
SECTION 14. GOVERNING LAW. This Agreement, and the rights and
obligations of CSFB and Northwest hereunder shall be governed by, and construed
in accordance with, the Laws of the State of New York and, to the extent
applicable, the Federal Laws of the United States of America.
SECTION 15. WAIVER OF JURY TRIAL RIGHT. EACH OF CSFB, NORTHWEST AND
THE INDENTURE TRUSTEE ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY
WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
<PAGE>
IN WITNESS WHEREOF, CSFB and Northwest have caused this Indemnity
Agreement to be duly executed as of the day and year first above written.
CREDIT SUISSE FIRST BOSTON,
New York Branch
By /s/ Robert M. Finney
--------------------------------
Name: Robert M. Finney
Title: Managing Director
By /s/ Christian Bourqui
--------------------------------
Name: Christian Bourqui
Title: Associate
NORTHWEST AIRLINES, INC.
By /s/ Mark D. Powers
--------------------------------
Name: Mark D. Powers
Title: Vice President-Finance &
Assistant Treasurer
<PAGE>
Schedule I-A
PARTICIPATION AGREEMENTS
------------------------
Participation Agreement [NW 1997 G] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
Participation Agreement [NW 1997 H] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
Participation Agreement [NW 1997 I] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
Participation Agreement [NW 1997 J] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
Participation Agreement [NW 1997 K] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
Participation Agreement [NW 1997 L] dated as of September 25, 1997 among
Northwest, the Guarantor, Pass Through Trustee, Owner Trustee, Indenture Trustee
and the Subordination Agent
<PAGE>
Schedule I-B
TRUST INDENTURE AND SECURITY AGREEMENTS
---------------------------------------
Trust Indenture and Security Agreement [NW 1997 G] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
Trust Indenture and Security Agreement [NW 1997 H] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
Trust Indenture and Security Agreement [NW 1997 I] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
Trust Indenture and Security Agreement [NW 1997 J] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
Trust Indenture and Security Agreement [NW 1997 K] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
Trust Indenture and Security Agreement [NW 1997 L] dated as of September 25,
1997 between the Owner Trustee and the Indenture Trustee
<PAGE>
Schedule I-C
INITIAL CERTIFICATES OF DEPOSIT
-------------------------------
FACE AMOUNT MATURITY INTEREST RATE
1. $15,502,053.72 October 20, 1997 7.101123%
2. 15,449,778.47 November 20, 1997 7.100567
3. 16,079,414.54 January 2, 1998 7.104040
4. 16,033,156.87 January 2, 1998 7.103421
5. 15,991,373.61 January 2, 1998 7.102886
6. 15,953,222.79 January 2, 1998 7.102674
<PAGE>
Schedule II
Notional Amount Initial Index Period Initial Index Rate
- --------------- -------------------- ------------------
$15,502,053.72 25 days 5.51%
15,449,778.47 56 days 5.53
16,079,414.54 99 days 5.64
16,033,156.87 99 days 5.66
15,991,373.61 99 days 5.67
15,953,222.79 99 days 5.69
<PAGE>
ANNEX A
DEFINITIONS
-----------
"ACTUAL KNOWLEDGE" means as it applies to Northwest, actual knowledge
of a Vice President or more senior officer of Northwest, or any other officer of
Northwest, having responsibility for the transactions contemplated by this
Agreement; PROVIDED that Northwest shall be deemed to have "Actual Knowledge" of
any matter as to which it has received notice from CSFB, such notice having been
given pursuant to Section 12 hereof.
"APPLICABLE RATE" means (a) the Base Rate or (b) if Northwest provides
a notice to CSFB requesting the Applicable Rate to be based upon the LIBOR Rate,
(i) for the period from and including the date such notice is received by CSFB
through and including the date three Business Days thereafter, the Base Rate and
(ii) thereafter, with respect to each Interest Period, the LIBOR Rate therefor,
in each case as determined by CSFB.
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to (a) the
Federal Funds Effective Rate, plus (b) one-quarter of one percent ([1/4] of 1%).
"BUSINESS DAY" means any day, other than a Saturday or a Sunday, on
which commercial banks settle payments in New York, New York and, if such day
relates to the LIBOR Rate, on which dealings in U.S. dollar deposits are carried
out in the London interbank market.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by CSFB from three Federal funds brokers of recognized
standing selected by it.
"FEDERAL FUNDS INDEX RATE" means, for any day of determination, the
Federal Funds Effective Rate for such day MINUS 1/8% per annum.
"GAAP" means generally accepted accounting principles as set forth in
the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles
A-1
<PAGE>
applied on a basis consistent with prior periods except as may be disclosed in
such person's financial statements.
"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 this Agreement or relating
to the observance or performance of the obligations of any of the parties to
this Agreement.
"INDEX PERIOD" means, with respect to any Notional Amount, the Initial
Index Period and each Subsequent Index Period therefor.
"INDEX RATE" means, with respect to any Notional Amount, (i) during
the Initial Index Period therefor, the rate per annum set forth opposite such
Notional Amount under the heading "INITIAL INDEX RATE" on Schedule II and (ii)
during each Subsequent Index Period therefor, the rate per annum for such
Subsequent Index Period determined in accordance with Section 2.04 hereof.
"INITIAL INDEX PERIOD" means, with respect to each Notional Amount,
the period set forth opposite such Notional Amount under the heading "INITIAL
INDEX PERIODS" on Schedule II hereto.
"INTEREST PERIOD" means, with respect to any amount not paid when due
hereunder, each of the following periods:
(a) the period beginning on the third Business Day following the date
on which the notice requesting the LIBOR Rate as the Applicable Rate is
received by CSFB and ending on the same numerically corresponding date in
the immediately succeeding month; and
(b) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the same numerically
corresponding date in the immediately succeeding month;
except that each Interest Period that (i) commences on the last Business Day of
a calendar month (or any day for which there is no numerically corresponding day
in the appropriate succeeding calendar month) shall end on the last Business Day
of the immediately succeeding month and (ii) would otherwise end on a day that
is not a Business Day shall end on the next succeeding Business Day (or if such
next succeeding Business Day falls in the next succeeding calendar month, on the
next preceding Business Day).
A-2
<PAGE>
"INVESTMENT EARNINGS" on any amount, means investment earnings on such
amount net of losses and investment expenses of CSFB in making such investments.
"LAW" means (a) any constitution, treaty, statute, law, decree,
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.
"LIBOR RATE" means, with respect to any Interest Period, the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates per
annum at which deposits in U.S. dollars are offered to major banks in the London
interbank market at approximately 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount approximately equal to
the principal amount not paid when due hereunder to which such Interest Period
is to apply and for a period of time comparable to such Interest Period.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under this Agreement.
"NOTIONAL AMOUNTS" means each of the amounts set forth under the
heading "Notional Amounts" on Schedule II hereto as the same may be reduced from
time to time in accordance with Section 2.03.
"NOTIONAL EARNINGS" means, with respect to any Relevant Period and
each Notional Amount, the sum of the Index Rate per annum of such Notional
Amount for each day during such Relevant Period. The Notional Earnings shall be
calculated on the basis of a year of 360 days and actual days elapsed.
"PERMITTED INVESTMENTS" means (i) time deposits with CSFB, each for a
term determined by Northwest of at least 7 days and no more than 30 days or (ii)
overnight Federal funds (in which case such investment shall be deemed to bear
interest at the Federal Funds Index Rate for the applicable day).
"RELEVANT DATE" means (i) in the case of the first Regular
Distribution Date or Final Payment Date occurring prior to the first Regular
Distribution Date, the date of the Indemnity Agreement and (ii) in the case of
any other Regular Distribution Date or Final Payment Date, the Regular
Distribution Date immediately preceding such Regular Distribution Date or Final
Payment Date, as the case may be.
A-3
<PAGE>
"RELEVANT PERIOD" means, with respect to any Regular Distribution Date
or Final Payment Date, the period from and including the Relevant Date for such
Regular Distribution Date or Final Payment Date, as the case may be, to but
excluding such Regular Distribution Date or Final Payment Date, as the case may
be.
"SEC" means the Securities and Exchange Commission of the United
States, or any Government Entity succeeding to the functions of such Securities
and Exchange Commission.
"SUBSEQUENT INDEX PERIOD" with respect to each Notional Amount, shall
have the meaning set forth in Section 2.04.
A-4
<PAGE>
Exhibit 23(a)(1)
[AIRCRAFT INFORMATION SERVICES, INC. LOGO]
15 August 1997
Northwest Airlines, Inc.
and Northwest Airlines Corporation
5101 Northwest Drive
St. Paul, MN 55111-3034
Dear Sirs:
We hereby consent to the use of our name and the making of the statements
with respect to us, including the reference to our appraisal reports and
summary appraisal letter relating to the Aircraft appraised by us, which are
set forth in the Prospectus, the Preliminary Prospectus Supplement and
related Prospectus Supplement (collectively, the "Prospectus") relating to
the Northwest Airlines 1997-1 Pass-Through Trusts. We also consent to the
inclusion of our summary appraisal letter in such Prospectus, the
incorporation by reference of our appraisal reports in the Registration
Statement on Form S-3, as amended, containing such Prospectus, and such
Prospectus, and the reference to us under the heading "Experts" in such
Prospectus.
Sincerely,
Aircraft Information Services, Inc.
/s/ Fred Bearden
- -----------------------------
Fred Bearden
President
<PAGE>
Exhibit 23(a)(2)
[LETTERHEAD OF BK ASSOCIATES, INC.]
September 3, 1997
Northwest Airlines, Inc.
and Northwest Airlines Corporation
5101 Northwest Drive
St. Paul, MN 55111-3034
Dear Sirs:
We hereby consent to the use of our name and the making of the statements
with respect to us, including the reference to our appraisal reports and
summary appraisal letter relating to the Aircraft appraised by us, which are
set forth in the Prospectus, the Preliminary Prospectus Supplement and
related Prospectus Supplement (collectively, the "Prospectus") relating to
the Northwest Airlines 1997-1 Pass-Through Trusts. We also consent to the
inclusion of our summary appraisal letter in such Prospectus, the
incorporation by reference of our appraisal reports in the Registration
Statement on Form S-3, as amended, containing such Prospectus, and such
Prospectus, and the reference to us under the heading "Experts" in such
Prospectus.
Sincerely,
BK ASSOCIATES, INC.
/s/ R. L. Britton
-----------------------------
R. L. Britton
Vice President
ISTAT Certified Appraiser
RLB/kf
<PAGE>
Exhibit 23(a)(3)
[LETTERHEAD OF MORTEN BEYER & AGNEW]
August 26, 1997
Northwest Airlines, Inc.
and Northwest Airlines Corporation
5101 Northwest Drive
St. Paul, MN 55111-3034
Dear Sirs:
We hereby consent to the use of our name and the making of the
statements with respect to us, including the reference to our appraisal
reports and summary appraisal letter relating to the Aircraft appraised by
us, which are set forth in the Prospectus, the Preliminary Prospectus
Supplement and related Prospectus Supplement (collectively, the "Prospectus")
relating to the Northwest Airlines 1997-1 Pass-Through Trusts. We also
consent to the inclusion of our summary appraisal letter in such Prospectus,
the incorporation by reference of our appraisal reports in the Registration
Statement on Form S-3, as amended, containing such Prospectus, and such
Prospectus, and the reference to us under the heading "Experts" in such
Prospectus.
Sincerely,
MORTEN BEYER & AGNEW
/s/ Morten S. Beyer
-----------------------------
Morten S. Beyer
Chairman & CEO
<PAGE>
Exhibit 23(a)(4)
September __, 1997
Northwest Airlines Corporation
and
Northwest Airlines, Inc.
5101 Northwest Drive
St. Paul, Minnesota 55111-3034
Gentlemen:
We hereby consent to the reference to our firm contained under the
heading "Certain Massachusetts and Connecticut Taxes" and "Legal Matters" in
the Prospectus and related Prospectus Supplement (collectively, the
"PROSPECTUS") relating to the Northwest Airlines 1997-1 Pass-Through Trusts.
In giving this consent, we do not thereby admit that we are in the category
of persons whose consent is required under the Section 7 of the Securities
Act of 1933, as amended or the Rules and Regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ BINGHAM, DANA & GOULD
-----------------------------
BINGHAM, DANA & GOULD LLP
<PAGE>
Exhibit 99(a)
================================================================================
PARTICIPATION AGREEMENT
[NW 1997 A]
DATED AS OF
SEPTEMBER 25, 1997
AMONG
NORTHWEST AIRLINES, INC.,
LESSEE,
NORTHWEST AIRLINES CORPORATION,
GUARANTOR,
FINOVA CAPITAL CORPORATION,
OWNER PARTICIPANT,
STATE STREET BANK AND TRUST COMPANY,
PASS THROUGH TRUSTEE UNDER EACH OF
THE PASS THROUGH TRUST AGREEMENTS,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED
HEREIN, BUT SOLELY AS OWNER TRUSTEE,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
SUBORDINATION AGENT,
AND
STATE STREET BANK AND TRUST COMPANY,
IN ITS INDIVIDUAL CAPACITY AND AS INDENTURE TRUSTEE
_____________________
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
N501XJ
LEASED TO NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
INDEX TO PARTICIPATION AGREEMENT
Page
----
SECTION 1. Participations in Lessor's Cost of the Aircraft. . . . . . . . 3
SECTION 2. Lessee's Notice of Delivery Date . . . . . . . . . . . . . . . 4
SECTION 3. Instructions to the Owner Trustee. . . . . . . . . . . . . . . 4
SECTION 4. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Conditions Precedent to the Participations in
the Aircraft. . . . . . . . . . . . . . . . . . . . . . . 5
(b) Conditions Precedent to the Obligations of
Lessee and the Guarantor. . . . . . . . . . . . . . . . .13
SECTION 5. [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . .15
SECTION 6. Extent of Interest of Certificate Holders. . . . . . . . . . .15
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities . . . . . . . . . . . . . . . . . . . .15
(a) Representations and Warranties. . . . . . . . . . . . . .15
(b) General Tax Indemnity . . . . . . . . . . . . . . . . . .18
(c) General Indemnity . . . . . . . . . . . . . . . . . . . .18
(d) Income Tax. . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 8. Representations, Warranties and Covenants. . . . . . . . . . .19
SECTION 9. Reliance of Liquidity Provider . . . . . . . . . . . . . . . .38
SECTION 10. Other Documents. . . . . . . . . . . . . . . . . . . . . . . .38
SECTION 11. Certain Covenants of Lessee. . . . . . . . . . . . . . . . . .39
SECTION 12. Owner for Federal Tax Purposes . . . . . . . . . . . . . . . .39
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction. . . . .40
SECTION 14. Change of Situs of Owner Trust . . . . . . . . . . . . . . . .41
SECTION 15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . .41
SECTION 16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .43
SECTION 17. Refinancings . . . . . . . . . . . . . . . . . . . . . . . . .43
(i)
<PAGE>
SCHEDULES
---------
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
--------
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B-1 - Form of Opinion of Simpson Thacher & Bartlett, special
counsel for the Lessee and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special
counsel for the Lessee and the Guarantor
Exhibit B-3 - Form of Opinion of Lessee's Legal Department
Exhibit C - Form of Opinion of Vedder, Price, Kaufman & Kammholz,
special counsel for the Manufacturer
Exhibit D - Form of Opinion of Ray, Quinney & Nebeker, special counsel
for the Owner Trustee
Exhibit E-1 - Form of Opinion of Todd & Levi, LLP, special counsel for the
Owner Participant
Exhibit E-2 - Form of Opinion of Owner Participant's in-house counsel
Exhibit F - Form of Opinion of Crowe & Dunlevy, P.C.
Exhibit G - Form of Opinion of Bingham, Dana & Gould LLP, special
counsel for the Indenture Trustee
Exhibit H-1 - Form of Opinion of Powell, Goldstein, Frazer & Murphy LLP,
special counsel for the Liquidity Provider
Exhibit H-2 - Form of Opinion of in-house counsel for the Liquidity
Provider
Exhibit I - Form of Opinion of David, Hagner, Kuney & Davison, P.C.,
special tax counsel to the Owner Participant
(ii)
<PAGE>
Exhibit J - Form of Section 1110 Opinion of Cadwalader, Wickersham &
Taft, special counsel for the Lessee
Exhibit K - Form of Opinion of Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee
(iii)
<PAGE>
PARTICIPATION AGREEMENT
[NW 1997 A]
THIS PARTICIPATION AGREEMENT [NW 1997 A] dated as of September 25,
1997, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the
"LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the
"GUARANTOR"), (iii) FINOVA CAPITAL CORPORATION, a Delaware corporation (the
"OWNER PARTICIPANT"), (iv) STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity except as otherwise provided herein, but solely as trustee
(in such capacity, the "PASS THROUGH TRUSTEE") under each of three separate Pass
Through Trust Agreements (as defined below), (v) FIRST SECURITY BANK, 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"), (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 (defined below), and (vii) 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 British
Aerospace Avro 146-RJ85 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 1997 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
1997 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 1997 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
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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 1.01 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 1997 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 will issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") in three
series, 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 1997 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, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Tax Indemnity Agreement [NW
1997 A], dated as of the date hereof, with Lessee (the "TAX INDEMNITY
AGREEMENT");
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW 1997 A], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of Lessee under the Operative Documents (the "GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule III hereto (collectively,
the "PASS THROUGH TRUST AGREEMENTS"), concurrently with the execution and
delivery of this 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,
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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
on the Delivery Date 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
Agreement, (i) Royal Bank of Canada (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 will enter into the Intercreditor
Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated hereby,
Lessee and the Guarantor have entered into the Underwriting Agreement, dated as
of September 16, 1997, among Lessee, the Guarantor and the several underwriters
named therein (the "UNDERWRITING AGREEMENT"); and
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 PASS THROUGH TRUSTEES. Subject to the terms and conditions of
this Agreement, the Pass Through Trustee for each Pass Through Trust agrees to
finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft
by paying to the Owner Trustee the aggregate purchase price of the Secured
Certificates being issued to such Pass Through Trustee as set forth on SCHEDULE
II opposite the name of such Pass Through Trust. The Pass Through Trustees
shall make such payments to the Owner Trustee on a date to be designated
pursuant to Section 2 hereof, but in no event later than September 25, 1997, by
transferring to the account of the Owner Trustee at State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028,
Account No. 9900-314-7, Reference: Northwest/NW 1997 A, 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 name of such Pass Through Trust on
SCHEDULE II hereto.
Upon the occurrence of the above transfers by the Pass Through Trustee
for each Pass Through Trust to the Owner Trustee, the Owner Trustee, at the
direction of the Owner Participant, shall issue, pursuant to Article II of the
Trust Indenture, to the Subordination Agent
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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.
(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 September 25, 1997, by
transferring to the account of the Owner Trustee at State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028,
Account No. 9900-314-7, Reference: Northwest/NW 1997 A, 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 Pass Through Trustee 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 Pass Through Trustee
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.
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;
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(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 Pass Through Trustee to finance a portion of
the Lessor's Cost for the Aircraft and to execute and deliver to the
Subordination Agent on behalf of the Pass Through Trustee for each of the
Pass Through Trusts 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 shall be in the principal
amounts set forth on Schedule II hereto, 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 Pass Through Trustee 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) and (15),
(xxi), (xxii) and (xxiv) shall not be a condition precedent to the obligations
of the Pass Through Trustee, and paragraphs (iv), (vii) (insofar as it relates
to the Owner Participant) and (xiv) shall not be a condition precedent to the
obligation of the Owner Participant:
(i) The Pass Through Trustee 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 would make it a violation of law or regulations or guidelines for the
Pass Through Trustee or the Owner Participant to make its Commitment
available in accordance with Section 1 hereof.
(iii) In the case of the Owner Participant, the Pass Through
Trustees shall have made available the amount of their Commitments for the
Aircraft in accordance with Section 1 hereof.
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(iv) In the case of the Pass Through Trustees, 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 Pass Through Trustee and
the Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Pass Through Trustee and the
Owner Participant, or their respective counsel, PROVIDED that only the
Subordination Agent on behalf of each Pass Through Trustee shall receive an
executed original of such Pass Through Trustee's 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 its counsel
prior to the Delivery Date and subsequent to the Delivery Date may be
inspected and reviewed by the Indenture Trustee 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 and the Residual Agreement need only be satisfactory to
the Owner Participant and Lessee and 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;
(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 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;
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(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the Residual 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".
In addition, the Pass Through Trustee and the Owner Participant each
shall have received executed counterparts or conformed copies of the
following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Class A, Class
B and Class C Trusts.
(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 Pass Through Trustee shall have been executed
and delivered by Lessee or the Owner Trustee and duly filed.
(vii) The Pass Through Trustee and the Owner Participant shall have
received the following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to execute
and deliver this Agreement, the Lease, the Lease Supplement covering
the Aircraft, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement Assignment, the Tax Indemnity Agreement, the Pass Through
Trust Agreements, the Guarantee and any other documents to be executed
on behalf of 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
Lessee and the Guarantor or the executive committee thereof, certified
by the Secretary or an Assistant Secretary of Lessee and the Guarantor
(as the case may be), duly authorizing the transactions contemplated
hereby and the execution and delivery
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of each of the documents required to be executed and delivered on
behalf of 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 Lessee
and the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of 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 Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of 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 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 Delivery Date, as to the due
incorporation and good standing of Lessee or the Guarantor (as the
case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, 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 Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made 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 are correct on and as of such earlier date).
(C)(1) an incumbency certificate of the Owner Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Lease, the Lease Supplement covering the Aircraft, the
Trust Agreement, the Trust Indenture, the Residual Agreement, the
Purchase Agreement Assignment 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 Delivery Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) are correct as though made
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 are correct on and as
of such earlier date).
(D)(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and any
other documents to be executed on behalf of the Owner Participant in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a certificate signed by the Secretary or an Assistant
Secretary of the Owner Participant, to the effect that 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 Participant in connection with the transactions
contemplated hereby have been duly authorized;
(3) a copy of the articles of association and by-laws of
the Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the
Owner Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made 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 are correct on and as of such earlier date).
(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
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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 Pass Through Trustee and the Owner
Participant shall have received a certificate signed by an authorized
officer of Lessee (and with respect to the matters set forth in clauses (4)
and (5) below, the Guarantor) to the effect that:
(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness;
(2) 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;
(3) application for registration of the Aircraft in the
name of the Owner Trustee has been duly made with the Federal Aviation
Administration;
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) 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, 1996.
(x) 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.
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant and the Owner Trustee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee and the Owner Participant,
an opinion substantially in the form of EXHIBIT B-1 hereto from Simpson
Thacher & Bartlett, special counsel for Lessee and the Guarantor, an
opinion substantially in the form of EXHIBIT B-2 hereto from Cadwalader,
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Wickersham & Taft, special counsel for Lessee and the Guarantor, and an
opinion substantially in the form of EXHIBIT B-3 hereto from Lessee's legal
department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT C hereto from Vedder, Price, Kaufman &
Kammholz, special counsel to the Manufacturer, with respect to the
Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT D hereto from Ray, Quinney & Nebeker,
special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and substance
to the Pass Through Trustee, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT E-1 hereto from Todd & Levi, LLP
special counsel for the Owner Participant, and an opinion substantially in
the form of EXHIBIT E-2 hereto from the Owner Participant's in-house
counsel.
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT F hereto from Crowe & Dunlevy, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant, the
Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee, the Owner Participant, the
Guarantor and Lessee, an opinion substantially in the form of EXHIBIT G
hereto from Bingham, Dana & Gould LLP, special counsel for the Indenture
Trustee.
(xvii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT H-1 hereto from Powell, Goldstein,
Frazer & Murphy LLP, special counsel for the Liquidity Provider, and an
opinion substantially in the form of EXHIBIT H-2 hereto from in-house
counsel for the Liquidity Provider.
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(xviii) The Pass Through Trustee and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Pass Through Trustee 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.
(xix) Lessor's Cost for the Aircraft shall be $21,000,000.
(xx) 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.
(xxi) The Owner Participant shall have received from David, Hagner,
Kuney & Davison, P.C., special tax counsel to the Owner Participant, a
favorable opinion substantially in the form of EXHIBIT I hereto, 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.
(xxii) In the opinion of the Owner Participant and its special tax
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.
(xxiii) The Pass Through Trustee and the Owner Participant shall have
received a favorable opinion substantially in the form of EXHIBIT J hereto
addressed to the Pass Through Trustee and the Owner Participant, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee 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.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties contained
herein of the Pass Through Trustee are correct as though made 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
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representations and warranties are correct on and as of such earlier date),
(B) an opinion substantially in the form of EXHIBIT K hereto addressed to
the Owner Participant, the Guarantor and Lessee of Bingham, Dana & Gould
LLP, special counsel for the Pass Through Trustee, and reasonably
satisfactory as to scope and substance to the Owner Participant, the
Guarantor and Lessee, and (C) 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.
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 Pass Through Trustee, 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 and the Lease and the filing of 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 AND THE
GUARANTOR. It is agreed that (A) the obligations of Lessee to sell the Aircraft
to the Owner Trustee and to accept delivery of the Aircraft under the Lease, and
(B) the obligations of Lessee and the Guarantor to enter into the other
Operative Documents, are all subject to the fulfillment to the satisfaction of
Lessee and the Guarantor 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
and the Guarantor, 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
and the Guarantor or its special counsel.
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(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xxiv)(A), and (C) such other documents and evidence with
respect to the Pass Through Trustee as Lessee or its special counsel and
the Guarantor or its special counsel may reasonably request in order to
establish the due 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) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv), 4(a)(xvi),
4(a)(xvii) and 4(a)(xxiv)(B) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and the
Guarantor and its special counsel.
(vi) 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.
(vii) 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 by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee or
the Guarantor to enter into any transaction contemplated by the Operative
Documents.
(viii) 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.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. [INTENTIONALLY OMITTED].
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
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paid in full. Each Pass Through Trustee 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 Pass Through Trustees 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. REPRESENTATIONS AND WARRANTIES OF LESSEE AND THE
GUARANTOR; INDEMNITIES. (a) REPRESENTATIONS AND WARRANTIES. Lessee and the
Guarantor represent and warrant to the Pass Through Trustee, the Owner Trustee,
the Indenture Trustee, the Liquidity Provider, the Subordination Agent and the
Owner Participant that as of the Delivery Date:
(i) each of 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 Lessee, the Lessee
Documents, 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 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;
(ii) 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;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, and the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement and each other Operative Document to which 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 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 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 Lessee or the Guarantor (as the case may be) or the
certificate of incorporation or by-laws of 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 Lessee or the Guarantor (as the
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case may be) under, any indenture, mortgage, contract or other agreement to
which 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;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, nor the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement or the other Operative Documents to which Lessee or
the Guarantor (as the case may be) is a party, 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 over Lessee or the Guarantor, other than (A) 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, (B) 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, (C) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee or any Sublessee
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 on the Delivery Date will 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), (D) the registration of the Aircraft referred to in Section
4(a)(ix)(3), (E) the registrations and filings referred to in Section
7(a)(vi), and (F) 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;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee constitute 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 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;
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<PAGE>
(vi) except for (A) the filing of the Trust Agreement with the FAA,
(B) the filing for recording pursuant to the Federal Aviation Act of the
termination of the Mortgage and the Predecessor Lease and the filing of a
UCC-3 termination statement in connection with the Mortgage, (C) the
registration of the Aircraft pursuant to the Federal Aviation Act, (D) the
filing for recording pursuant to the Federal Aviation 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, (E) the filing of financing statements
(and continuation statements at periodic intervals) with respect to the
security 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 the filing of a
UCC-3 termination statement relating to the financing statement filed in
connection with the Mortgage, and (F) the taking of possession by the
Indenture Trustee of the original chattel paper counterpart of each of the
Lease and the Lease Supplement covering the Aircraft, 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 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;
(vii) neither 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;
(viii) neither Lessee nor the Guarantor is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(ix) 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;
(x) 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;
(xi) 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;
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<PAGE>
(xii) 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; 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 so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
(b) GENERAL TAX INDEMNITY. [Intentionally Omitted].
(c) GENERAL INDEMNITY. [Intentionally Omitted].
(d) INCOME TAX. [Intentionally Omitted].
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) [Intentionally Omitted].
(b) [Intentionally Omitted].
(c) Each of the Owner Participant and First Security Bank,
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, National Association, in its
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individual capacity, agrees that if at any time an officer or responsible
employee of the Corporate Trust Department of First Security Bank, National
Association, shall obtain actual knowledge that First Security Bank, 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, 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, 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, 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, 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, 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, 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 the Indenture Trustee 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
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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 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 reasonable fees and
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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
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Subordination
Agent, the Liquidity Provider and the Owner Trustee, in its capacity as such and
in its individual capacity, as follows:
(i) 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, and has the corporate power and authority to enter
into and to perform its obligations under the Owner Participant Documents;
this Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its 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; and it has a tangible net worth (exclusive of goodwill) greater
than $75,000,000;
(ii) neither (A) the execution and delivery by the Owner
Participant of the Owner Participant Documents nor (B) compliance by it
with all of the provisions 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, 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, 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;
(iii) 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 required for the due execution, delivery or performance by
it of the Owner Participant Documents;
(iv) 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;
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(v) 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 financing contemplated
hereby and agreed to herein by the Owner Participant, 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 is being
acquired for its own account and is being purchased for investment and not
with a view to any resale or distribution thereof;
(vi) on the Delivery 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 which would be Lessor Liens but for the
proviso in the definition of Lessor Liens); and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
(h) Each of First Security Bank, 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, 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, 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 which 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
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continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.
(j) [Intentionally Omitted].
(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
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) or the Owner Participant under this Agreement or
the Trust Indenture (and any exhibits or annexes thereto).
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(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant as follows:
(i) 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
Trust 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 Trust Indenture and each other Operative Document to which
it is a party and to carry out its obligations under this Agreement, the
Trust Indenture, each other Operative Document to which it is a party and
to authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents 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;
(iii) this Agreement and each of the other Indenture Trustee
Documents 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;
(iv) 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
(v) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(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
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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 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 (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 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 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, 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,
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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 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, 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) 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 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 and holding of such
Secured Certificate (or any part thereof) constitutes assets of any "employee
benefit plan" or that such purchase and holding will not result in a 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). The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(1) of
the initial supplement to each Pass Through Trust Agreement without the prior
written consent of the Owner Participant.
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<PAGE>
(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 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 Pass
Through Trustee 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.
(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) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent
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that it relates to the Owner Trustee, clauses (ii), (ix) and (xi) below) as
Owner Trustee, represents and warrants to Lessee, the Guarantor, the Pass
Through Trustee, the Subordination Agent, the Liquidity Provider and the Owner
Participant that:
(i) 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 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
(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 Trust Indenture, the Secured Certificates, the Lease and
each other Operative Document (other than the Trust Agreement) to which it
is a party;
(ii) 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, in its individual capacity, has duly
authorized, executed and delivered the Trust Agreement and in its trust
capacity, except as expressly provided therein, has duly authorized,
executed and delivered the other Owner Trustee Documents and (assuming the
due authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement and each of the other Owner Trustee
Documents constitute the legal, valid and binding obligations 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;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Delivery 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 Trust
Indenture, and each Secured Certificate on the Delivery Date will
constitute the valid and binding obligation of the Owner Trustee and will
be entitled to the benefits and security afforded by the Trust Indenture in
accordance with the terms of such Secured Certificate and the Trust
Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any
Owner Trustee Document, 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 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 thereof, (A) requires or will require any
approval of its stockholders, or approval or consent of any trustees or
holders of any indebtedness or
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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;
(v) 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 Trust Indenture, the Lease or 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 7(iv);
(vi) there exists no Lessor Lien (including for this purpose Liens
which 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 which 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 Trust 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 Trust
Indenture of Rent assigned to the Indenture Trustee for the benefit of the
Certificate Holders;
(vii) there exists no Lessor Lien (including for this purpose Liens
which 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 which 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 Trust Indenture, (D) which the Owner Trustee is
diligently contesting by appropriate proceedings and (E) the existence of
which does not
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result in actual interruption in the receipt and distribution by the
Indenture Trustee in accordance with the Trust Indenture of Rent assigned
to the Indenture Trustee for the benefit of the Certificate Holders;
(viii) 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 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 (i), (ii), (iii) and (iv) 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, 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;
(ix) 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 (i), (ii), (iii) and (iv) above;
(x) 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;
(xi) 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 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;
(xii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangements);
and
(xiii) there has not occurred any event which constitutes (or, to the
best of its knowledge would, with the passing 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 Owner Trustee, in its
individual capacity, and which is presently continuing.
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(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 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.
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.
(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
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the assets of Lessee as an entirety shall execute and deliver to the Owner
Trustee, the Indenture Trustee and the Owner Participant an agreement in
form and substance reasonably satisfactory to the Indenture Trustee and the
Owner 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 the Owner 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 Indenture Trustee
and the Owner Participant, 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
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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 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) 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.
(ee) 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(k), 8(l), 8(q), and 8(t) hereof and this Section 8(ee) and
Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(ff) The Pass Through Trustee represents and warrants to Lessee,
the Guarantor, the Indenture Trustee, the Subordination Agent, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) 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 and this Agreement and to perform its obligations under the Pass
Through Trust Agreements, the Intercreditor Agreement and this Agreement;
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(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement 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;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this 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;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement or
this Agreement, nor the consummation by the Pass Through Trustee 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 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;
(v) 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 or the Intercreditor 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 either as a grantor trust under subpart E, Part I, of
Subchapter J of the Code or as a partnership, such trusts will not be
subject to
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any Taxes imposed by the Commonwealth of Massachusetts or any political
subdivision thereof;
(vi) 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 Intercreditor
Agreement or any Pass Through Trust Agreement;
(vii) 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 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
(viii) 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, Lessee or the Guarantor.
(gg) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) 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 and
this Agreement and to perform its obligations under this Agreement, the
Liquidity Facilities and the Intercreditor Agreement;
(ii) this Agreement, each of the Liquidity Facilities and the
Intercreditor Agreement have been duly authorized, executed and delivered
by the Subordination Agent; this Agreement, each of the Liquidity
Facilities and the Intercreditor Agreement 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;
(iii) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the Intercreditor
Agreement or this Agreement contravenes any law, rule or regulation of the
State of Connecticut or any United States
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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;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent 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 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;
(v) 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 or the Intercreditor 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);
(vi) 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 Intercreditor Agreement
or any Liquidity Facility;
(vii) 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
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
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SECTION 9. 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. Lessee agrees and acknowledges that
the Liquidity Provider shall be a third party beneficiary of the indemnities
contained in Section 7(c) hereof, and may rely on such indemnities to the same
extent as if such indemnities were made to the Liquidity Provider directly.
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 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
Indenture Trustee. 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 10.14
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
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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.
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 Guarantor, the Owner Trustee, the
Pass Through Trustee, the Subordination 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.
(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
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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 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
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 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 Indenture Trustee and to the Owner Participant covering the matters
described in the opinion delivered pursuant to Section 4(a)(xiii) hereof and
such other matters as the Indenture Trustee and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold
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harmless the Owner Participant and the Indenture Trustee 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 and
the Indenture Trustee 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 Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant provided
for in this Agreement, and Lessee's, the Guarantor's, the Owner Trustee's, the
Indenture Trustee's, the Subordination Agent's, the Pass Through Trustee's and
the Owner Participant's obligations under any and all thereof, shall survive the
making available of the respective Commitments by the Pass Through Trustee 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, subject to the terms of this 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 Owner Participant and,
subject to the terms of this Agreement, its successors and permitted 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.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. 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
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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 in the event of any
reorganization of Lessee under such Section.
SECTION 16. EXPENSES. (a) Invoices
and Payment. Each of the parties hereto 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 November 30, 1997). The Owner Participant agrees to
transfer to the Owner Trustee promptly but in any event no later than December
15, 1997 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 1.37% 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 1.37% 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 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,
-41-
<PAGE>
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.
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 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
-42-
<PAGE>
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) and 4.07 of
Rev. Proc. 75-28 and with one or more of any "safe harbors" from
characterization of the Lease as a "disqualified leaseback or long-term
agreement" set forth in Section 467 of the Code (or any proposed, temporary or
final regulations thereunder applicable to the Lease) or, if no "safe harbor"
exists, made in a manner to avoid characterization of the Lease as 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.
-43-
<PAGE>
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: /s/ Mark D. Powers
----------------------------------------
Name: Mark D. Powers
Title: Vice President-Finance
and Assistant 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
NORTHWEST AIRLINES CORPORATION,
GUARANTOR
Name: Mark D. Powers
----------------------------------------
Title: Vice President-Finance
and Assistant 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
-Signature Page-
<PAGE>
[OWNER PARTICIPANT]
By:[/s/ Vice President of Owner Participant]
-----------------------------------------
Name:
Title:
Address:
Attn:
Telecopy No.:
STATE STREET BANK AND
TRUST COMPANY,
INDENTURE TRUSTEE
By: /s/ Donald E. Smith
-----------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
OWNER TRUSTEE
By: /s/ Greg A. Hawley
------------------------------------------
Name: Greg A. Hawley
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
-Signature Page-
<PAGE>
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: /s/ DONALD E. SMITH
------------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
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: /s/ DONALD E. SMITH
------------------------------
Name: Donald E. Smith
Title: Vice President
Address: c/o State Street Bank and
Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
-Signature Page-
<PAGE>
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:
---------------------
Attn:
Telecopy No.:
<PAGE>
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 1997 A
Owner Trustee: First Security Bank, 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, National Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1997 A
Loan Participants:
SCHEDULE I - PAGE 2
<PAGE>
SCHEDULE II
COMMITMENTS
INTEREST RATE PERCENTAGE OF
PURCHASERS AND MATURITY PURCHASE PRICE LESSOR'S COST
---------- ------------- -------------- -------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured $10,481,250.00 49.91071429%
Certificates due January 2,
2015
1997-1B 7.248% Series B Secured $ 4,387,500.00 20.89285714%
Certificates due January 2,
2011
1997-1C 7.039% Series C Secured $ 1,931,250.00 9.19642857%
Certificates due January 2,
2005
OWNER PARTICIPANT EQUITY INVESTMENT
- ----------------- -----------------
_____________ $ 4,200,000.00 20.00000000%
Total Commitments $21,000,000.00 100%
<PAGE>
SCHEDULE III
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. 1997-1A, dated as of
September 25, 1997.
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. 1997-1B, dated as of
September 25, 1997.
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. 1997-1C, dated as of
September 25, 1997.
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1997 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>
Exhibit 99(b)
================================================================================
PARTICIPATION AGREEMENT
[NW 1997 G]
DATED AS OF
SEPTEMBER 25, 1997
AMONG
NORTHWEST AIRLINES, INC.,
LESSEE AND INITIAL OWNER PARTICIPANT,
NORTHWEST AIRLINES CORPORATION,
GUARANTOR,
STATE STREET BANK AND TRUST COMPANY,
PASS THROUGH TRUSTEE UNDER EACH OF
THE PASS THROUGH TRUST AGREEMENTS,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED
HEREIN, BUT SOLELY AS OWNER TRUSTEE,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
SUBORDINATION AGENT,
AND
STATE STREET BANK AND TRUST COMPANY,
IN ITS INDIVIDUAL CAPACITY AND AS INDENTURE TRUSTEE
_____________________
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
N507XJ
TO BE LEASED TO NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
INDEX TO PARTICIPATION AGREEMENT
Page
----
SECTION 1. Participations in Lessor's Cost of the Aircraft. . . . . . . . 4
SECTION 2. Lessee's Notice of Delivery Date . . . . . . . . . . . . . . . 9
SECTION 3. Instructions to the Owner Trustee. . . . . . . . . . . . . . . 9
SECTION 4. Certificate Closing Conditions . . . . . . . . . . . . . . . . 9
(a) Conditions Precedent to the Certificate Closing . . . . . 9
(b) Certificate Closing Conditions Precedent to the
Obligations of Lessee and the Guarantor . . . . . . . . .14
SECTION 5. Delivery Date Closing Conditions . . . . . . . . . . . . . . .16
(a) Conditions Precedent to the Delivery Date Closing . . . .16
(b) Conditions Precedent to the Obligations of Lessee
and the Guarantor . . . . . . . . . . . . . . . . . . . .24
SECTION 6. Extent of Interest of Certificate Holders. . . . . . . . . . .26
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities . . . . . . . . . . . . . . . . . . . .26
(a) Representations and Warranties. . . . . . . . . . . . . .26
(b) General Tax Indemnity . . . . . . . . . . . . . . . . . .30
(c) General Indemnity . . . . . . . . . . . . . . . . . . . .30
(d) Income Tax. . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 8. Representations, Warranties and Covenants. . . . . . . . . . .30
SECTION 9. Reliance of Liquidity Provider . . . . . . . . . . . . . . . .45
SECTION 10. Other Documents. . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 11. Certain Covenants of Lessee. . . . . . . . . . . . . . . . . .46
SECTION 12. Owner for Federal Tax Purposes . . . . . . . . . . . . . . . .46
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction. . . . .47
SECTION 14. [RESERVED.]. . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 17. Refinancings . . . . . . . . . . . . . . . . . . . . . . . . .49
(i)
<PAGE>
Page
----
SECTION 18. Collateral Account . . . . . . . . . . . . . . . . . . . . . .51
(ii)
<PAGE>
APPENDICES
----------
Appendix A - Definitions
SCHEDULES
---------
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
SCHEDULE IV - Mandatory Economic Terms
SCHEDULE V - Mandatory Document Terms
EXHIBITS
--------
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B - Form of Purchase Agreement Assignment
Exhibit C - Form of Lease Agreement
Exhibit D-1 - Form of Certificate Closing Date Opinion of Simpson Thacher
& Bartlett, special counsel for Lessee and the Guarantor
Exhibit D-2 - Form of Certificate Closing Date Opinion of Cadwalader,
Wickersham & Taft, special counsel for Lessee and the
Guarantor
Exhibit D-3 - Form of Certificate Closing Date Opinion of Lessee's Legal
Department
Exhibit E - Form of Certificate Closing Date Opinion of Ray, Quinney &
Nebeker, special counsel for the Owner Trustee
Exhibit F - Form of Certificate Closing Date Opinion of Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee
Exhibit G-1 - Form of Certificate Closing Date Opinion of Powell,
Goldstein, Frazer & Murphy LLP, special counsel for the
Liquidity Provider
Exhibit G-2 - Form of Certificate Closing Date Opinion of in-house counsel
for the Liquidity Provider
Exhibit H - Form of Certificate Closing Date Opinion of Bingham, Dana &
Gould LLP, special counsel for the Pass Through Trustee
Exhibit I-1 - Form of Delivery Date Opinion of Simpson Thacher & Bartlett,
special counsel for Lessee and the Guarantor
Exhibit I-2 - Form of Delivery Date Opinion of Cadwalader, Wickersham &
Taft, special counsel for Lessee and the Guarantor
Exhibit I-3 - Form of Delivery Date Opinion of Lessee's Legal Department
Exhibit J-1 - Form of Delivery Date Opinion of Vedder, Price, Kaufmann &
Kammholz, special counsel for the Manufacturer
Exhibit J-2 - Form of Delivery Date Opinion of in-house counsel for the
Manufacturer
Exhibit K - Form of Delivery Date Opinion of Ray, Quinney & Nebeker,
special counsel for the Owner Trustee
Exhibit L-1 - Form of Delivery Date Opinion of special counsel for the
Owner Participant
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant
(iii)
<PAGE>
Exhibit M - Form of Delivery Date Opinion of Crowe & Dunlevy P.C.
Exhibit N - Form of Delivery Date Opinion of Bingham, Dana & Gould LLP,
special counsel for the Indenture Trustee
Exhibit O-1 - Form of Delivery Date Opinion of Powell, Goldstein, Frazer &
Murphy LLP, special counsel for the Liquidity Provider
Exhibit O-2 - Form of Delivery Date Opinion of in-house counsel for the
Liquidity Provider
Exhibit P - Form of Delivery Date Opinion of Cadwalader, Wickersham &
Taft, special counsel for Lessee, as to Section 1110 of the
U.S. Bankruptcy Code
Exhibit Q - Form of Delivery Date Opinion of Bingham, Dana & Gould LLP,
special counsel for the Pass Through Trustee
(iv)
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT [NW 1997 G] dated as of September 25,
1997, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"
and the "INITIAL OWNER PARTICIPANT"), (ii) NORTHWEST AIRLINES CORPORATION, a
Delaware corporation (the "GUARANTOR"), (iii) STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity except as otherwise provided herein, but
solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of
three separate Pass Through Trust Agreements (as defined below), (iv) FIRST
SECURITY BANK, 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"), (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 (defined
below), and (vi) 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 between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain British Aerospace Avro 146-RJ85 aircraft, including the Aircraft which
is to be delivered by the Manufacturer to Lessee and which is the subject of
this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Initial Owner Participant is entering into a Trust Agreement [NW
1997 G], 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 in Section 1.01 thereof (herein called the "TRUST ESTATE") for
the use and benefit of the Initial Owner Participant;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Indenture Trustee and the Owner Trustee are entering into a Trust
Indenture and Security Agreement [NW 1997 G], 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 will issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"SECURED CERTIFICATES",
<PAGE>
and individually, a "SECURED CERTIFICATE") in three series, which Secured
Certificates are to be secured by the Liquid Collateral prior to the Delivery
Date, and by mortgage and security interests created by the Owner Trustee in
favor of the Indenture Trustee thereafter;
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW 1997 G], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of Lessee under the Operative Documents (the "GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule III hereto (collectively,
the "PASS THROUGH TRUST AGREEMENTS"), concurrently with the execution and
delivery of this 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
on the Certificate Closing Date 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
Agreement, (i) the Royal Bank of Canada (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 will enter into the Intercreditor
Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated hereby,
Lessee and the Guarantor have entered into the Underwriting Agreement, dated as
of September 16, 1997, among Lessee, the Guarantor and the several underwriters
named therein (the "UNDERWRITING AGREEMENT");
WHEREAS, subject to the terms and conditions herein set forth, on the
Delivery Date (as hereinafter defined):
(i) Lessee and the Owner Trustee will enter into a Purchase
Agreement Assignment [NW 1997 G], dated as of the Delivery Date (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), substantially in the form of
EXHIBIT B hereto, whereby Lessee
- 2 -
<PAGE>
assigns to the Owner Trustee certain rights and interests of Lessee under
the Purchase Agreement with respect to the Aircraft;
(ii) the Manufacturer will have executed the Consent and Agreement
[NW 1997 G] (herein called the "CONSENT AND AGREEMENT"), substantially in
the form attached to the form of Purchase Agreement Assignment (herein
called the "CONSENT AND AGREEMENT");
(iii) 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;
(iv) the Owner Trustee and Lessee will enter into the Lease
Agreement [NW 1997 G], dated as of the Delivery Date and substantially in
the form of EXHIBIT C hereto (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;
and
(v) the Owner Participant and Lessee will enter into a Tax
Indemnity Agreement [NW 1997 G], dated as of the Delivery Date (the "TAX
INDEMNITY AGREEMENT");
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant to
execute and deliver the Trust Indenture for the benefit of the Certificate
Holders, pursuant to which the Owner Trustee agrees, among other things, (A) to
deposit, mortgage and pledge with the Indenture Trustee, as part of the Trust
Indenture Estate, all of the Trust Estate other than Excluded Payments and (B)
on the Certificate Closing Date, to issue the Secured Certificates, the proceeds
of the sale of which will be held by the Indenture Trustee on behalf of the
Owner Trustee in the Collateral Account until released in accordance with the
terms hereof;
WHEREAS, on the Delivery Date, pursuant to and subject to the terms
and conditions of this Agreement, the Purchase Agreement Assignment and the
Bills of Sale, the Owner Trustee will purchase, and receive title to, the
Aircraft from Lessee and lease the Aircraft to Lessee pursuant to the Lease; and
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
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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 PASS THROUGH TRUSTEES AND TRANSFER OF FUNDS. Subject to the
terms and conditions of this Agreement, the Pass Through Trustee for each Pass
Through Trust agrees to finance, in part, the Owner Trustee's payment of
Lessor's Cost for the Aircraft by paying to the Owner Trustee the aggregate
purchase price of the Secured Certificates being issued to such Pass Through
Trustee as set forth on SCHEDULE II opposite the name of such Pass Through
Trust. The Pass Through Trustees shall make such payments to the Indenture
Trustee on behalf of the Owner Trustee by transferring to the account of the
Indenture Trustee at State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9900-314-7,
Attention: Corporate Trust Department, Reference: Northwest/NW 1997 G, not
later than 9:30 a.m., New York City time, on the Certificate Closing Date in
immediately available funds in Dollars, the amount set forth opposite the name
of such Pass Through Trust on SCHEDULE II hereto. On the Certificate Closing
Date, the Indenture Trustee shall, on behalf of the Owner Trustee, deposit by
wire transfer or intra-bank transfer, the amounts received by it pursuant to the
preceding sentence, which amounts shall constitute the Debt Portion set forth on
SCHEDULE II hereto, in the Collateral Account pursuant to the Trust Indenture.
Upon the occurrence of the above transfers by the Pass Through Trustee
for each Pass Through Trust to the Indenture Trustee for the benefit of the
Owner Trustee, the Owner Trustee, at the direction of the Initial Owner
Participant, shall issue, pursuant to Article II of the Trust 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.
On the Certificate Closing Date, concurrently with the events
specified in this Section 1(a), the parties hereto shall execute and deliver, to
the extent they are parties thereto, and consent to the execution and delivery
of (if they are not parties thereto), the Trust Indenture and the other
documents listed in Section 4(a)(iii) hereof.
(b) TRANSFER OF BENEFICIAL INTEREST. If on a date prior to the
Delivery Date, Lessee shall have identified an Owner Participant ready, willing
and able to acquire the Beneficial Ownership Interest of the Initial Owner
Participant, in consideration for such Owner Participant's agreement to
participate in Lessor's Cost of the Aircraft on the Delivery Date, the Initial
Owner Participant shall transfer its Beneficial Interest to such Owner
Participant on such date (the "TRANSFER DATE"). On the Transfer Date, the
document amendments contemplated by Section 1(c) below (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
(c) AMENDMENTS ON DELIVERY DATE OR TRANSFER DATE. (i) Upon any
transfer by the Initial Owner Participant of its Beneficial Interest on the
Delivery Date (as contemplated by Section 1(d)(i) hereof, (or, if earlier, the
Transfer Date), the parties hereto shall enter into amendments and restatements
of the Trust Agreement and this Agreement and, on the Delivery
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Date, the Trust Indenture, which amendments and restatements shall reflect such
changes as shall have been requested by the Owner Participant, agreed to by
Lessee and, if modified in any material respect, as to which Rating Agency
Confirmation shall have been obtained from each Rating Agency by Lessee (to be
delivered by Lessee to the Pass Through Trustee on or before the Delivery Date
or the Transfer Date, as the case may be); PROVIDED, HOWEVER, that in any event
such amended and restated documents shall not vary the Mandatory Economic Terms
and shall contain the Mandatory Document Terms.
Lessee agrees to furnish to each Liquidity Provider and to Powell,
Goldstein, Frazer & Murphy LLP (the initial Liquidity Provider's counsel) at its
Atlanta, Georgia office, Attention: David M. Armitage, as soon as practicable
but in no event less than three (3) Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement and
amended and restated Trust Agreement and, in no event less than three (3)
Business Days prior to the estimated Delivery Date, true and complete copies of
drafts of any such amended and restated Trust Indenture. Lessee further agrees
to furnish to each Liquidity Provider and to the counsel identified in the
preceding sentence (i) each and every subsequent draft of such documents and
(ii) promptly following the execution thereof, true and complete copies of such
documents.
(ii) The schedule of principal payments on the Secured Certificates
set forth in Schedule I to the Trust Indenture and Schedule I to each Secured
Certificate on the Certificate Closing Date have been calculated based upon a
hypothetical owner's economic return and certain assumptions regarding the
Delivery Date, Transaction Costs, tax law, Basic Term and certain other items
(the "ASSUMPTIONS"). If the Initial Owner Participant transfers its Beneficial
Interest to an Owner Participant on the Delivery Date (as contemplated by
Section 1(d)(i) hereof (or, if earlier, the Transfer Date), then, no later than
20 days following the Delivery Date (the "REOPTIMIZATION DATE"), the Owner
Trustee may elect to amend Schedule I to the Trust Indenture and such Schedules
to each Secured Certificate to reflect the actual Net Economic Return and any
changes to the Assumptions. In addition, the Owner Trustee may prepay on the
Reoptimization Date part of the Series C Secured Certificates. On the
Reoptimization Date the Owner Trustee shall deliver and the Subordination Agent
on behalf of the Pass Through Trustee of each Pass Through Trust shall accept
delivery of an amended Schedule I to each Secured Certificate containing such
changed principal installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendments to the Trust Indenture and such Schedules
shall not vary the Mandatory Economic Terms and on the Reoptimization Date
Lessee shall deliver a certificate to the Pass Through Trustee and the Liquidity
Provider signed by the Vice President and Treasurer or any other authorized
officer of Lessee certifying to such effect. If the Reoptimization Date occurs
later than the Delivery Date, Lessee shall cause any required filing and
recording of the affected documents with the FAA to be effected on the
Reoptimization Date.
(d) COMMITMENTS TO PARTICIPATE IN LESSOR'S COST. (i)
PARTICIPATION IN LESSOR'S COST. Subject to the terms and conditions of this
Agreement, on the Delivery Date, (i) the Indenture Trustee agrees to release the
Debt Portion or such lesser amount as may then be held in the Collateral
Account, if any, to the Owner Trustee for application to Lessor's Cost of the
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Aircraft as provided below, (ii) unless previously transferred on the Transfer
Date, the Initial Owner Participant agrees to transfer its Beneficial Interest
to the Owner Participant in consideration for the Owner Participant's
participation in Lessor's Cost of the Aircraft through an investment in the
Trust Estate in an amount equal to the amount to be set forth in an amended
and/or restated Participation Agreement to be entered into on the Delivery Date
(or, if earlier, the Transfer Date), and (iii) Lessee shall sell the Aircraft to
the Owner Trustee and the Owner Trustee shall immediately thereafter lease the
Aircraft to Lessee pursuant to the Lease. In consideration for the assignment
to the Owner Trustee by Lessee under the Purchase Agreement Assignment of any
warranties thereunder, the transfer by the Initial Owner Participant to the
Owner Participant of its Beneficial Interest and the transfer of title to the
Aircraft from Lessee to the Owner Trustee, the following cash payment will be
made by wire transfer of immediately available funds on the Delivery Date: by
the Owner Trustee to Lessee, an amount equal to Lessor's Cost of the Aircraft.
(ii) NO OBLIGATION TO INCREASE COMMITMENTS; DELAYED DELIVERY. (A)
If the Indenture Trustee shall default in its obligation to make the amount of
its Debt Portion available pursuant hereto, the Owner Participant shall have no
obligation to make any portion of such Debt Portion available or to increase the
amount of its Commitment, but the obligations of the Owner Participant shall
nevertheless remain subject to the terms and conditions of this Agreement.
(B) Subject to the provisions of Section 1(e) hereof, if the
closing of the transactions contemplated by the Operative Documents shall not
have been consummated by 2:00 p.m. (New York City time), or such earlier time as
directed by Lessee, on the Scheduled Delivery Date, the Owner Trustee shall, if
instructed in writing by Lessee, at the risk and expense of Lessee, use its
reasonable best efforts to cause the Owner Participant's Commitment to be
invested and reinvested to the extent practicable at the direction received by
it from Lessee (with a copy to the Owner Participant), at the risk of Lessee, in
Cash Equivalents consisting of either commercial paper or time deposits;
PROVIDED, HOWEVER, that in the absence of instructions by 2:00 p.m. (New York
City time) the Owner Trustee shall use its reasonable best efforts to cause such
amount or the proceeds thereof to be invested and reinvested to the extent
practicable in overnight Eurodollar time deposits. Earnings on any such
investments shall be applied to Lessee's payment obligations, if any, to such
Owner Participant pursuant to the next succeeding paragraph, and the balance, if
any, of such earnings remaining after such application shall be paid in
accordance with Lessee's written instructions.
If for any reason (i) the Operative Documents shall not be executed
and delivered by the respective parties thereto and/or the Delivery Date shall
not occur (whether by reason of a failure to meet a condition precedent thereto
set forth in Section 5 hereof or otherwise) on or before the third Business Day
after the Scheduled Delivery Date (or earlier if requested by the Owner
Participant) or, if earlier, the Cut-Off Date, or (ii) Lessee has notified the
Owner Trustee (with a copy to the Owner Participant) prior to 2:00 p.m. (New
York City time) on any date after the Scheduled Delivery Date that it does not
intend to go forward to close the transactions contemplated hereby for such
Delivery Date, the Owner Participant may cancel any funding arrangements made to
fund its Commitment on the Scheduled Delivery Date but the Owner Participant's
Commitment hereunder with respect to the Aircraft shall not be terminated
thereby until the Cut-Off Date, whereupon the Owner Participant's Commitment
hereunder shall
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terminate. On such third Business Day (or such earlier date) or the Cut-Off
Date, as the case may be, or the earliest practicable Business Day thereafter,
the Owner Trustee shall return the amounts held by it hereunder to the Owner
Participant, provided that the Owner Trustee shall have had a reasonable time to
liquidate any Cash Equivalents it has been authorized to invest in pursuant to
the preceding paragraph and to obtain the proceeds therefrom in funds of the
type originally received, and Lessee shall pay interest on such funds to the
Owner Participant at an interest rate equal to the weighted average (based on
outstanding principal amount) rate of interest on the Secured Certificates
issued pursuant to the Trust Indenture, such interest to be payable for the
period from and including such Scheduled Delivery Date to but excluding the date
such funds are returned to the Owner Participant in accordance with the terms
hereof; provided that if any such funds are returned to the Owner Participant
after 2:00 p.m. (New York City time) on any such date, such funds shall be
deemed for purposes of this paragraph to have been returned on the next
succeeding Business Day.
Lessee shall reimburse the Owner Trustee on demand for any loss
incurred by the Owner Trustee as a result of the investment of funds by the
Owner Trustee in accordance with the terms of this Section 1(d). Further,
Lessee shall indemnify the Owner Trustee and hold it harmless from and against
any cost or expense the Owner Trustee may incur as a result of any investment of
funds or transfer of funds referred to herein in accordance with the terms
hereof. The Owner Trustee shall not be liable for failure to invest such funds
except as otherwise provided herein or for any losses incurred on such
investments except for any losses arising out of its own gross negligence or
willful misconduct.
(e) POSTPONEMENT OF DELIVERY DATE. (i) If no Owner Participant
has committed to participate in the transactions contemplated hereby or an Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available in accordance with the terms of Section 1(d) hereof on the
Scheduled Delivery Date, Lessee shall endeavor to identify another equity
investor to whom it can assign its Beneficial Interest. If Lessee identifies an
equity investor, Lessee shall assign its interest in the Trust Estate as
provided above. In case of any such conveyance (but subject to the satisfaction
of the conditions precedent specified in an amendment hereto), the Indenture
Trustee shall release the Debt Portion or such lesser amount as may then be held
in the Collateral Account for application to the payments contemplated in the
last sentence of Section 1(d)(i) hereof. Notwithstanding the foregoing and for
the avoidance of doubt, it is understood and agreed that if the Manufacturer
Delivery shall have occurred and for any reason Lessee does not enter into the
Lease with the Owner Trustee on or prior to the Cut-Off Date, the Indenture
Trustee and the Pass Through Trustee agree that Lessee shall assume not later
than the Determination Date all of the obligations of the Owner Trustee under
the Secured Certificates upon satisfaction of the requirements set forth in
Sections 5(a)(vi), (vii)(A) and (B), (viii), (ix), (xi), (xii), (xv), (xvi),
(xvii), (xviii), (xx), (xxiii), (xxiv) and (xxv) hereof, as the same may be
modified by the provisions of Section 8(x) hereof and Section 2.13 of the Trust
Indenture and as otherwise necessary to reflect Lessee holding title to the
Aircraft and a full recourse secured aircraft financing of Lessee. In
connection with such assumption, each of the Owner Participant, the Owner
Trustee, the Indenture Trustee and Lessee agrees to execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, releasing the Owner Participant and the Owner
Trustee from all future obligations in respect of the Secured Certificates and
the Trust Indenture and all such other
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actions as are reasonably necessary to permit such assumption by Lessee. Upon
the date Lessee assumes the Secured Certificates, the Indenture Trustee shall
release the Debt Portion or such lesser amount as may then be held in the
Collateral Account to Lessee.
(ii) RELEASE OF OBLIGATIONS. If (x) the Manufacturer Delivery
shall not have occurred on or prior to the Prepayment Date, (y) (I) the
Manufacturer Delivery shall have occurred, (II) the Delivery Date shall not have
occurred on or prior to the Cut-Off Date and (III) Lessee shall not have assumed
the Secured Certificates by the Determination Date, or (z) (i) a Triggering
Event shall have occurred on or prior to the Prepayment Date, (ii) the Delivery
Date shall not have occurred and (iii) Lessee shall not have assumed the Secured
Certificates, then, in such event, the Owner Trustee shall not purchase the
Aircraft from Lessee, and the parties to the Operative Documents shall have no
further obligations or liabilities under any of said Operative Documents with
respect to the Aircraft, including the obligation of the Owner Participant to
participate in the payment of Lessor's Cost of the Aircraft, and such documents
shall terminate and have no further force or effect with respect to the
Aircraft; PROVIDED, HOWEVER, that (I) in the case of clause (x) above, Lessee
shall provide no later than the Prepayment Date notice of prepayment to the
Indenture Trustee and the Secured Certificates shall be prepaid on the 15th day
following the Prepayment Date as provided in Section 2.10(c) of the Trust
Indenture and Section 18(c) hereof, (II) in the case of clause (y) above, Lessee
shall provide no later than the Determination Date notice of prepayment to the
Indenture Trustee and the Secured Certificates shall be prepaid on the 15th day
after the Determination Date as provided in Section 2.10(d) of the Trust
Indenture and Section 18(d) hereof, and (III) in the case of clause (z) above,
Lessee shall provide no later than the date of occurrence of the Triggering
Event notice of prepayment to the Indenture Trustee and the Secured Certificates
shall be prepaid on the 15th day following the occurrence of such Triggering
Event as provided in Section 2.10(e) of the Trust Indenture and Section 18(e)
hereof; and PROVIDED FURTHER, that (i) Lessee's obligation to indemnify such
parties to the extent provided in such documents, shall not be diminished or
modified in any respect and (ii) the obligations of the Owner Trustee, the
Indenture Trustee and Lessee to return funds and pay interest, costs, expenses
and other amounts thereon or in respect thereof as provided in Section 1(d) and
Section 18 hereof shall continue.
(iii) OPTIONAL POSTPONEMENT. Without limiting the provisions of
Section 1(d)(ii) hereof, the Scheduled Delivery Date may be postponed from time
to time (but in no event shall the Delivery Date be later than the Cut-Off Date)
for any reason, other than pursuant to Section 1(e)(i) hereof, if Lessee gives
the Owner Participant, the Indenture Trustee, the Owner Trustee and the Pass
Through Trustee confirmed facsimile notice (or telephone notice followed by
written confirmation) of such postponement and notice of the date to which the
Delivery Date has been postponed, such notice of postponement to be received by
each party no later than 11:00 a.m. (New York City time) on the Business Day
preceding the Scheduled Delivery Date.
SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to
give each Participant, the Owner Trustee, the Pass Through 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, the Debt Portion,
and the amount of the Owner Participant's Commitment for the Aircraft. As to
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the Owner 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 Initial Owner
Participant agrees that Pass Through Trustee's payments to the Owner Trustee in
accordance with the terms of Section 1(a) shall constitute, subject to
satisfaction or waiver of the conditions set forth in Section 4(a), without
further act, authorization and direction by the Initial Owner Participant to the
Owner Trustee on the Certificate Closing Date:
(i) to borrow from the Pass Through Trustee and to execute and
deliver to the Subordination Agent on behalf of the Pass Through Trustee
for each of the Pass Through Trusts 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 shall
be in the principal amounts set forth on Schedule II hereto, pursuant
hereto and to the Trust Indenture; and
(ii) to take such other action as may be required to be taken by
the Owner Trustee on the Certificate Closing Date by the terms of any
Operative Document.
SECTION 4. CERTIFICATE CLOSING CONDITIONS. (a) CONDITIONS
PRECEDENT TO THE CERTIFICATE CLOSING. It is agreed that the obligations of each
of the Pass Through Trustee, the Initial Owner Participant, the Indenture
Trustee and the Subordination Agent to enter into the transactions to be
consummated on the Certificate Closing Date are subject to the satisfaction (or
waiver by such party) prior to or on the Certificate Closing Date of the
following conditions precedent, except that paragraphs (ii) and (xv) shall not
be a condition precedent to the obligations of the Pass Through Trustee, and
paragraph (v) (insofar as it relates to a party) shall not be a condition
precedent to the obligation of such party:
(i) 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 would make it a violation of law or regulations or guidelines for the
Pass Through Trustee or the Initial Owner Participant to participate in the
transactions to be consummated on the Certificate Closing Date.
(ii) The Pass Through Trustees shall have paid the Owner Trustee
the aggregate purchase price of the Secured Certificates in accordance with
Section 1(a) hereof.
(iii) 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 Pass Through Trustee, the
Initial Owner Participant and the Indenture Trustee and shall be in full
force and effect and executed counterparts shall have been delivered to the
Pass Through Trustee, the Initial Owner Participant and the Indenture
Trustee, or their respective counsel, PROVIDED that only the Subordination
Agent on behalf of each Pass Through Trustee shall receive an executed
original of such Pass Through Trustee's respective Secured Certificate:
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(1) the Trust Agreement;
(2) the Trust Indenture;
(3) the Secured Certificates; and
(4) the Guarantee.
All of the foregoing documents, together with this Agreement, are sometimes
referred to herein, collectively, as the "CERTIFICATE CLOSING DOCUMENTS"
and, individually, as a "CERTIFICATE CLOSING DOCUMENT".
In addition, the Pass Through Trustee, the Initial Owner Participant
and the Indenture Trustee each shall have received executed counterparts or
conformed copies of the following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Class A, Class B
and Class C Trusts.
(iv) 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 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 Indenture
Trustee or the Pass Through Trustee shall have been executed and delivered
by the Owner Trustee and duly filed.
(v) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee shall have received the following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to execute
and deliver this Agreement, the Pass Through Trust Agreements, the
Guarantee and any other documents to be executed on behalf of Lessee
or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby on the Certificate Closing Date, and
the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof, certified
by the Secretary or an Assistant Secretary of 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 Lessee or the
Guarantor (as the case may be) in connection with the transactions
contemplated hereby to be consummated on the Certificate Closing Date;
and
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(3) a copy of the certificate of incorporation of Lessee
and the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of 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 Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of 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 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 Certificate Closing Date, as to the due
incorporation and good standing of Lessee or the Guarantor (as the
case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, 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 on the
Certificate Closing Date, 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 to be consummated on the Certificate Closing Date;
(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 Certificate Closing Date, certifying that
(a) the representations and warranties contained herein of the
Indenture Trustee to be made on the Certificate Closing Date are
correct as though made on and as of the Certificate Closing 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) and (b) except
for the taking of possession by the Indenture Trustee of the Liquid
Collateral and maintaining possession by the Indenture Trustee thereof
as contemplated in Section 2.17(a) of the Trust Indenture, no further
filing or recording of any document is necessary in order to perfect
the security interest in favor of the Indenture Trustee in the Liquid
Collateral.
(C)(1) an incumbency certificate of the Owner Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Trust Agreement, the Trust Indenture and any other
documents to be executed on behalf of the Owner Trustee in connection
with the transactions contemplated hereby on the Certificate Closing
Date, 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
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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 to be consummated on the Certificate
Closing Date;
(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 Certificate Closing Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) to be made on the
Certificate Closing Date are correct as though made on and as of the
Certificate Closing 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).
(vi) All appropriate action required to have been taken prior to
the Certificate Closing 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 Certificate Closing 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 Certificate Closing Date.
(vii) On the Certificate Closing Date the Pass Through Trustee and
the Indenture Trustee shall have received a certificate signed by an
authorized officer of Lessee and the Guarantor to the effect that:
(1) the representations and warranties contained herein of
Lessee and the Guarantor to be made on the Certificate Closing Date
are correct as though made on and as of the Certificate Closing Date,
except to the extent that such representations and warranties (other
than those contained in clause (F) of Section 7(a)(iv)) relate solely
to an earlier date (in which case such representations and warranties
were correct on and as of such earlier date); and
(2) there has been no material adverse change in the
financial condition of the Guarantor and its subsidiaries, taken as a
whole, since December 31, 1996.
(viii) 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.
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(ix) The Pass Through Trustee and the Indenture Trustee shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Initial Owner Participant and the Owner Trustee, and reasonably
satisfactory as to scope and substance to the Pass Through Trustee and the
Indenture Trustee, an opinion substantially in the form of EXHIBIT D-1
hereto from Simpson Thacher & Bartlett, special counsel for Lessee and the
Guarantor, an opinion from Cadwalader, Wickersham & Taft substantially in
the form of EXHIBIT D-2 hereto, special counsel for Lessee and the
Guarantor, and an opinion from Lessee's legal department substantially in
the form of EXHIBIT D-3 hereto.
(x) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee shall have received, addressed to the Pass Through
Trustee, the Indenture Trustee, the Initial Owner Participant, the Owner
Trustee, the Guarantor and Lessee, and reasonably satisfactory as to scope
and substance to the Pass Through Trustee, the Initial Owner Participant,
the Guarantor and Lessee, an opinion substantially in the form of EXHIBIT E
hereto from Ray, Quinney & Nebeker, special counsel for the Owner Trustee.
(xi) [RESERVED.]
(xii) The Pass Through Trustee and the Initial Owner Participant
shall have received, addressed to the Pass Through Trustee, the Initial
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Initial Owner Participant, the Guarantor and Lessee, an
opinion substantially in the form of EXHIBIT F hereto from Bingham, Dana &
Gould LLP, special counsel for the Indenture Trustee.
(xiii) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee shall have received, addressed to the Pass Through
Trustee, the Indenture Trustee, the Initial Owner Participant, the Owner
Trustee, the Guarantor and Lessee, and reasonably satisfactory as to scope
and substance, to the Pass Through Trustee, the Initial Owner Participant,
the Guarantor and Lessee, an opinion substantially in the form of EXHIBIT
G-1 hereto from Powell, Goldstein, Frazer & Murphy LLP, special counsel for
the Liquidity Provider, and an opinion substantially in the form of EXHIBIT
G-2 hereto from in-house counsel for the Liquidity Provider.
(xiv) 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 Certificate
Closing Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(xv) The Initial Owner Participant shall have received (A) a
certificate signed by an authorized officer of the Pass Through Trustee,
dated the Certificate Closing Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Certificate Closing Date, except to the extent
that such representations and warranties relate solely to an earlier date
(in
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which case such representations and warranties are correct on and as of
such earlier date), (B) an opinion substantially in the form of EXHIBIT H
hereto addressed to the Initial Owner Participant, the Guarantor and Lessee
of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee,
and reasonably satisfactory as to scope and substance to the Initial Owner
Participant, the Guarantor and Lessee, and (C) 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.
(b) CERTIFICATE CLOSING CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
LESSEE AND THE GUARANTOR. It is agreed that the obligations of Lessee and the
Guarantor to enter into the transactions to be consummated on the Certificate
Closing Date are all subject to the fulfillment to the satisfaction of Lessee
and the Guarantor prior to or on the Certificate Closing Date of the following
conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Certificate Closing 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 Certificate Closing 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)(i) and 4(a)(ii)
hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(iii) 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)(iii), shall each be satisfactory in form and substance to
Lessee and the Guarantor, shall be in full force and effect on the
Certificate Closing Date, and an executed counterpart of each thereof
(other than the Secured Certificates) shall have been delivered to Lessee
or its special counsel and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(v) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xv), and (C) such other documents and evidence with respect to
the Pass Through Trustee as Lessee or its special counsel and the Guarantor
or its special counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement to be
consummated on the Certificate Closing Date, the taking of all corporate
proceedings in connection therewith and compliance with the conditions
herein set forth.
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(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(x), 4(a)(xi), 4(a)(xii), 4(a)(xiii) and 4(a)(xv)(B)
in each case addressed to Lessee and the Guarantor and dated the
Certificate Closing Date and in each case in scope and substance reasonably
satisfactory to Lessee and its special counsel and the Guarantor and its
special counsel.
(vi) 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 Certificate
Closing Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(vii) 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 by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee or
the Guarantor to enter into any transaction contemplated by the Certificate
Closing Documents.
(viii) 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.
SECTION 5. DELIVERY DATE CLOSING CONDITIONS. (a) CONDITIONS
PRECEDENT TO THE DELIVERY DATE CLOSING. It is agreed that the obligations of
each of the Pass Through Trustee, the Owner Trustee, the Owner Participant, the
Indenture Trustee, and the Subordination Agent to enter into the transactions to
be consummated on the Delivery Date are subject to the satisfaction (or waiver
by such party) prior to or on the Delivery Date of the following conditions
precedent, except that paragraphs (iii), (v)(5) and (15), (xxi), (xxii) and
(xxiv) shall not be a condition precedent to the obligations of the Pass Through
Trustee, and paragraphs (iv), (vii) (insofar as it relates to the Owner
Participant) and (xiv) shall not be a condition precedent to the obligation of
the Owner Participant:
(i) The Pass Through Trustee 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 would make it a violation of law or
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regulations or guidelines for the Pass Through Trustee or the Owner
Participant to make its Commitment available in accordance with Section 1
hereof.
(iii) In the case of the Owner Participant, the Indenture Trustee
shall have released the Debt Portion or such lesser amount as may be held
in the Collateral Account together with amounts payable by Lessee pursuant
to Section 18 hereof.
(iv) In the case of the Pass Through Trustees, 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 Pass Through Trustee and
the Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Pass Through Trustee and the
Owner Participant, or their respective counsel, PROVIDED 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 its counsel prior to the Delivery Date and subsequent to
the Delivery Date may be inspected and reviewed by the Indenture Trustee if
and only if there shall occur and be continuing an Event of Default) and
PROVIDED, FURTHER, that 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 and the
Residual Agreement need only be satisfactory to the Owner Participant and
Lessee and shall only be delivered to Lessee and the Owner Participant and
their respective counsel:
(1) this Agreement, as amended and restated as of the
Delivery Date;
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement (unless delivered on the
Transfer Date);
(6) the Trust Agreement, as amended and restated as of the
Delivery Date;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
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(10) an acceptance certificate covering the Aircraft in the
form agreed to by 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, as amended and restated as of the
Delivery Date;
(12) the Consent and Agreement;
(13) the Guarantee, as amended and restated as of the
Delivery Date;
(14) the Residual Agreement; and
(15) an excerpted copy of the Purchase Agreement (insofar as
it relates to the Aircraft);
unless, in the case of each of the documents listed in clauses (1) and (3)
above, such documents shall have been amended and restated as of and
delivered on the Transfer Date. All of the foregoing documents, together
with this Agreement, are sometimes referred to herein, collectively, as the
"DELIVERY DOCUMENTS" and, individually, as a "DELIVERY DOCUMENT".
In addition, the Owner Participant shall have received executed
counterparts or conformed copies of the following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Class A, Class B
and Class C Trusts.
(vi) Uniform Commercial Code financing statements (A) to amend and
restate each financing statement referred to in Section 4(a)(iv) hereof and
(B) 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 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 Pass Through Trustee shall have been executed
and delivered by Lessee or the Owner Trustee and duly filed.
(vii) The Pass Through Trustee (to the extent not received on the
Certificate Closing Date) and the Owner Participant shall have received the
following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to execute
and deliver this
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Agreement, the Lease, the Lease Supplement covering the Aircraft, the
Bill of Sale, the FAA Bill of Sale, the Purchase Agreement Assignment,
the Tax Indemnity Agreement, the Pass Through Trust Agreements, the
Guarantee and any other documents to be executed on behalf of Lessee
or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby on the Delivery Date and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof, certified
by the Secretary or an Assistant Secretary of Lessee and the Guarantor
(as the case may be), duly authorizing the transactions contemplated
hereby to be consummated on the Certificate Closing Date and the
execution and delivery of each of the documents required to be
executed and delivered on behalf of Lessee or the Guarantor (as the
case may be) in connection with the transactions contemplated hereby
to be consummated on the Delivery Date;
(3) a copy of the certificate of incorporation of Lessee
and the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of 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 Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of 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 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 Delivery Date, as to the due
incorporation and good standing of Lessee or the Guarantor (as the
case may be) in such state; and
(4) each of the documents referred to in Section 4(a)(iii)
to which Lessee or the Guarantor is a party shall be in full force and
effect, and there shall not have occurred any default thereunder, or
any event which, with the lapse of time or the giving of notice or
both, would be a default thereunder.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, 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 on the
Delivery Date 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 to be consummated on the Delivery Date;
(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;
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of
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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 are correct on and as of such earlier
date); and
(5) each of the documents referred to in Section 4(a)(iii)
to which Indenture Trustee is a party shall be in full force and
effect, and there shall not have occurred any default thereunder, or
any event which, with the lapse of time or the giving of notice or
both, would be a default thereunder.
(C)(1) an incumbency certificate of the Owner Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Lease, the Lease Supplement covering the Aircraft, the
Trust Agreement, the Trust Indenture, the Residual Agreement, the
Purchase Agreement Assignment and any other documents to be executed
on behalf of the Owner Trustee in connection with the transactions
contemplated hereby on the Delivery Date 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 to be
consummated on the Delivery Date;
(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;
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) are correct as though made
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 are correct on and as
of such earlier date); and
(5) each of the documents referred to in Section 4(a)(iii)
to which Owner Trustee is a party shall be in full force and effect,
and there shall not have occurred any default thereunder, or any event
which, with the lapse of time or the giving of notice or both, would
be a default thereunder.
(D)(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and any
other documents to be executed on behalf of the Owner Participant 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 Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant, 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
Participant in connection with the transactions contemplated hereby;
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(3) a copy of the articles of association and by-laws of
the Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the
Owner Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made 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 are correct on and as of such earlier date).
(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 Pass Through Trustee and the Owner
Participant shall have received a certificate signed by an authorized
officer of Lessee (and with respect to the matters set forth in clauses (4)
and (5) below, the Guarantor) to the effect that:
(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness;
(2) the FAA Bill of Sale, the Lease, the Lease Supplement,
the Trust Indenture (as amended and restated) 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 (as
amended and restated) shall have been filed (or shall be in the
process of being so filed) with the Federal Aviation Administration;
(3) application for registration of the Aircraft in the
name of the Owner Trustee has been duly made with the Federal Aviation
Administration;
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such earlier
date); and
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(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, 1996.
(x) [Intentionally Omitted.]
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant and the Owner Trustee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee and the Owner Participant,
an opinion substantially in the form of EXHIBIT I-1 hereto from Simpson
Thacher & Bartlett, special counsel for Lessee and the Guarantor, an
opinion substantially in the form of EXHIBIT I-2 hereto from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, and an
opinion substantially in the form of EXHIBIT I-3 hereto from Lessee's legal
department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT J-1 hereto from Vedder, Price, Kaufman
& Kammholz, special counsel to the Manufacturer, and an opinion
substantially in the form of EXHIBIT J-2 hereto from the Manufacturer's
in-house counsel, in each case with respect to the Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT K hereto from Ray, Quinney & Nebeker,
special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and substance
to the Pass Through Trustee, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT L-1 hereto from special counsel for
the Owner Participant, and an opinion substantially in the form of EXHIBIT
L-2 hereto from the Owner Participant's in-house counsel.
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT M hereto from Crowe & Dunlevy, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant, the
Owner Trustee, the
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Guarantor and Lessee, and reasonably satisfactory as to scope and substance
to the Pass Through Trustee, the Owner Participant, the Guarantor and
Lessee, an opinion substantially in the form of EXHIBIT N hereto from
Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee.
(xvii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT O-1 hereto from Powell, Goldstein,
Frazer & Murphy LLP, special counsel for the Liquidity Provider, and an
opinion substantially in the form of EXHIBIT O-2 hereto from in-house
counsel for the Liquidity Provider.
(xviii) The Pass Through Trustee and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Pass Through Trustee 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.
(xix) Lessor's Cost for the Aircraft shall be not less than
$21,000,000 nor more than $22,000,000.
(xx) 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.
(xxi) The Owner Participant shall have received from its special tax
counsel 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.
(xxii) In the opinion of the Owner Participant and its special tax
counsel, there shall have been, since the date of execution and delivery of
the Tax Indemnity Agreement, 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 of execution and delivery of
the Tax Indemnity Agreement, 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.
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(xxiii) The Pass Through Trustee and the Owner Participant shall have
received a favorable opinion substantially in the form of EXHIBIT P hereto
addressed to the Pass Through Trustee and the Owner Participant, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee 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.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties contained
herein of the Pass Through Trustee are correct as though made 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 are correct on and as of such earlier date),
(B) an opinion substantially in the form of EXHIBIT Q hereto addressed to
the Owner Participant, the Guarantor and Lessee of Bingham, Dana & Gould
LLP, special counsel for the Pass Through Trustee, and reasonably
satisfactory as to scope and substance to the Owner Participant, the
Guarantor and Lessee, and (C) 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.
(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, or if earlier, the Transfer Date, in
connection with the amendments contemplated by Section 1(c)(i) hereof,
Lessee shall have delivered a certificate to the Pass Through Trustee and
the Liquidity Provider signed by a duly authorized officer of Lessee
stating that (i) the Certificate Closing Documents which are amended and
restated as of the Delivery Date or the Transfer Date, as the case may be,
and the Lease to be entered into on the Delivery Date do not vary the
Mandatory Economic Terms and contain the Mandatory Document Terms and (ii)
any substantive modification of such documents from those in effect on the
Certificate Closing Date and any change in the Lease from the form set
forth on EXHIBIT C hereto does not materially and adversely affect the
Holders of Pass Through Certificates and each Liquidity Provider and such
certification shall be true and correct.
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 Pass Through Trustee, 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
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FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust
Supplement and the Lease and the filing of 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 AND THE
GUARANTOR. It is agreed that the obligations of Lessee to sell the Aircraft to
the Owner Trustee and to accept delivery of the Aircraft under the Lease, and
the obligations of Lessee and the Guarantor to enter into the other Operative
Documents on the Delivery Date, are all subject to the fulfillment to the
satisfaction of Lessee and the Guarantor 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 5(a)(ii), 5(a)(iii) and
5(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 5(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 5(a)(v), shall each be satisfactory in form and substance to Lessee
and the Guarantor, 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 and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 5(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 5(a)(xxiv)(A), and (C) such other documents and evidence with
respect to the Pass Through Trustee as Lessee or its special counsel and
the Guarantor or its special counsel may reasonably request in order to
establish the due 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) Lessee and the Guarantor shall have received the opinions set
forth in Sections 5(a)(xii), 5(a)(xiii), 5(a)(xiv), 5(a)(xv), 5(a)(xvi),
5(a)(xvii) and 5(a)(xxiv)(B) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and the
Guarantor and its special counsel.
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(vi) 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.
(vii) 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 by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee or
the Guarantor to enter into any transaction contemplated by the Operative
Documents.
(viii) 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.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No
Certificate Holder shall have any further interest in, or other right with
respect to, the mortgage and security interests created by the Trust Indenture
when and if the 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 Pass Through Trustee 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 Pass Through Trustees 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. REPRESENTATIONS AND WARRANTIES OF LESSEE AND THE
GUARANTOR; INDEMNITIES. (a) REPRESENTATIONS AND WARRANTIES. Lessee and the
Guarantor represent and warrant to the Pass Through Trustee, the Owner Trustee,
the Indenture Trustee, the Liquidity Provider, the Subordination Agent and the
Owner Participant that as of the Certificate Closing Date and as of the Delivery
Date:
(i) each of 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 or
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will have 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 Lessee, the Lessee Documents, 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 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;
(ii) 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;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, to the extent
entered into on or prior to the date this representation is made, and the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement and each other Operative Document to which Lessee or
the Guarantor (as the case may be) is a party, to the extent entered into
on or prior to the date this representation is made, have been duly
authorized by all necessary corporate action on the part of 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 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 Lessee or the Guarantor
(as the case may be) or the certificate of incorporation or by-laws of
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 Lessee or the Guarantor
(as the case may be) under, any indenture, mortgage, contract or other
agreement to which 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;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, to the
extent entered into on or prior to the date this representation is made,
nor the performance of the obligations of Lessee or the Guarantor (as the
case may be) under the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement or the other Operative Documents to which Lessee
or the Guarantor (as the case may be) is a party, to the extent entered
into on or prior to the date
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this representation is made, 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
over Lessee or the Guarantor, other than (A) 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, (B) 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,
(C) the orders, permits, waivers, exemptions, authorizations and approvals
of the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee or any Sublessee 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 on the
Delivery Date will 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), (D) on or prior to
the Delivery Date, the registration of the Aircraft referred to in Section
5(a)(ix)(3), (E) on or prior to the Delivery Date, the registrations and
filings referred to in Section 7(a)(vi), and (F) 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;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee, to the extent entered into on
or prior to the date this representation is made, constitute 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 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 (when entered into), 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;
(vi) as of the Delivery Date, except for (A) the filing for
recording pursuant to the Federal Aviation Act of the termination of any
Mortgage and any Predecessor Lease, (B) the registration of the Aircraft
pursuant to the Federal Aviation Act, (C) the filing of the Trust Agreement
with the FAA, (D) the filing for recording pursuant to the Federal Aviation
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, (E) the filing of financing
statements (and continuation statements at periodic intervals) with respect
to the security interests created by such documents under the Uniform
Commercial Code of Minnesota and Utah and such other states as may be
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specified in the opinion furnished pursuant to Section 5(a)(xi) hereof and
the filing of a UCC-3 termination statement relating to the financing
statement filed in connection with the Mortgage, and (F) the taking of
possession by the Indenture Trustee of the original chattel paper
counterpart of each of the Lease and the Lease Supplement covering the
Aircraft, 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 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;
(vii) neither 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;
(viii) neither Lessee nor the Guarantor is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(ix) as of the Delivery Date, 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;
(x) as of the Delivery Date, 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;
(xi) as of 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;
(xii) 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; 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 so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
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<PAGE>
(b) GENERAL TAX INDEMNITY. [Intentionally Omitted].
(c) GENERAL INDEMNITY. [Intentionally Omitted].
(d) INCOME TAX. [Intentionally Omitted].
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) [Intentionally Omitted.]
(b) [Intentionally Omitted.]
(c) First Security Bank, 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.
First Security Bank, 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, National Association, shall obtain actual
knowledge that First Security Bank, 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 First Security Bank, National Association, in its individual
capacity, does not comply with the requirements of this Section 8(c) or if the
Owner Participant shall not be a Citizen of the United States, 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, 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, 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, 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, National Association, in its individual
capacity, represents that it has not offered any interest in the Trust Estate or
any Secured
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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, 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 the Indenture Trustee 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 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
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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 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) [RESERVED.]
(h) First Security Bank, National Association, in its individual
capacity, 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. First Security Bank, 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 Lessor Lien attributable to
it. First Security Bank, National Association, in its individual capacity,
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 which 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 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
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continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.
(j) [Intentionally Omitted.]
(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
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) or the Owner Participant under this Agreement or
the Trust Indenture (and any exhibits or annexes thereto).
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(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant as follows:
(i) 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
Trust 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 Trust Indenture and each other Operative Document to which
it is a party and to carry out its obligations under this Agreement, the
Trust Indenture, each other Operative Document to which it is a party and
to authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents 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;
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute, or will constitute when entered into as contemplated
hereby, 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;
(iv) 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
(v) there are no Indenture Trustee Liens on the Aircraft or any
portion of the Trust Estate.
(n) [RESERVED.]
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(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, 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) 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 and holding of such
Secured Certificate (or any part thereof) constitutes assets of any "employee
benefit plan" or that such purchase and holding will not result in a prohibited
transaction (as defined in Section 4975 of the Code and ERISA). The Pass
Through Trustee agrees that it will not agree to any amendment, modification or
waiver of Section 1.01(e)(1) of the initial supplement to each Pass Through
Trust Agreement without the prior written consent of the Owner Participant.
(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 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 Pass
Through Trustee 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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(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) 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) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent that it relates to the Owner Trustee, clauses
(ii), (ix) and (xi) below) as Owner Trustee, represents and warrants to Lessee,
the Guarantor, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant that:
(i) 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 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
(assuming the authorization, execution and delivery of the Trust Agreement
by the other party thereto), 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 Trust Indenture, the Secured Certificates, the Lease and
each other Operative Document (other than the Trust Agreement) to which it
is a party;
(ii) 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, in its individual capacity, has duly
authorized, executed and delivered the Trust Agreement and in its trust
capacity, except as expressly provided therein, has duly authorized,
executed and delivered the other Owner Trustee Documents and (assuming the
due authorization, execution and delivery of the Trust Agreement by the
Owner Participant) this Agreement and each of the other Owner Trustee
Documents constitute, or will constitute when entered into as contemplated
hereby, the legal, valid and binding obligations 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
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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;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the other party thereto, the Owner Trustee has duly
authorized, and on the Certificate Closing 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
Trust Indenture, and each Secured Certificate on the Certificate Closing
Date and the Delivery Date will constitute the valid and binding obligation
of the Owner Trustee and will be entitled to the benefits and security
afforded by the Trust Indenture in accordance with the terms of such
Secured Certificate and the Trust Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any
Owner Trustee Document, 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 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 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;
(v) 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 Trust Indenture, the Lease or 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 7(iv);
(vi) there exists no Lessor Lien (including for this purpose Liens
which 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 which would be
Lessor Liens but for the proviso in the definition of Lessor
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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 Trust 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 Trust
Indenture of Rent assigned to the Indenture Trustee for the benefit of the
Certificate Holders;
(vii) as of the Delivery Date, there exists no Lessor Lien
(including for this purpose Liens which 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 which 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 Trust
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 Trust Indenture of Rent assigned to the
Indenture Trustee for the benefit of the Certificate Holders;
(viii) 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 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 (i), (ii), (iii) and (iv) 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, 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;
(ix) 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 (i), (ii), (iii) and (iv) above;
(x) 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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(xi) 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 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;
(xii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangements);
and
(xiii) there has not occurred any event which constitutes (or, to the
best of its knowledge would, with the passing 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 Owner Trustee, in its
individual capacity, and which is presently continuing.
(w) [RESERVED.]
(x) Each of the Owner Participant, the Owner Trustee, the
Indenture Trustee 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.
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.
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(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 the
Owner Participant an agreement in form and substance reasonably
satisfactory to the Indenture Trustee and the Owner 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 the Owner 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 Indenture Trustee
and the Owner Participant, 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
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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) 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(k), 8(l), 8(q), and 8(t) hereof and this Section 8(aa) and
Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(bb) The Pass Through Trustee represents and warrants to Lessee,
the Guarantor, the Indenture Trustee, the Subordination Agent, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) 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 and this Agreement and to perform its obligations under the Pass
Through Trust Agreements, the Intercreditor Agreement and this Agreement;
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement 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;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this
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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;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement or
this Agreement, nor the consummation by the Pass Through Trustee 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 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;
(v) 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 or the Intercreditor 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 either as a grantor trust under subpart E, Part I of
Subchapter J of the Code or as a partnership, such trusts will not be
subject to any Taxes imposed by the Commonwealth of Massachusetts or any
political subdivision thereof;
(vi) 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 Intercreditor
Agreement or any Pass Through Trust Agreement;
(vii) 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 Person or solicited any offer to
acquire any Secured Certificates from any
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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
(viii) 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, Lessee or the Guarantor.
(cc) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) 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 and
this Agreement and to perform its obligations under this Agreement, the
Liquidity Facilities and the Intercreditor Agreement;
(ii) this Agreement, each of the Liquidity Facilities and the
Intercreditor Agreement have been duly authorized, executed and delivered
by the Subordination Agent; this Agreement, each of the Liquidity
Facilities and the Intercreditor Agreement 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;
(iii) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the Intercreditor
Agreement or this 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;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent 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 with respect to, any Connecticut
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governmental authority or agency or any federal governmental authority or
agency regulating the Subordination Agent's banking, trust or fiduciary
powers;
(v) 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 or the Intercreditor 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);
(vi) 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 Intercreditor Agreement
or any Liquidity Facility;
(vii) 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
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
SECTION 9. 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. Lessee agrees and acknowledges that
the Liquidity Provider shall be a third party beneficiary of the indemnities
contained in Section 7(c) hereof, and may rely on such indemnities to the same
extent as if such indemnities were made to the Liquidity Provider directly.
SECTION 10. OTHER DOCUMENTS. Each of the Initial 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
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to time in accordance with the terms thereof) applicable to it; (B) agrees with
Lessee and the Indenture Trustee not to amend, supplement or otherwise modify
any provision of the Trust Agreement in a manner adversely affecting such party
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 Indenture Trustee. 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 10.14 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,
- 44 -
<PAGE>
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 set forth or referred to in Appendix A
hereto. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement. 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 Guarantor, the Owner Trustee, the
Pass Through Trustee, the Subordination 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.
(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
- 45 -
<PAGE>
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. [RESERVED.]
SECTION 15. MISCELLANEOUS. (a) [RESERVED.]
(b) The representations, warranties, indemnities and agreements of
Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant provided
for in this Agreement, and Lessee's, the Guarantor's, the Owner Trustee's, the
Indenture Trustee's, the Subordination Agent's, the Pass Through Trustee's and
the Owner Participant's obligations under any and all thereof, shall survive the
purchase of the Secured Certificates by the Pass Through Trustee, the making
available of the Commitment by 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, subject to the terms of this 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 Owner Participant and,
subject to the terms of this Agreement, its successors and permitted 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.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. 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
- 46 -
<PAGE>
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. Each of the parties hereto 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 sixty (60) days following the Certificate Closing Date or
the Delivery Date, as the case may be). Lessee (or, following a transfer of the
Initial Owner Participant's Beneficial Interest, the Owner Participant) agrees
to transfer to the Owner Trustee promptly 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 Lessee promptly upon receipt
thereof.
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 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.
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
- 47 -
<PAGE>
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
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;
- 48 -
<PAGE>
(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) and 4.07 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.
(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. COLLATERAL ACCOUNT.
(a) The Indenture Trustee shall notify the Owner Trustee and
Lessee of any losses incurred on the Cash Equivalents in the Collateral Account
promptly upon the realization thereof, as well as any fees, commissions and
other costs, Taxes (other than income taxes) and expenses, if any, incurred by
the Indenture Trustee in connection with its administration of the Collateral
Account (collectively, "LOSSES"). Promptly upon receipt of such notification
but, in any event, no later than the earlier of the Delivery Date, the date of
assumption of the Secured Certificates by Lessee, or the date of redemption of
the Secured Certificates occurring pursuant to Section 2.10(c), 2.10(d) or
2.10(e) of the Trust Indenture Lessee shall pay to the Indenture Trustee for
deposit into the Collateral Account, an amount equal to such Losses (net of any
investment earnings).
(b) Lessee shall pay to the Indenture Trustee (A) on each Payment
Date prior to the Delivery Date an amount equal to the aggregate amount of
interest accrued on the Secured Certificates from (and including) the
Certificate Closing Date or previous Payment Date, as the case may be, to, but
excluding, such Payment Date and (B) on the Delivery Date, interest accrued on
the Secured Certificates from and including the last Payment Date (or, if none,
the Certificate Closing Date), to, but excluding, the Delivery Date. The
Indenture Trustee shall deposit all payments made by Lessee pursuant to clause
(B) in a non-interest bearing account for payment to Certificate Holders on the
Payment Date. In addition, Lessee will pay to the Indenture Trustee all amounts
owed by the Owner Trustee pursuant to clause (b) of the third paragraph of
Section 2.02 of the Trust Indenture.
(c) If the Manufacturer Delivery shall not have occurred on or
prior to the Prepayment Date, Lessee agrees to pay to the Indenture Trustee, on
the 15th day following the
- 49 -
<PAGE>
Prepayment Date, the excess, if any, of the amounts payable under Section
2.10(c) of the Trust Indenture over the amounts released from the Collateral
Account under Section 2.19 of the Trust Indenture.
(d) If (i) the Manufacturer Delivery shall have occurred, (ii) the
Delivery Date shall not have occurred on or prior to the Cut-Off Date and (iii)
Lessee shall not have assumed the Secured Certificates by the Determination
Date, Lessee agrees to pay to the Indenture Trustee, on the 15th day after the
Determination Date, the excess, if any, of the amounts payable under Section
2.10(d) of the Trust Indenture over the amounts released from the Collateral
Account under Section 2.19 of the Trust Indenture.
(e) If (i) a Triggering Event shall have occurred on or prior to
the Prepayment Date, (ii) the Delivery Date shall not have occurred and (iii)
Lessee shall not have assumed the Secured Certificates, Lessee agrees to pay to
the Indenture Trustee, on behalf of the Owner Trustee, on the 15th date
following the date of occurrence of the applicable Triggering Event, the excess,
if any, of the amounts payable under Section 2.10(e) of the Trust Indenture over
the amounts released from the Collateral Account under Section 2.19 of the Trust
Indenture.
(f) On the Delivery Date immediately upon transfer of title to the
Aircraft to the Owner Trustee, or immediately upon assumption of the Secured
Certificates by Lessee pursuant to Section 1(e)(i) of this Agreement, or upon
prepayment of the Secured Certificates pursuant to Section 1(e)(ii) of this
Agreement, the Indenture Trustee will transfer to Lessee by wire transfer, in
immediately available funds, cash equal to any amount then remaining in the
Collateral Account.
(g) amounts payable by Lessee pursuant to this Section 18 shall be
paid to the Indenture Trustee at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW
1997 G, not later than 10:30 a.m., New York City time, by wire transfer of
immediately available funds in Dollars on the due date of such payment. All
amounts payable to Lessee pursuant to this Section 18 shall be paid to Lessee in
accordance with Schedule I hereto, not later than 10:30 a.m., New York City
time, by wire transfer of immediately available funds in Dollars on the due date
of such payment.
(h) Each of the parties hereto agrees that, for Federal income tax
purposes, (A) Lessee shall be treated as the initial borrower with respect to
the Secured Certificates and shall report as income all interest and gains on
the Collateral Account and shall deduct as its interest expense all interest
paid or payable to each Pass Through Trustee for this period in a manner
consistent with a short-term loan to Lessee maturing on the earliest of (i) the
Delivery Date, (ii) the date of assumption of the Secured Certificates by Lessee
or (iii) the date of redemption of the Secured Certificates pursuant to Section
2.10(c), 2.10(d) or 2.10(e) of the Trust Indenture and (B) the Owner Trustee or
the Lessee shall be treated as the borrower with respect to the Secured
Certificates on and after the date specified in clauses (A)(i) or (A)(ii) of
this Section 18(h) respectively.
- 50 -
<PAGE>
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: /s/ Mark D. Powers
------------------------------
Name: Mark D. Powers
Title: Vice President-Finance
and Assistant 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
NORTHWEST AIRLINES CORPORATION,
GUARANTOR
By: /s/ Mark D. Powers
------------------------------
Name: Mark D. Powers
Title: Vice President-Finance
and Assistant 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
- Signature Page -
<PAGE>
NORTHWEST AIRLINES, INC.,
INITIAL OWNER PARTICIPANT
By: /s/ Mark D. Powers
------------------------------
Name: Mark D. Powers
Title: Vice President-Finance
and Assistant 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
STATE STREET BANK AND
TRUST COMPANY,
INDENTURE TRUSTEE
By: /s/ Donald E. Smith
------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
OWNER TRUSTEE
By: /s/ Greg A. Hawley
------------------------------
Name: Greg A. Hawley
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
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: /s/ Donald E. Smith
------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
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: /s/ Donald E. Smith
------------------------------
Name: Donald E. Smith
Title: Vice President
Address: c/o State Street Bank and
Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
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
Initial Owner Participant: 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>
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 1997 G
Owner Trustee: First Security Bank, 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, National
Association
ABA No. 124-0000-12
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1997 G
Loan Participants:
SCHEDULE I - PAGE 2
<PAGE>
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
INTEREST RATE
PURCHASERS AND MATURITY PURCHASE PRICE
---------- ------------- --------------
<S> <C> <C> <C>
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due G $10,369,024.29
January 2, 2016
[H 10,369,450.52
I 10,560,952.07
J 10,574,426.83
K 10,583,770.00
L 10,568,876.29]
1997-1B 7.248% Series B Secured Certificates due
January 2, 2012 [G, H];
January 2, 2013 [I, J, K, L] G $ 3,169,029.45
[H 3,112,327.96
I 3,538,462.47
J 3,474,730.05
K 3,419,603.59
L 3,393,846.48]
1997-1C 7.039% Series C Secured Certificates due
January 2, 2006 [G];
July 2, 2006 [H];
January 2, 2007 [I, J, K, L] G $ 1,963,999.98
[H 1,967,999.99
I 1,980,000.00
J 1,983,999.99
K 1,988,000.02
L 1,990,500.02]
Debt Portion $_____________
</TABLE>
<PAGE>
SCHEDULE III
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. 1997-1A, dated as of
September 25, 1997.
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. 1997-1B, dated as of
September 25, 1997.
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. 1997-1C, dated as of
September 25, 1997.
<PAGE>
SCHEDULE IV
MANDATORY ECONOMIC TERMS
------------------------
SECURED CERTIFICATES
- --------------------
Loan to Aircraft Value Ratio on any July 2 Payment Date (with the values of the
Aircraft set forth in the Prospectus Supplement (as defined in the Pass Through
Agreement) in "Description of the Equipment Notes - Loan to Value Ratios of
Equipment Notes") shall be as follows:
Series A: not in excess of 43.0%
Series B: not in excess of 61.0%
Series C: not in excess of 69.0%
AVERAGE LIFE:
The average life may not be more than 13.73 years in the case of the Series A
Certificates and 13.40 in the case of the Series B Certificates and in the case
of the Series C Certificates may not be so great as to cause the average life of
the Pass Through Certificates, 1997-1-C, to be more than 6.00 years (but in each
case may be decreased by any amount); and the average life of the Pass Through
Certificates, 1997-1-A may not be more than 12.69 years, the average life of the
Pass Through Certificates, 1997-1-B may not be more than 10.94 years and the
average life of the Pass Through Certificates 1997-1-C may not be more than 6.00
years.
FINAL MATURITY DATE:
Series A: may not be extended beyond January 2, 2016
Series B: may not be extended beyond January 2, 2013
Series C: may not be extended beyond January 2, 2007
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 7.068%
Series B: 7.248%
Series C: 7.039%
PAST DUE RATE: Debt Rate plus 2% per annum.
PAYMENT DATES: January 2 and July 2.
MAKE-WHOLE AMOUNT: As provided in the Trust Indenture.
REDEMPTION
AND PURCHASE: As provided in the Trust Indenture.
LEASE
LEASE PERIOD DATES: January 2 and July 2.
MINIMUM RENT: Basic Rent due and payable on each Lease Period Date
shall, together with the amount of Excess Amount
payable on such date, be at least sufficient to pay
in full, as of such Lease Period Date (assuming
timely payment of the Secured Certificates prior to
such
<PAGE>
Date), the aggregate principal amount of scheduled
installments due on the Secured Certificates
outstanding on such Lease Period Date.
SUPPLEMENTAL RENT: Shall be sufficient to cover the sum described in the
definition of such term in Annex A to the
Participation Agreement.
STIPULATED LOSS VALUE: At all times shall be equal to or greater than the
outstanding principal amount of the Secured
Certificates together with accrued interest thereon.
TERMINATION VALUE: At all times shall be equal to or greater than the
outstanding principal amount of the Secured
Certificates together with accrued interest thereon.
ALL-RISK HULL INSURANCE: Shall not be less than Stipulated Loss Value, subject
to Lessee's right to self-insure on terms no more
favorable to Lessee in any material respect than
those set forth in Section 11(d) of the form of Lease
attached as EXHIBIT C to the Participation Agreement.
MINIMUM LIABILITY
INSURANCE AMOUNT: $150,000,000 per occurrence.
PAST DUE RATE: As set forth in the definition thereof in Annex A to
the Participation Agreement.
SCHEDULE IV - PAGE 2
<PAGE>
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement, or initial execution and delivery, of
the Operative Documents on the Delivery Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Trust Indenture so as to deprive the Certificate
Holders of a first priority security interest in and mortgage
lien on the Aircraft and the Lease or to eliminate any of the
obligations secured thereby or otherwise modify, in any material
adverse respect as regards the interests of the Certificate
Holders, the Subordination Agent, the Liquidity Provider or the
Indenture Trustee, the provisions of Article II or III or Section
4.02, 4.03, 4.04, 4.08. 5.01, 5.06, 9.01, or the first sentence
of Section 10.11 of the Trust Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Certificate Holders, the Subordination Agent,
the Liquidity Provider or the Indenture Trustee the provisions of
Section 3(d)(v), Section 3(f), the second sentence of Section
11(a)(I), the second sentence of Section 16, Section 18, the
third sentence of Section 20, or the third and sixth sentences of
Section 24 of the form of Lease attached as EXHIBIT C to the
Participation Agreement or otherwise modify the terms of the form
of Lease attached as EXHIBIT C to the Participation Agreement so
as to deprive the Indenture Trustee of rights expressly
contemplated to be granted to the "Indenture Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Certificate Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Section 5(a)(vi), Section 5(a)(ix)(1) and (2), Section 9,
Section 11(b), Section 12, the fifth sentence of Section 15(c),
Section 15(e) or Section 18 of the Participation Agreement or of
the provisions of Sections 5(a)(xi), (xii), (xiii), (xiv), (xv)
and (xvi) of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to the Indenture Trustee thereunder
(recognizing that the lawyers rendering such opinions may be
changed) or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Provider or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes;
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Provider or the Indenture
Trustee, the definition of "Make-Whole Amount" or "Supplemental
Rent" in Annex A to the Participation Agreement; and
<PAGE>
5. Shall contain representations, warranties and covenants of the
Owner Participant substantially similar to those set forth on
EXHIBIT A attached hereto.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, PROVIDED that any such action
shall not materially adversely affect the interests of the Certificate Holders,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee or the
holders of the Pass Through Certificates.
SCHEDULE V - PAGE 2
<PAGE>
Exhibit A
to
Schedule V
Section ________. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER
PARTICIPANT. (a) REPRESENTATIONS AND WARRANTIES. In addition to and without
limiting its other representations and warranties provided for in this Section
8, the Owner Participant represents and warrants that:
(i) 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, and has the corporate power and authority to enter
into and to perform its obligations under the Owner Participant Documents;
this Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its 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; and it has a tangible net worth (exclusive of goodwill) greater
than $75,000,000;
(ii) neither (A) the execution and delivery by the Owner
Participant of the Owner Participant Documents nor (B) compliance by it
with all of the provisions 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, 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, 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;
(iii) 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 required for the due execution, delivery or performance by
it of the Owner Participant Documents;
(iv) 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
SCHEDULE V - PAGE A-1
<PAGE>
this Agreement, the Participation Agreement, the Tax Indemnity Agreement
and the Trust Agreement;
(v) 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 financing contemplated
hereby and agreed to herein by the Owner Participant, 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 is being
acquired for its own account and is being purchased for investment and not
with a view to any resale or distribution thereof;
(vi) on the Delivery 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 which would be Lessor Liens but for the
proviso in the definition of Lessor Liens);
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement);
and
(viii) it is not acquiring its interest in the Trust Estate or any
interests represented thereby with 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. 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) 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 to the
Participation Agreement 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 that it is a Citizen of the
United States without making use of any voting trust, voting powers agreement or
other arrangement 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
SCHEDULE V - PAGE A-2
<PAGE>
Participants as a result of the Owner Participant's failure to comply with its
obligations pursuant to the preceding sentence.
(c) 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. 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. 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 which 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.
(d) 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 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 (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
SCHEDULE V - PAGE A-3
<PAGE>
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 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,
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 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 Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee.
(e) 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.
(f) MISCELLANEOUS. The Owner Participant covenants and agrees
that it shall not unreasonably withhold its consent to any consent requested of
the Owner Trustee, as Lessor,
SCHEDULE V - PAGE A-4
<PAGE>
under the terms of the Lease which by its terms is not to be unreasonably
withheld by the Owner Trustee, as Lessor.
(g) CHANGE IN 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 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
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 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 Indenture Trustee and to the Owner Participant covering the matters
described in the opinions delivered pursuant to Sections 4(a)(xiii) and
5(a)(xiii) hereof and 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 and the Indenture Trustee 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 and
the Indenture Trustee in connection with such change of situs.
SCHEDULE V - PAGE A-5
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1997 G]
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
EXHIBIT A-1
<PAGE>
ANNEX A [NW 1997 G]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for all purposes of the Operative Documents referred to
below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) and shall be equally applicable to
both the singular and the plural forms of the terms herein defined. In the case
of any conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control the
construction of such Operative Document.
"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.
"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 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 either 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.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-R585A airframe bearing
manufacturer's serial number E2316 and anticipated to bear FAA registration
number N507XJ, together with four AlliedSignal LF507 type engines.
"AIRFRAME" means: (i) the British Aerospace Avro 146-RJ85A 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
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; 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 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
<PAGE>
substitution for the Airframe pursuant to the applicable provisions of the
Lease, the replaced Airframe shall cease to be an Airframe under the Lease.
"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 of the Trust Indenture.
"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.
"ASSUMPTIONS" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"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 each 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.
"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) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined pursuant
to Section 19 of the Lease.
"BASIC TERM" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of the Lease.
"BENEFICIAL INTEREST" means the interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust Agreement.
"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.
-3-
<PAGE>
"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.
"CASH EQUIVALENTS" (i) on or prior to the earliest to occur of (i) the
Delivery Date, (ii) the date of assumption by Lessee of the Secured Certificates
and (iii) the date of redemption of the Secured Certificates pursuant to Section
2.10(c), (d) or (e) of the Trust Indenture, shall mean (a) direct obligations of
the United States or obligations fully guaranteed by the United States, (b)
commercial paper rated A-1/P-1 by S&P and Moody's, respectively, or, if such
ratings are unavailable, rated by any nationally recognized rating organization
in the United States equal to the highest rating assigned by such rating
organization, (c) investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or other direct obligations of,
or obligations guaranteed by, commercial banks organized under the laws of the
United States or of any political subdivision thereof (or any U.S. branch of a
foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having
maturities no later than eight months following the date of such investment, (d)
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, or (e) overnight repurchase agreements with
respect to the securities described in clause (a) above entered into with an
office of a bank or trust company which is located in the United States or any
bank or trust company which is organized under the laws of the United States or
any state thereof and has capital, surplus and undivided profits aggregating at
least $500 million, and (ii) after the date specified in clause (i) above, shall
mean the investments specified in Section 22(a) of the form of Lease attached as
EXHIBIT C to the Participation Agreement.
"CERTIFICATE CLOSING" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"CERTIFICATE CLOSING DATE" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"CERTIFICATE CLOSING DOCUMENTS" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
"CERTIFICATE HOLDER" shall mean any holder from time to time of one or
more Secured Certificates.
"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.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL ACCOUNT" means the deposit account established and
maintained pursuant to Section 2.16 of the Trust Indenture.
"COLLATERAL ACCOUNT CONTROL AGREEMENT" means the Collateral Account
Control Agreement [NW 1997 G], dated as of September 25, 1997, among State
Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee.
"COMMITMENT" means the amount of the Owner Participant's participation
in Lessor's Cost for the Aircraft required to be made available or paid as
provided in Section 1(d) of the Participation Agreement.
"CONSENT AND AGREEMENT" means the Consent and Agreement [NW 1997 G],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as EXHIBIT B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with the
applicable provisions thereof.
"CONTINUOUS STAY PERIOD" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"CONTRACT RIGHTS" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H or
Part J of the Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and Part J of
the Manufacturer Support Agreement in respect of the Aircraft and all claims
thereunder and (b) any and all rights of Lessee to compel performance of the
terms of Part H and Part J of the Manufacturer Support Agreement in support
thereof.
"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.
"CUT-OFF DATE" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"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.
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"DEBT PORTION" means the amount specified as such on Schedule II to
the Participation Agreement.
"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" (a) for purposes of the Operative Documents other than the
Trust Indenture, means any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) and (b) for purposes of the
Trust Indenture, means any condition or event that with the giving of notice or
the lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events of
Default relating to Excluded Payments).
"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 under the Lease.
"DELIVERY DATE CLOSING" means the closing of the transactions to be
consummated on the Delivery Closing Date.
"DELIVERY DOCUMENTS" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"DELIVERY NOTICE" means notice of the Aircraft's Delivery Date, given
by the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by Lessee
pursuant to Section 1(e)(iii) of the Participation Agreement.
"DEPRECIATION PERIOD" means the period commencing on the Delivery Date
and ending on the eighth December 31st thereafter, or such earlier date as the
Lease may be terminated in accordance with the provisions thereof.
"DETERMINATION DATE" means the earlier of (i) the 30th day following
the Cut-Off Date and (ii) the Prepayment Date.
"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with a corporate trust
department of a depository institution with corporate trust powers organized
under the laws United States or any state thereof or the District of Columbia,
and whose deposits are insured by the Federal Deposit Insurance Corporation,
provided that such institution also has a combined capital and surplus of at
least $100,000,000 and a rating of A or better from the Thomson Bank Watch.
"ELIGIBLE INSTITUTION" means a depository institution organized under
the laws of the United States or any one of the states thereof, or the District
of Columbia, or any domestic branch of a foreign bank, which in any case at all
times (a) has either (x) a long-term unsecured debt rating of Aa2 by Moody's or
(y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either
(x) a long-term unsecured debt rating of at least AA by S&P or (y) a short-term
certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal
Deposit Insurance Corporation.
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"ENFORCEMENT DATE" shall have meaning specified in Section 4.03 of the
Trust Indenture.
"ENGINE" means (i) each of the four AlliedSignal LF507 type 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 either 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 of the Lease 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 hereunder. The term
"ENGINES" means, as of any date of determination, all Engines then leased under
the Lease.
"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" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes of
the Operative Documents other than the Trust Indenture, means each of the
following events (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) so long as, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement 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 of Lessee to pay to Lessor 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
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement 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 the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect
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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 Trustee or the Certificate
Holders) within thirty (30) days after the receipt by Lessee of a
written notice from the Indenture Trustee advising Lessee of the
existence of such incorrectness.
"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 (or any Sublessee) 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 (or any Sublessee)
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 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 (or any Sublessee), 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 such Sublessee), 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 the
entire U.S. registered fleet of British Aerospace Avro 146-RJ85A aircraft of
Lessee (or any Sublessee) and Lessee (or a Sublessee), 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 (or
such Sublessee), 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 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) of
the Lease; and (vi) any divestiture of title to or interest in 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.
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"EXCESS AMOUNT", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in EXHIBIT B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
"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 of the Trust Indenture, 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.
"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
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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).
"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 Documents or
relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
"GUARANTEE" means the Guarantee [NW 1997 G], dated as of the
Certificate 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.
"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 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 DEFAULT" means any event or condition that with the giving
of notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related to
Excluded Payments).
"INDENTURE EVENT OF DEFAULT" shall mean an "Event of Default" as
defined in clause (a) of the definition of "Event of Default".
"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 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.
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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.
"INITIAL OWNER PARTICIPANT" means Lessee.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"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 AGREEMENT", "THE LEASE AGREEMENT", "THE LEASE", OR "THE
AGREEMENT", mean the Lease Agreement [NW 1997 G], substantially in the form of
EXHIBIT C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the Trust Agreement and the Trust Indenture, including, without limitation,
supplementation thereof by one or more Lease Supplements entered into pursuant
to the applicable provisions thereof.
"LEASE DEFAULT" shall mean a "Default" as defined in clause (a) of the
definition of "Default".
"LEASE EVENT OF DEFAULT" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"LEASE PERIOD DATE" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, to and including the
last such date in the Term.
"LEASE SUPPLEMENT" means a Lease Supplement, substantially in the form
of EXHIBIT A to the Lease, 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 thereof.
"LESSEE" shall mean Northwest Airlines, Inc., a Minnesota corporation.
"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.
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"LESSEE OPERATIVE DOCUMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Bill of Sale and the Bill of Sale.
"LESSOR LIENS" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, 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, 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, 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,
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 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, PROVIDED, HOWEVER, that any Lien which is
attributable solely to First Security Bank, 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,
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, 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.
"LIQUID COLLATERAL" means all amounts and securities deposited from
time to time in the Collateral Account and all of the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary, into
cash, Cash Equivalents or other property, all rights to payment of any and every
kind, and other forms of obligations, and instruments and other property which
at any time constitute all or part or are included in the proceeds of any of the
foregoing.
"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.
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"LIQUIDITY PROVIDER" means The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"LOAN PARTICIPANT" means each Purchaser and its respective successors
and registered assigns, including any 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) of the
Lease.
"LOSSES" has the meaning specified in Section 18 of the Participation
Agreement.
"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 of the Trust Indenture (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) 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>
"MAKE-WHOLE TERMINATION DATE" with respect to the Series A Secured
Certificates, means July 2, 2010; with respect to the Series B Secured
Certificates, means July 2, 2008; and with respect to the Series C Secured
Certificates, means October 2, 2003.
"MANDATORY DOCUMENT TERMS" means the terms set forth on SCHEDULE V to
the Participation Agreement.
"MANDATORY ECONOMIC TERMS" means the terms set forth on SCHEDULE IV to
the Participation Agreement.
"MANUFACTURER" means British Aerospace (Operations) Limited, a limited
company incorporated under the laws of England and Wales, and its successors and
assigns.
"MANUFACTURER DELIVERY" means the date the Aircraft is delivered by
the Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"MANUFACTURER DOCUMENTS" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"MANUFACTURER SUPPORT AGREEMENT" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"MORTGAGED PROPERTY" shall have the meaning specified in Section 3.03
of the Trust Indenture.
"NET ECONOMIC RETURN" shall have the meaning ascribed to such term in
paragraph 2 of EXHIBIT E to the Lease.
"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 Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"OVERALL TRANSACTION" means all the transactions contemplated by the
Operative Documents.
"OWNER INDEMNITEE" shall have the meaning specified in the definition
of Excluded Payments herein.
"OWNER PARTICIPANT" shall mean the corporation to whom on the Delivery
Date (or, if earlier, the Transfer Date) the Initial Owner Participant shall
transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter 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>
"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
Residual Agreement, the Trust Indenture and the Secured Certificates.
"PARTICIPANTS" shall mean and include the Loan Participants, the
Initial Owner Participant and the Owner Participant.
"PARTICIPATION AGREEMENT" means that certain Participation Agreement
[NW 1997 G], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent, the
Initial 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
of the Lease after removal therefrom.
"PASS THROUGH CERTIFICATES" means the pass through certificates to be
issued by the Pass Through Trustee in connection with the Overall 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 Participation Agreement.
"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" (A) with respect to the Secured Certificates, means
the rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, 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 rate per annum equal to 2% over the Debt Rate as in
effect from time to time 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.
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<PAGE>
"PAYMENT DATE" shall mean each January 2 and July 2, commencing on
January 2, 1998 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in full.
"PERMITTED LIEN" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"PERMITTED SUBLESSEE" means any entity domiciled in a country listed
in EXHIBIT F to the Lease.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PREDECESSOR LEASE" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"PREPAYMENT DATE" means [for NW 1997 G and H: June 15, 1998] [for 1997
I/J/K/L: August 31, 1998].
"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.
"PURCHASE AGREEMENT" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), 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 1997 G], dated as of the Delivery Date and substantially in the
form of EXHIBIT B to the Participation Agreement, 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.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"RATING AGENCIES" means collectively, at any time, each nationally
recognized agency which shall have been requested to rate the Pass Through
Certificates and which shall then be rating the Pass Through Certificates. The
initial Rating Agencies shall be S&P and Moody's.
"RATING AGENCY CONFIRMATION" means, with respect to any Operative
Document that is to be modified in any material respect on the Delivery Date or
the Transfer Date, if applicable, a written confirmation from each of the Rating
Agencies that the use of such Operative Document with such modifications would
not result in (i) a reduction of the rating for
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<PAGE>
any class of Pass Through Certificates below the then current rating for such
class of Pass Through Certificates or (ii) a withdrawal or suspension of the
rating of any class of Pass Through Certificates.
"RELATED INDEMNITEE GROUP" means, with respect to any Indemnitee, any
officer, director, servant, employee, agent or Affiliate thereof.
"RENEWAL TERM" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"RENT" means Basic Rent and Supplemental Rent, collectively.
"REOPTIMIZATION DATE" has the meaning set forth in Section 1(c)(ii) of
the Participation Agreement.
"REPLACEMENT AIRFRAME" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"REPLACEMENT ENGINE" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"RESIDUAL AGREEMENT" means the Residual Value Agreement (N507XJ),
dated as of the Delivery Date, among the Manufacturer, the Owner Participant and
the Owner Trustee.
"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.
"S&P" means Standard & Poor's Ratings Group.
"SCHEDULED DELIVERY DATE" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"SECTION 1110 PERIOD" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"SECURED CERTIFICATES" shall mean and include any Secured Certificates
issued under the Trust Indenture, and issued in exchange therefor or replacement
thereof.
"SECURED OBLIGATIONS" shall have the meaning specified in Section 2.06
of the Trust Indenture.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR HOLDER" shall have the meaning specified in Section 2.15(c) of
the Trust Indenture.
"SERIES A" or "SERIES A SECURED CERTIFICATES" means Secured
Certificates issued and designated as "Series A" under the Trust Indenture, in
the Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series A."
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"SERIES B" or "SERIES B SECURED CERTIFICATES" means Secured
Certificates issued and designated as "Series B" under the Trust Indenture, 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" under the Trust Indenture, in
the Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series C."
"SPECIAL PURCHASE PRICE" shall mean the amount denominated as such in
EXHIBIT B to the Lease.
"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.
"STIPULATED LOSS VALUE" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
EXHIBIT C to the Lease 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) of the Lease and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after the last day
of the Basic Term shall be the amount determined as provided in Section 19(a) of
the Lease.
"SUBLEASE" means any sublease permitted by the terms of Section
7(b)(x) of the Lease.
"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.
"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.
"SUPPLEMENTAL RENT" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than 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).
"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
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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.
"TAX INDEMNITY AGREEMENT" means that certain Tax Indemnity Agreement
[NW 1997 G], to be dated as of the Delivery Date, 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 Basic Term and, if actually entered into, any Renewal
Term.
"TERMINATION DATE" has the meaning set forth in Section 9(a) of the
Lease.
"TERMINATION VALUE" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, means, but subject always
to the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
EXHIBIT D to the Lease 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) of the Lease and in Section 7 of the Tax Indemnity
Agreement).
"TRANSACTION EXPENSES" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection with
the transactions contemplated by the Participation 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) including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements 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) Shearman & Sterling, special counsel for the
Underwriters, and (D) Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma;
(2) the initial fees and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture;
(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 fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of
special counsel to the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of Simpson Thacher
& Bartlett and Cadwalader, Wickersham & Taft, special counsel for Lessee;
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<PAGE>
(9) the costs of filing and recording documents with the
FAA and filing Uniform Commercial Code statements in the United States;
(10) the reasonable fees, expenses and disbursements of
Powell, Goldstein, Frazer & Murphy LLP, special counsel to the Liquidity
Provider;
(11) the reasonable fees, expenses and disbursements of
Vedder, Price, Kaufman & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements
of Babcock and Brown Financial Corporation.
"TRANSACTIONS" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"TRANSFER DATE" has the meaning specified in Section 1(b) of the
Participation Agreement.
"TRIGGERING EVENT" has the meaning specified in the Intercreditor
Agreement.
"TRUST AGREEMENT" means that certain Trust Agreement [NW 1997 G],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, 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 AGREEMENT AND INDENTURE SUPPLEMENT" or "TRUST SUPPLEMENT" shall
mean a supplement to the Trust Agreement and to the Trust Indenture, 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 the Trust
Agreement. The initial Trust Agreement and Indenture Supplement shall be dated
the Delivery Date.
"TRUST ESTATE" means the Trust Estate as that term is defined in the
Trust Agreement.
"TRUST INDENTURE", "THE TRUST INDENTURE", "INDENTURE", AND "THE
INDENTURE" shall mean the Trust Indenture and Security Agreement [NW 1997 G],
dated as of the Certificate Closing Date, between Lessor and the Indenture
Trustee, as originally executed or as modified, amended or supplemented in
accordance with its terms, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"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 the Trust Indenture, excluding Excluded Payments.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the underwriters
named therein.
"UNITED STATES" OR "U.S." means the United States of America.
"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
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<PAGE>
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.
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EXHIBIT C TO PARTICIPATION
AGREEMENT [NW 1997 __]
================================================================================
LEASE AGREEMENT
[NW 1997 __]
DATED AS OF
_________ __, 199_
BETWEEN
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE,
LESSOR
AND
NORTHWEST AIRLINES, INC.,
LESSEE
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
================================================================================
As set forth in Section 20 hereof, Lessor has assigned to the Indenture Trustee
(as defined herein) certain of its right, title and interest in and to this
Lease. To the extent, if any, that this Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the original
executed counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
thereof.
<PAGE>
TABLE OF CONTENTS TO LEASE AGREEMENT
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SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2. Acceptance and Lease. . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. Term and Rent . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Basic Term . . . . . . . . . . . . . . . . . . . . . . . 14
(b) [Intentionally Omitted]. . . . . . . . . . . . . . . . . 14
(c) Basic Rent . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Adjustments to Basic Rent. . . . . . . . . . . . . . . . 15
(e) Supplemental Rent. . . . . . . . . . . . . . . . . . . . 16
(f) Payments in General. . . . . . . . . . . . . . . . . . . 17
(g) Prepayment of Certain Rent Payments. . . . . . . . . . . 18
SECTION 4. Lessor's Representations and Warranties . . . . . . . . . . . 18
SECTION 5. Return of the Aircraft. . . . . . . . . . . . . . . . . . . . 19
(a) Condition Upon Return. . . . . . . . . . . . . . . . . . 19
(b) Return of the Engines. . . . . . . . . . . . . . . . . . 20
(c) Fuel; Manuals. . . . . . . . . . . . . . . . . . . . . . 21
(d) Storage Upon Return. . . . . . . . . . . . . . . . . . . 21
SECTION 6. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia . . . . . . . . . . . . . . . . . . . . . 22
(a) Registration and Maintenance . . . . . . . . . . . . . . 22
(b) Possession and Subleases . . . . . . . . . . . . . . . . 23
(c) Insignia . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions . . . . . . . . . . . . . . . . . 27
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . 27
(b) Pooling of Parts . . . . . . . . . . . . . . . . . . . . 28
(c) Alterations, Modifications and Additions . . . . . . . . 29
SECTION 9. Voluntary Termination . . . . . . . . . . . . . . . . . . . . 30
(a) Termination Event. . . . . . . . . . . . . . . . . . . . 30
(b) [Intentionally Omitted]. . . . . . . . . . . . . . . . . 30
(c) Optional Sale of the Aircraft. . . . . . . . . . . . . . 30
(i)
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(d) Termination as to Engines. . . . . . . . . . . . . . . . 32
SECTION 10. Loss, Destruction, Requisition, etc.. . . . . . . . . . . . . 32
(a) Event of Loss with Respect to the Aircraft . . . . . . . 32
(b) Event of Loss with Respect to an Engine. . . . . . . . . 34
(c) Application of Payments from Governmental
Authorities for Requisition of Title, etc. . . . . . . . 35
(d) Requisition for Use of the Aircraft by the
United States Government or the Government of
Registry of the Aircraft . . . . . . . . . . . . . . . . 36
(e) Requisition for Use of an Engine by the United
States Government or the Government of Registry
of the Aircraft. . . . . . . . . . . . . . . . . . . . . 37
(f) Application of Payments During Existence of
Event of Default . . . . . . . . . . . . . . . . . . . . 37
SECTION 11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Public Liability and Property Damage Insurance . . . . . 37
(b) Insurance Against Loss or Damage to the Aircraft . . . . 39
(c) Reports, etc.. . . . . . . . . . . . . . . . . . . . . . 41
(d) Self-Insurance . . . . . . . . . . . . . . . . . . . . . 42
(e) Additional Insurance by Lessor and Lessee. . . . . . . . 42
(f) Indemnification by Government in Lieu of Insurance . . . 43
(g) Application of Payments During Existence of an
Event of Default . . . . . . . . . . . . . . . . . . . . 43
SECTION 12. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 13. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 14. Events of Default . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 15. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 16. Lessee's Cooperation Concerning Certain Matters . . . . . . . 49
SECTION 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 18. No Set-Off, Counterclaim, etc.. . . . . . . . . . . . . . . . 51
SECTION 19. Renewal Options; Purchase Options; Valuation. . . . . . . . . 51
(a) Renewal Options. . . . . . . . . . . . . . . . . . . . . 51
(b) Purchase Options . . . . . . . . . . . . . . . . . . . . 53
(c) Valuation. . . . . . . . . . . . . . . . . . . . . . . . 53
(d) Special Purchase Option. . . . . . . . . . . . . . . . . 54
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 21. Lessor's Right to Perform for Lessee. . . . . . . . . . . . . 55
SECTION 22. Investment of Security Funds; Liability of Lessor Limited . . 55
(ii)
<PAGE>
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----
(a) Investment of Security Funds . . . . . . . . . . . . . . 55
(b) Liability of Lessor Limited. . . . . . . . . . . . . . . 56
SECTION 23. Service of Process. . . . . . . . . . . . . . . . . . . . . . 56
SECTION 24. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 25. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 26. Covenant of Quiet Enjoyment . . . . . . . . . . . . . . . . . 57
(iii)
<PAGE>
EXHIBITS
--------
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Excess Amount, Lessor's Cost
and Special Purchase Price Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation and Indemnification Verification
EXHIBIT F - Schedule of Domiciles of Permitted Sublessees
EXHIBIT G - Return Conditions
EXHIBIT H - Return Conditions (EBT)
(iv)
<PAGE>
LEASE AGREEMENT
[NW 1997 __]
This LEASE AGREEMENT [NW 1997 __], dated as of ___________, 199_,
between FIRST SECURITY BANK, 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 1997 __] 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 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 British Aerospace Avro 146-RJ85A 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
<PAGE>
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.
"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 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 Delivery Date and ending
on _________, 201_, or such earlier date as this Lease may be terminated in
accordance with the provisions hereof.
"BENEFICIAL INTEREST" means the interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"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 the City
of New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"CERTIFICATE CLOSING DATE" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees
contemplated by Section 1(a) of the Participation Agreement.
"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.
- 2 -
<PAGE>
"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.
"COMMITMENT" means the commitment of a Pass Through Trustee 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 1997 __],
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.
"CONTRACT RIGHTS" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to
the extent that the same relate to the warranties with respect to the
Aircraft, including, without limitation, (a) all claims for damages in
respect of the Aircraft arising as a result of any default by the
Manufacturer under Part H or Part J of the Manufacturer Support Agreement,
including, without limitation, all warranty, service life policy and
indemnity provisions in Part H and Part J of the Manufacturer Support
Agreement in respect of the Aircraft and all claims thereunder and (b) any
and all rights of Lessee to compel performance of the terms of Part H and
Part J of the Manufacturer Support Agreement in support thereof.
"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, 200_, or such earlier date as this Lease may be
terminated in accordance with the provisions hereof.
"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ENGINE" means (i) each of the four AlliedSignal LF507 type 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 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
- 3 -
<PAGE>
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 (or any Sublessee)
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 (or any Sublessee) 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 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 (or any Sublessee), 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 such Sublessee), 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 the entire U.S.
registered fleet of British Aerospace Avro 146-RJ85A aircraft of Lessee (or
any Sublessee) and Lessee (or a Sublessee), 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 (or such Sublessee), 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
- 4 -
<PAGE>
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 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 a Lease Period 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 such Lease
Period Date.
"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 any agency or instrumentality of the
applicable government succeeding to the functions of any of the foregoing
entities).
"GUARANTEE" means the Guarantee [NW 1997 __], dated as of the
Certificate 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.
"HALF-LIFE ADJUSTMENT" has the meaning specified in EXHIBIT H hereto.
"INDEMNITEE" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii)
the Owner
- 5 -
<PAGE>
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" 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 OWNER PARTICIPANT" means Lessee.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the
Subordination Agent.
"LEASE AGREEMENT", "THIS LEASE AGREEMENT", "THIS LEASE", "THIS
AGREEMENT", "HEREIN", "HEREOF", "HEREUNDER", "HEREBY" or other like words
mean this Lease Agreement [NW 1997 __] 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 periods throughout the
Basic Term and any Renewal Term ending on a Lease Period Date, the first
such period commencing on and including the Delivery Date.
- 6 -
<PAGE>
"LEASE PERIOD DATE" means ____________, 199_ 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,
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, 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,
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, 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, 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, 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, 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>
"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 Royal Bank of Canada, as Class A Liquidity
Provider, Class B Liquidity Provider and Class C Liquidity Provider under
the Liquidity Facilities, or any successor thereto.
"LOAN PARTICIPANT" means each Purchaser and its respective successors
and registered assigns, including any 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 set
forth in the Trust Indenture.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust
Indenture.
"MANUFACTURER" means British Aerospace (Operations) Limited, a limited
company incorporated under the laws of England and Wales, and its
successors and assigns.
"MANUFACTURER DOCUMENTS" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"MANUFACTURER SUPPORT AGREEMENT" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"MORTGAGE" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"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 _____ 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 Residual Agreement, 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>
"OWNER PARTICIPANT" means the corporation to whom on the Delivery Date
(or, if earlier, the Transfer Date) the Initial Owner Participant shall
transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter 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
Residual Agreement, 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 1997 __], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent,
the Initial 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.
"PASS THROUGH CERTIFICATES" means the pass through certificates to be
issued by the Pass Through Trustee in connection with the Overall
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 Participation Agreement.
"PASS THROUGH TRUSTEE" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass
Through
- 9 -
<PAGE>
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
(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.
"PREDECESSOR LEASE" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"PREPAID RENT" has the meaning assigned in Section 3(g) hereof.
"PURCHASE AGREEMENT" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), 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 1997 __], 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.
"PURCHASERS" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"REIMBURSEMENT AMOUNT" has the meaning set forth in Section 3(g)
hereof.
"RELATED INDEMNITEE GROUP" means, with respect to any Indemnitee, any
officer, director, servant, employee, agent or Affiliate thereof.
"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.
"RESIDUAL AGREEMENT" means the Residual Value Agreement (N5__XJ),
dated as of the date hereof, among the Manufacturer, the Owner Participant
and the Owner Trustee.
"SECURED CERTIFICATES" has the meaning assigned to that term in the
Trust Indenture.
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<PAGE>
"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 _________, 201_, 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). "Stipulated Loss Value" as of any date after _________, 201_
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 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.
"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.
"SUPPLEMENTAL RENT" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than 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).
"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.
"TAX INDEMNITY AGREEMENT" means that certain Tax Indemnity Agreement
[NW 1997 __], dated as of the date hereof, between the Owner Participant
and
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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 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 _________, 201_, 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).
"TRANSACTION EXPENSES" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection
with the transactions contemplated by the Participation 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) including,
without limitation:
(1) the reasonable and actual fees, expenses and disbursements
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) Shearman & Sterling, special
counsel for the Underwriters, and (D) Crowe & Dunlevy, P.C., special
counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements
of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture;
(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 fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee;
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(8) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for
Lessee;
(9) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code statements in the United States;
(10) the reasonable fees, expenses and disbursements of Powell,
Goldstein, Frazer & Murphy, special counsel to the Liquidity Provider;
(11) the reasonable fees, expenses and disbursements of Vedder,
Price, Kaufman & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements of
Babcock and Brown Financial Corporation.
"TRUST AGREEMENT" means that certain Trust Agreement [NW 1997 __],
dated as of the Certificate Closing Date, between the Initial Owner
Participant and First Security Bank, 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 AGREEMENT AND INDENTURE SUPPLEMENT" OR "TRUST SUPPLEMENT" means
a supplement to the Trust Agreement and the Trust Indenture, substantially
in the form of EXHIBIT A to the Trust Indenture.
"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 1997 __], dated as of the Certificate Closing Date, between
Lessor and the Indenture Trustee, as originally executed or as modified,
amended or supplemented in accordance with the provisions thereof.
"TRUST INDENTURE ESTATE" has the meaning assigned to that term in the
Trust Indenture.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor, and the
underwriters named therein.
"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
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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 Sections 4(a) and 5(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 Sections 4(b) and 5(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) BASIC TERM. The Basic Term shall
commence on the Delivery Date and end on _________, 201_, 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 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 Delivery Date or applicable Lease Period
Date, as the case may be, specified in EXHIBIT B hereto.
(d) ADJUSTMENTS TO BASIC RENT.
(i) In the event that (A) the Delivery Date occurs other than on
___________, 199_, or (B) Transaction Expenses paid by Lessor pursuant
to Section 16(a) of the Participation Agreement are determined to be
other than ___% 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 ____________, 199_ 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. In such recalculation there will be no change
in the amortization of the Secured Certificates.
(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 and the Termination
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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.
(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 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
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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) and 4.07 of Rev.
Proc. 75-28 and will not cause this 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, as each
is in effect on the Delivery Date 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 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 Section 2.10(b) or Section 2.11 of the Trust
Indenture. 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, 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 1997 __ (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. 9900-314-7, Attention: Corporate Trust Department,
Reference: Northwest/NW 1997 __ (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
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10 Business Days prior to the date such payment of Rent is due). Lessor hereby
directs and Lessee agrees that 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 any Lease Period Date from Lessor an amount equal to the Excess
Amount for such date, Lessee shall on the Delivery Date, prepay on such Lease
Period 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 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
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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. 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, 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 which 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 in default pursuant to
Section 15 hereof) it will not,
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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 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 AlliedSignal LF507 type engines or
four 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 all 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 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 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 (a) EXHIBIT G, in the event
such return occurs other than at the termination of this Lease on ____________,
201_, or (b) EXHIBIT H, in the event such return occurs at the termination of
this Lease on ____________, 201_; PROVIDED that if a Half-Life Adjustment is
required to be calculated pursuant to the terms of EXHIBIT H, if the Half-Life
Adjustment is a positive number Lessee shall pay Lessor the Half-Life Adjustment
and if the Half-Life Adjustment is a negative number Lessor shall pay Lessee the
Half-Life Adjustment.
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
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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 which 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 which 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
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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, 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, 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 sixty (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 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 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 British
Aerospace Avro 146-RJ85A 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
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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) 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
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Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and
11 hereof, Lessee (or, except with respect to clause (x) below, any Sublessee)
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, if a Sublease is then in
effect, by 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>
(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 Lessor, 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
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<PAGE>
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 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
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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, 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
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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 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)
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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 $200,000. 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].
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(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 commercially reasonable
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 which 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
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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 sales 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 Make-Whole 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 which 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
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 (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 Make-Whole 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 Make-Whole 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
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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.
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) an
earlier Business Day irrevocably specified fifteen (15) days in
advance by notice from Lessee to Lessor and the Indenture Trustee (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 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.
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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
which 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 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 which 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
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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 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 AlliedSignal LF507 type 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 all 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 which 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
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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 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
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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 EXHIBITS G and H) 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 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
evidencing the transfer, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens which 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.
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(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, if a Sublease is then in
effect, if and to the extent maintained by 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
(or, if a Sublease is then in effect, by Sublessee) 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 (which shall not be less than
$150,000,000 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 aircraft operated by Lessee (or, if a Sublease
is then in effect, by Sublessee) 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
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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 (or, if a
Sublease is then in effect, by Sublessee) 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 (or, if a Sublease is then in
effect, by Sublessee) 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, by 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 or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) 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
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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 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
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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) remaining after
compliance with such Sections with respect to such loss shall be paid to Lessee
(or any Sublessee if directed by Lessee).
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<PAGE>
(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 or operated
by Lessee (or, if a Sublease is then in effect, by Sublessee) 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, 1998, a report, signed by Aon Risk Services, Inc., Aon Risk
Services of Minnesota, Inc. 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 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.
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(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.
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 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
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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; 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 Basic Rent or
Stipulated Loss Value within ten (10) Business 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
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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, in clauses
(i)(B) and (ii) of the first sentence of second paragraph of EXHIBIT G and
in the proviso contained in the last sentence of the first paragraph of
Section 5(a)) 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 two hundred seventy (270) 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 for
representations or warranties contained in the Pass Through Trust Agreement
or the Underwriting Agreement (as defined in the Participation 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 (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
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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
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
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
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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 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 Delivery 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
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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 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
(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
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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 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
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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 1998, 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 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
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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). 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 OPTIONS; PURCHASE OPTIONS; VALUATION.
(a) RENEWAL OPTIONS. (1) FIXED RENEWAL TERM. Lessee shall have the right to
renew this Lease for up to
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_____ 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 _____ 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) or 14(e) 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
Aircraft as of the last day of such Renewal
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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 __% 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 which 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 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,
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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 ___________, 20__ (or, if
___________, 20__ is not a Business Day, the Business Day immediately succeeding
_____________, 20__), 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. 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 which 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
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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 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
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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 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.
- 54 -
<PAGE>
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 (or any Sublessee'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.
- 55 -
<PAGE>
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,
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>
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1997 __]
LEASE SUPPLEMENT NO.
[NW 1997 __]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement [NW 1997 __], dated as of September
__, 1997, as amended and restated as of __________ __, 19__ 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 1997 __], dated as of _________ __, 199_, relating to one British
Aerospace Avro 146-RJ85A 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 British Aerospace Avro 146-RJ85A 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 Supplements No. 1.
(2) This language for other Lease Supplements.
<PAGE>
(ii) Engines: four (4) AlliedSignal LF507 type engines bearing,
respectively, manufacturer's serial nos. LFO______, LFO______,
LFO______ and LFO______ (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 ____________, 201_.
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 British
Aerospace (Operations) Limited, or any subcontractor or supplier of British
Aerospace (Operations) Limited, 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>
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,
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>
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1997 __]
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 and Excess Amount:
Excess Amount Basic Rent
Delivery (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
Excess Amount Basic Rent
Delivery (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
* Denotes payment in arrears from preceding Lease Period Date (or Delivery
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>
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.
Excess Amount Basic Rent
Lease Period (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
* Denotes payment in arrears from preceding Lease Period Date (or Delivery
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>
BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
-------------------------------------------------
Lessor's Cost for the Aircraft: $______________
Special Purchase Price: ___________% of Lessor's Cost.
EXHIBIT B - PAGE 3
<PAGE>
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1997 __]
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>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 2
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 3
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 4
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 5
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 6
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 7
<PAGE>
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1997 __]
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>
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1997 __]
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.
1. Any recalculation of Basic Rent, Excess Amounts, 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 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. 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 __ 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
Amounts, 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
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, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages as of the Delivery Date.
<PAGE>
EXHIBIT F
TO
LEASE AGREEMENT
[NW 1997 __]
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>
EXHIBIT __
TO
LEASE AGREEMENT
[NW 1997 __]
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
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) 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) shall
have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return, and (v) shall be in Lessee's or such
Sublessee's passenger configuration and the interior of the Airframe shall be
clean in accordance with Lessee's customary standards for a "between flights"
cleaning. In the event the FAA 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 Section 5 of the
Lease, unless it shall previously or concurrently have applied for such an
extension with respect to all British Aerospace Avro 146-RJ85A aircraft in its
fleet affected by such directive. In addition, if at the time of return the
Aircraft is not being maintained on a continuous maintenance program, the
landing gear, APU
<PAGE>
and hard time component on the Airframe will have at least 25% life remaining to
the next scheduled maintenance visit.
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) 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 (i) 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) 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 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.
EXHIBIT G - PAGE 2
<PAGE>
EXHIBIT H
TO
LEASE AGREEMENT
[NW 1997 __]
RETURN CONDITIONS (EBT)
-----------------------
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, the
following return conditions apply to a return of the Airframe upon the
termination of the Lease on ___________, 201_:
1. DEFINITIONS. Capitalized terms used in this EXHIBIT H without
other definition have the respective meanings ascribed thereto in the Lease
Agreement [NW 1997 __], dated as of _________ __, 199_, as amended from time to
time (the "LEASE"), between First Security Bank, National Association, not in
its individual capacity but solely as Owner Trustee, and Northwest Airlines,
Inc. In addition, the following capitalized terms shall have the respective
meanings set forth below:
"AIRCRAFT DOCUMENTATION" means all logs, manuals, certificates, data
and inspection, modification, repair, and overhaul records which are required to
be maintained with respect to the Aircraft under the Maintenance Program or by
the Relevant Aviation Authority.
"APU" means the Sundstrand Model APIC 10000 auxiliary power unit
originally installed on the Aircraft on the Delivery Date or any auxiliary power
unit of a comparable or improved model substituted for such originally installed
auxiliary power unit.
"BFE" means the equipment described in Annex II to the Residual
Agreement, or any equivalent replacement equipment that may from time to time be
substituted for any such BFE.
"COUNTRY OF REGISTRATION" means the country in which the Aircraft is
registered on the date the Aircraft is returned under the Lease at the end of
the Basic Term, which shall be one of the United States, the United Kingdom,
Japan, Canada or the Netherlands.
"HSI" means with respect to an Engine or the APU a hot section
inspection of such Engine or APU in accordance with the Maintenance Program.
"MAINTENANCE PLANNING DOCUMENT" means the Manufacturer's maintenance
planning document for Avro 146-RJ85 aircraft as in effect on the date the
Aircraft is returned under the Lease.
<PAGE>
"MAINTENANCE PROGRAM" means the maintenance program for the Aircraft
required to be maintained pursuant to Section 7(a)(I) of the Lease, as in effect
on the date the Aircraft is returned under the Lease at the end of the Basic
Term.
"MANUFACTURER" means, with respect to the Airframe, British Aerospace
(Operations) Limited, and its successors and assigns, and, with respect to the
Engines, AlliedSignal Engines, a division of AlliedSignal.
"MRB" means the Maintenance Review Board for British Aerospace Avro
146-RJ85 aircraft.
"OPERATOR" means the operator of the Aircraft immediately prior to the
date the Aircraft is returned under the Lease.
"RELEVANT AVIATION AUTHORITY" means the civil aviation authority of
the Country of Registration.
"STRUCTURAL REPAIR MANUAL" means the Manufacturer's structural repair
manual for Avro 146-RJ85 aircraft as in effect on the date the Aircraft is
returned under the Lease.
2. AIRCRAFT RETURN CONDITIONS AT ____________ __, 201_.
(a) GENERAL CONDITIONS. On the date the Aircraft is returned under
the Lease, the Aircraft shall be in compliance with the conditions set forth
below, ordinary wear and tear excepted:
(i) The Aircraft shall be registered in a Country of
Registration.
(ii) The Aircraft shall be airworthy, possess a currently valid
standard certificate of airworthiness, transport category, issued by the
Relevant Aviation Authority and be eligible for commercial passenger
transportation in the Country of Registration.
(iii) The Aircraft shall be fully equipped with four Engines and
the APU.
(iv) All maintenance required by the Maintenance Program to
have been performed on or prior to the date the Aircraft is returned under
the Lease shall have been accomplished. The Airframe, each Engine, the APU
and the landing gear shall be serviceable and free from all known defects
and discrepancies outside the limits of the Maintenance Program other than
fair wear and tear not affecting airworthiness. All major dents and
abrasions, scab patches and loose or pulled rivets shall be within the
prescribed limits referred to in the Structural Repair Manual or the
Maintenance Program.
(v) All mandatory modifications to the Aircraft required to be
made on or prior to the date the Aircraft is returned under the Lease by
the Relevant Aviation Authority shall have been made, PROVIDED that if an
inspection program is permitted as an alternative to a mandatory
modification and the Aircraft is in compliance with such inspection
program, then such mandatory modification shall not be required. All
Manufacturer's Mandatory Service Bulletins and Airworthiness Directives
issued by the
EXHIBIT H - PAGE 2
<PAGE>
Relevant Aviation Authority and, in either case, applicable to the
Aircraft, which are in force on the date the Aircraft is returned under the
Lease and which require termination within six months of the date the
Aircraft is returned under the Lease shall have been accomplished on the
Aircraft.
(vi) Brakes and tires shall be serviceable and in good
condition. The landing gear and wheel wells shall be clean, free of leaks
and in good repair as required to be serviceable in accordance with the
Maintenance Program. The fuel system shall be in compliance with the
Maintenance Program. Except for BFE, the cockpit, all calendar lifed
emergency equipment, toilets and galley areas and the interior shall be in
serviceable condition and shall meet applicable fire resistance regulations
issued by the Relevant Aviation Authority in effect on the date the
Aircraft is returned under the Lease.
(vii) The Aircraft shall be clean by the Operator's normal
operating conditions. The Aircraft shall have all of the Operator's
exterior logos removed.
(b) LIFE REMAINING. On the date the Aircraft is returned under the
Lease at the end of the Basic Term, the Aircraft shall comply with the following
additional requirements:
(i) The Engines shall have on average a minimum of one-half
HSI period remaining in accordance with MRB limits current on the date the
Aircraft is returned under the Lease, PROVIDED that in the event the
Engines do not have an average of at least one-half HSI period remaining in
accordance with such MRB limits, an Engine HSI Half-Life Adjustment under
clause (c)(i) shall be made in lieu of meeting such condition, PROVIDED,
HOWEVER, that in no event shall any Engine have less than one-quarter HSI
period remaining in accordance with such MRB limits or have any defects or
discrepancies outside of the limits set forth in the Maintenance Planning
Document.
(ii) Engine life limited parts shall have on average at least
half-life remaining to their respective scheduled replacement in accordance
with the Engine Manufacturer's published life limited part replacement
schedule current on the date the Aircraft is returned under the Lease,
PROVIDED that in the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, an Engine life limited part Half-Life Adjustment under clause
(c)(ii) shall be made in lieu of meeting such condition, PROVIDED, HOWEVER,
that in no event shall any Engine life limited part have less than
one-quarter life remaining to its scheduled replacement in accordance with
the Engine Manufacturer's published life limited part replacement schedule
current on the date the Aircraft is returned under the Lease.
(iii) The APU shall have remaining at least half of any
applicable HSI period remaining on the date the Aircraft is returned under
the Lease in accordance with the then current MRB standards, PROVIDED that
in the event the APU does not have at least half of any applicable HSI
period remaining, an APU Half-Life Adjustment under clause (c)(iii) shall
be made in lieu of meeting such condition.
(iv) The landing gear shall have at least half-life remaining
to the next landing gear overhaul according to MRB requirements current on
the date the Aircraft is returned under the Lease, PROVIDED that in the
event the landing gear does not have at
EXHIBIT H - PAGE 3
<PAGE>
least half-life remaining to such next landing gear overhaul, a landing
gear Half-Life Adjustment under clause (c)(iv) shall be made in lieu of
meeting such condition.
(v) The Aircraft's next sequential block C check (which C
check shall include full fault rectification) shall have been completed
immediately prior to the date the Aircraft is returned under the Lease,
PROVIDED that in the event the Aircraft has at least 25% of the time
remaining until its next scheduled sequential block C check, a C check
Half-Life Adjustment under clause (c)(v) shall be made in lieu of such
block C check. If the Maintenance Program permits a block C check to be
performed in phases, all phases of such block C check shall have been
performed in order to align such block C check with the BAe/Avro "block
type" Maintenance Planning Document schedule.
(vi) The Airframe shall have a minimum of half-time remaining
until its next scheduled major structural inspections, PROVIDED that in the
event the Aircraft has at least 25% of the time remaining until its next
scheduled major structural inspection, but less than half-time, a
structural inspection Half-Life Adjustment under the first sentence of
clause (c)(vi) shall be made in lieu of meeting such condition and in the
event the Aircraft has more than 75% of the time remaining until its next
scheduled major structural inspection, a structural inspection Half-Life
Adjustment under the second sentence of clause (c)(vi) shall be made.
For purposes of determining whether the foregoing requirements have been
satisfied:
(x) to the extent the Maintenance Program provides that a part
or component (for purposes of this clause (x) and clause (y) below, the
term "part or component" may include the entire Airframe, an entire Engine,
the APU or the landing gear) is maintained on a continuous or on condition
maintenance program with no fixed overhaul or major repair required in
accordance with the Manufacturer's requirements, such part or component
shall be deemed to have half-life or half-time (as the case may be)
remaining; and
(y) in the event that a part or component is subject to a
power by the hour program, or the equivalent, on terms and conditions
acceptable to Lessor, and provided that such program is fully assignable
with no material buy-in fees and for a sufficient term remaining to provide
the equivalent of half-life remaining on the affected part or component,
such part or component shall be deemed to have half-life remaining.
(c) HALF-LIFE ADJUSTMENT. The Half-Life Adjustment shall equal the
sum of the Engine HSI Half-Life Adjustment, the Engine life limited parts
Half-Life Adjustment, the APU Half-Life Adjustment, the landing gear Half-Life
Adjustment, the C check Half-Life Adjustment and the structural inspection
Half-Life Adjustment (which shall be added if calculated pursuant to the first
sentence of clause (vi) below and subtracted if calculated pursuant to the
second sentence of clause (vi) below), each as calculated as set forth below:
(i) In the event that the Engines do not have an average of at
least a half HSI period remaining in accordance with MRB limits current on
the date the Aircraft is returned under the Lease, the Engine HSI Half-Life
Adjustment shall be an amount computed by multiplying (A) four by (B) the
cost (as evidenced by industry norms) of performing an HSI for engines of
the same type as the Engines by (C) a fraction, of which (x) the numerator
shall be the excess of 50% of the HSI period in
EXHIBIT H - PAGE 4
<PAGE>
accordance with such MRB limits over the actual average amount of the HSI
period remaining and (y) the denominator shall be the HSI period.
(ii) In the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, the Engine life limited parts Half-Life Adjustment shall be an
amount computed by multiplying (A) four by (B) the average cost (as
evidenced by industry norms) of scheduled replacements of life limited
parts for engines of the same type as the Engines by (C) a fraction, of
which (x) the numerator shall be the excess of 50% of the life remaining to
scheduled replacement over the actual average remaining life to scheduled
replacement and (y) the denominator shall be the life between scheduled
replacements of Engine life limited parts.
(iii) In the event the APU does not have at least half of any
applicable HSI period remaining, the APU Half-Life Adjustment shall be an
amount computed by multiplying (A) the average cost (as evidenced by
industry norms) of an HSI for auxiliary power units of the same type as the
APU by (B) a fraction, of which (x) the numerator shall be the excess of
50% of the HSI period over the actual amount of the HSI period remaining
and (y) the denominator shall be the entire HSI period.
(iv) In the event the landing gear does not have at least
half-life remaining to such next scheduled landing gear overhaul, the
landing gear Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
landing gear overhaul for landing gear of the same type as the landing gear
installed on the Aircraft by (B) a fraction, of which (x) the numerator
shall be the excess of 50% of the period between landing gear overhauls
over the actual period remaining to the next scheduled landing gear
overhaul and (y) the denominator shall be the period between scheduled
landing gear overhauls.
(v) In the event the Aircraft's next sequential block C check
(which C check shall include the full fault rectification) shall not have
been completed immediately prior to the date the Aircraft is returned under
the Lease, the C check Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
block C check (including full fault rectification) for aircraft of the same
type as the Aircraft by (B) a fraction, of which (x) the numerator shall be
the excess of period between sequential block C checks over the actual
period remaining to the sequential block C check and (y) the denominator
shall be the period between sequential block C checks.
(vi) In the event the Aircraft has less than half-time
remaining until its next scheduled major structural inspection, the
structural inspection Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
scheduled major structural inspection for aircraft of the same type as the
Aircraft by (B) a fraction, of which (x) the numerator shall be the excess
of 50% of the period between scheduled major structural inspections over
the actual period remaining to the next scheduled major structural
inspection and (y) the denominator shall be the period between scheduled
major structural inspections. In the event the Aircraft has more than 75%
of the time remaining until its next scheduled major structural inspection,
the structural inspection Half-Life Adjustment shall be an amount computed
by multiplying (A) the average cost (as evidenced by industry norms)
EXHIBIT H - PAGE 5
<PAGE>
of a scheduled major structural inspection for aircraft of the same type as
the Aircraft by (B) a fraction, of which (x) the numerator shall be the
excess of the actual period remaining to the next scheduled structural
inspection over 75% of the period between scheduled major structural
inspection and (y) the denominator shall be the period between scheduled
major structural inspections.
(d) AIRCRAFT DOCUMENTATION. On _____________, 20__, the Aircraft
shall be returned with all Aircraft Documentation. The Aircraft Documentation
shall be current as of the date the Aircraft is returned under the Lease and in
full compliance with the requirements of the Relevant Aviation Authority. In
the event that the Maintenance Program deviates from the Maintenance Planning
Document, the Aircraft Documentation shall include a document which shall
cross-reference all deviations. The Aircraft Documentation shall document all
repairs to the Aircraft with appropriate references to the Structural Repair
Manual and a repair scheme approved by the Manufacturer or the Relevant Aviation
Authority.
EXHIBIT H - PAGE 6
<PAGE>
EXHIBIT B
TO
PARTICIPATION AGREEMENT [NW 1997 _]
_______
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 __]
DATED AS OF _________ __, 199_
BETWEEN
NORTHWEST AIRLINES, INC.,
ASSIGNOR
AND
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
ASSIGNEE
_______________
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
U.S. REGISTRATION NO. N5___XJ
MANUFACTURER'S SERIAL NO. E_____
__________
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 __]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 __], dated as of
___________ __, 199_ between NORTHWEST AIRLINES, INC., a Minnesota corporation
("ASSIGNOR"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee ("ASSIGNEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has agreed
to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement [NW
1997 __], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "LEASE"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. ASSIGNMENT; RIGHTS RESERVED. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. ACCEPTANCE OF ASSIGNMENT. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. RIGHTS OF ASSIGNOR IN ABSENCE OF EVENT OF DEFAULT.
(a) Notwithstanding the foregoing, if and so long as (A) the Aircraft
shall be subject to the Lease and (B) the Manufacturer shall not have received
notice from the Indenture Trustee or the Owner Trustee that an Event of Default
under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
the
<PAGE>
Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "MANUFACTURER PAYMENT"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to Assignee in accordance with the terms of the
Lease, be returned to Assignor promptly after all Events of Default under the
Lease have been cured or waived.
- 2 -
<PAGE>
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 13850 McLearen Road,
Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703) 736-4255)
and three Business Days shall have elapsed from the date of actual receipt by
the Manufacturer and, in acting in accordance with the terms and conditions of
the Purchase Agreement and this Assignment, the Manufacturer may rely
conclusively upon any such notice.
4. CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTIES.
(a) Anything herein contained to the contrary notwithstanding:
(i) Assignor shall at all times remain liable to the Manufacturer under the
Purchase Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any respect the Manufacturer's contract rights
thereunder, except as provided in the Consent and Agreement attached hereto.
- 3 -
<PAGE>
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement 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 Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee 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 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, 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 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. FURTHER ASSURANCES. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, PROVIDED, HOWEVER, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. ASSIGNOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. NO AMENDMENT OF PURCHASE AGREEMENT. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. EXECUTION OF ASSIGNMENT. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
9. BINDING EFFECT. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
- 4 -
<PAGE>
10. GOVERNING LAW. THIS ASSIGNMENT SHALL 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 ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. DEFINITIONS. Unless the context otherwise require, the following
terms shall have the following meanings for all purposes of this Assignment and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"AIRCRAFT" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"CONTRACT RIGHTS" means all of Assignor's right, title and
interest in and to Part H and Part J of the Manufacturer Support
Agreement, as and to the extent that the same relate to the warranties
with respect to the Aircraft, including, without limitation, (a) all
claims for damages in respect of the Aircraft arising as a result of
any default by the Manufacturer under Part H or Part J of the
Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and
Part J of the Manufacturer Support Agreement in respect of the
Aircraft and all claims thereunder and (b) any and all rights of
Assignor to compel performance of the terms of Part H and Part J of
the Manufacturer Support Agreement in support thereof.
"ENGINE" means each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the Lease Supplement.
"LEASE" means the Lease Agreement [NW 1997 __], dated as of
__________ ___, 199__, between Assignor and Assignee.
"LEASE SUPPLEMENT" means a Lease Supplement substantially in the
form of Exhibit A to the Lease, entered into between Assignor and
Assignee on the date the Aircraft is leased by Assignee to Assignor
and accepted by Assignor under the Lease.
"MANUFACTURER" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and
its successors and assigns.
"MANUFACTURER SUPPORT AGREEMENT" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and
Assignor.
"OPERATIVE DOCUMENTS" shall have the meaning specified in the
Lease.
"PURCHASE AGREEMENT" means the Sale and Purchase Agreement, dated
as of February 5, 1997, between the Manufacturer and Assignor relating
to the
- 5 -
<PAGE>
purchase by Assignor of the Aircraft (including the Manufacturer
Support Agreement), 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.
"SUBLESSEE" shall have the meaning specified in the Lease,
12. NOTICE. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. COUNTERPARTS. This Assignment 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.
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By:
------------------------------
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By:
------------------------------
Title:
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------
Title:
- 7 -
<PAGE>
CONSENT AND AGREEMENT
[NW 1997 _]
The undersigned, AERO INTERNATIONAL (REGIONAL), a Societe par Actions
Simplifee, whose registered office is situated at 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, acting as agent for and on behalf of British Aerospace
(Operations) Limited, a limited company incorporated under the laws of England
and Wales, hereby acknowledges notice of, and consents to all of the terms of,
the foregoing Purchase Agreement Assignment [NW 1997 _] dated as of __________
___, 199__ between Northwest Airlines, Inc. (the "ASSIGNOR"), and First Security
Bank, National Association, not in its individual capacity but solely as Owner
Trustee (the "ASSIGNEE") (herein called the "PURCHASE AGREEMENT ASSIGNMENT," the
defined terms therein or by reference therein being hereinafter used with the
same meaning) and hereby confirms to the Assignor and the Assignee, and agrees,
that: (i) all representations, warranties, indemnities and agreements of the
Manufacturer under the Purchase Agreement with respect to the Contract Rights,
to the extent assigned by the Assignor to the Assignee, shall inure to the
benefit of the Assignee to the same extent as if originally named the "Buyer"
therein, subject to the terms and conditions of the Purchase Agreement
Assignment; (ii) the Assignee shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the Purchase
Agreement Assignment give rise to any duties or obligations whatsoever on the
part of the Assignee owing to the Manufacturer, except for the Assignee's
agreement in the Purchase Agreement Assignment to the effect that in exercising
any rights under the Purchase Agreement or in making any claim with respect to
the Contract Rights, the terms and conditions of the Purchase Agreement relating
to the Aircraft shall apply to, and be binding upon, the Assignee to the same
extent as the Assignor, and with respect to such agreement the Manufacturer
agrees that, anything contained in the Purchase Agreement and the Purchase
Agreement Assignment to the contrary notwithstanding, so long as the
Manufacturer shall not have received written notice that an Event of Default has
occurred and is continuing, the Assignee shall not have any responsibility to
the Manufacturer for failure to comply with any of the terms of the Purchase
Agreement with respect to the Contract Rights as and to the extent the same
relate to the Aircraft while under lease to the Assignor; PROVIDED that no
person other than the Manufacturer shall have any rights against the Assignee
with respect to the undertaking and agreement set forth in this clause (ii);
(iii) the Manufacturer acknowledges the lease of the Aircraft by the Assignee to
the Assignor under the Lease and acknowledges advance notice of the Purchase
Agreement Assignment pursuant to Clause 24.1 of the Purchase Agreement; and (iv)
so long as the Aircraft is subject to the Lease, the Manufacturer will continue
to pay to the Assignor all payments which the Manufacturer may be required to
make in respect of the Aircraft under the Purchase Agreement unless and until
the Manufacturer shall have received written notice from the Indenture Trustee
or the Assignee by facsimile addressed to Aero International (Regional), 1,
Allee Pierre Nadot, 31712 Blagnac Cedex, France, Attn: SVP Commercial (telecopy
011 33 5 6221 6321) with a copy to Aero International (Regional) Marketing Inc.,
13850 McLearen Road, Herndon, Virginia 22071, Attn.: Contracts Director
(telecopy (703) 736-4255) and three Business Days shall have elapsed from the
date of actual receipt by the Manufacturer, that an Event of Default under the
Lease has occurred and is continuing,
- 8 -
<PAGE>
whereupon the Manufacturer will not be required to make further inquiry into the
content of such notice and thereafter (until the Manufacturer shall have
received notice in writing from the Assignee or the Indenture Trustee sent or
addressed as aforesaid that no Event of Default under the Lease exists or that
such Event of Default under the Lease has been cured or waived) Manufacturer
shall make any and all payments which it may be required to make in respect of
the Aircraft under the Purchase Agreement (to the extent that the right to
receive such payments has been assigned under the Purchase Agreement
Assignment) directly to the Indenture Trustee at the account of the Indenture
Trustee at State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0 Northwest/NW
1997 __, Attention: Corporate Trust Department, Reference: Northwest/NW 1997
__, or (if written notice has been given to the Manufacturer by the Assignee in
the manner aforesaid that the Trust Indenture is no longer in effect in
accordance with its terms and all amounts due and payable under the Secured
Certificates have been paid in full) to the Assignee at the account of the
Assignee at First Security Bank, 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 1997 __.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a limited company incorporated under the Companies Act of 1985
duly organized and validly existing under the laws of England and Wales, (B) the
execution, delivery and performance of the Purchase Agreement and this Consent
and Agreement have been duly authorized by all necessary corporate action on the
part of the Manufacturer, do not require any approval of the stockholders of the
Manufacturer, trustee or holders of any indebtedness or obligations of the
Manufacturer (other than any such approval or consent as has been obtained) and
neither the execution and delivery of the Purchase Agreement or this Consent and
Agreement by the Manufacturer, nor the performance by the Manufacturer of its
obligations under the Purchase Agreement or the Consent and Agreement
contravenes any law, governmental rule or regulation applicable to the
Manufacturer, and (C) neither the execution and delivery by the Manufacturer of
the Purchase Agreement or the Consent and Agreement, nor the performance by the
Manufacturer 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 (other than those which have been obtained).
- 9 -
<PAGE>
Dated as of __________ ___, 199__
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British
Aerospace (Operations) Limited
By
------------------------------
Title:
- 10 -
<PAGE>
Exhibit 99(c)
SCHEDULE TO DOCUMENTS
- ---------------------
The documents listed below under the heading "[NW 1997 A] N501XJ" (hereinafter
referred to as the "A Documents") have been provided in this filing. The
corresponding documents listed below under the headings "[NW 1997 B] N502XJ",
"[NW 1997 C] N503XJ", "[NW 1997 D] N504XJ", "[NW 1997 E] N505XJ" and "[NW 1997
F] N506XJ" are substantially identical to the A Documents with the following
exceptions: conforming changes have been made to reflect the appropriate deal
designation (i.e., 1997 A, 1997 B, etc.) and the United States registration
number of the aircraft (i.e., N501XJ, N502XJ, etc.), and the tables of Secured
Certificates Amortization attached to Schedule I of each Trust Indenture and
Security Agreement may differ.
The documents listed below under the heading "[NW 1997 G] N507XJ" (hereinafter
referred to as the "G Documents") have been provided in this filing. The
corresponding documents listed below under the headings "[NW 1997 H] N508XJ",
"[NW 1997 I] N509XJ", "[NW 1997 J] N510XJ", "[NW 1997 K] N511XJ" and "[NW 1997
L] N512XJ" are substantially identical to the G Documents with the following
exceptions: conforming changes have been made to reflect the appropriate deal
designation (i.e., 1997 G, 1997 H, etc.) and the United States registration
number of the aircraft (i.e., N507XJ, N508XJ, etc.); the amounts set forth on
Schedule II (Commitments) to each Participation Agreement will differ but will
read as set forth on the Participation Agreement [NW 1997 G] provided, with the
bracketed information substituted in the respective Participation Agreements for
the other deal designations; the amount set forth on Schedule I to each Trust
Indenture and Security Agreement will differ; and the tables of Secured
Certificates Amortization attached as Schedule to Schedule I of each Trust
Indenture and Security Agreement will differ.
[NW 1997 A] N501XJ
Participation Agreement [NW 1997 A], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner Participant; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee.
Lease Agreement [NW 1997 A], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
Guarantee [NW 1997 A], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 A], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 A], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
<PAGE>
Purchase Agreement Assignment [NW 1997 A], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 A], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 B] N502XJ
Participation Agreement [NW 1997 B], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner Participant; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee.
Lease Agreement [NW 1997 B], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
Guarantee [NW 1997 B], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 B], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 B], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
Purchase Agreement Assignment [NW 1997 B], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 B], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 C] N503XJ
Participation Agreement [NW 1997 C], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner Participant; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee.
Lease Agreement [NW 1997 C], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
-2-
<PAGE>
Guarantee [NW 1997 C], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 C], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 C], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
Purchase Agreement Assignment [NW 1997 C], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 C], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 D] N504XJ
Participation Agreement [NW 1997 D], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner Participant; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee.
Lease Agreement [NW 1997 D], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
Guarantee [NW 1997 D], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 D], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 D], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
Purchase Agreement Assignment [NW 1997 D], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 D], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 E] N505XJ
Participation Agreement [NW 1997 E], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner
-3-
<PAGE>
Participant; State Street Bank and Trust Company, Pass Through Trustee under
each of the Pass Through Trust Agreements; First Security Bank, National
Association, not in its individual capacity, except as expressly provided
therein, but solely as Owner Trustee; State Street Bank and Trust Company of
Connecticut, National Association, Subordination Agent; and State Street Bank
and Trust Company, in its individual capacity and as Indenture Trustee.
Lease Agreement [NW 1997 E], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
Guarantee [NW 1997 E], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 E], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 E], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
Purchase Agreement Assignment [NW 1997 E], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 E], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 F] N506XJ
Participation Agreement [NW 1997 F], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee; Northwest Airlines Corporation, Guarantor; the
Owner Participant, Owner Participant; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee.
Lease Agreement [NW 1997 F], dated as of September 25, 1997, between First
Security Bank, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Owner Trustee, and Northwest Airlines,
Inc., Lessee.
Guarantee [NW 1997 F], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 F], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 F], dated as of September 25, 1997, between the Owner
Participant, Owner Participant, and First Security Bank, National Association,
Owner Trustee.
-4-
<PAGE>
Purchase Agreement Assignment [NW 1997 F], dated as of September 25, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 F], dated as of September 25, 1997, from Aero
International (Regional), acting as agent for and on behalf of British Aerospace
(Operations) Limited.
[NW 1997 G] N507XJ
Participation Agreement [NW 1997 G], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 G], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 G], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 G], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
[NW 1997 H] N508XJ
Participation Agreement [NW 1997 H], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 H], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 H], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 H], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
-5-
<PAGE>
[NW 1997 I] N509XJ
Participation Agreement [NW 1997 I], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 I], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 I], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 I], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
[NW 1997 J] N510XJ
Participation Agreement [NW 1997 J], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 J], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 J], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 J], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
[NW 1997 K] N511XJ
-6-
<PAGE>
Participation Agreement [NW 1997 K], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 K], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 K], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 K], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
[NW 1997 L] N512XJ
Participation Agreement [NW 1997 L], dated as of September 25, 1997, among
Northwest Airlines, Inc., Lessee and Initial Owner Participant; Northwest
Airlines Corporation, Guarantor; State Street Bank and Trust Company, Pass
Through Trustee under each of the Pass Through Trust Agreements; First Security
Bank, National Association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee; State Street Bank and Trust
Company of Connecticut, National Association, Subordination Agent; and State
Street Bank and Trust Company, in its individual capacity and as Indenture
Trustee; including Appendix A thereto (Definitions), Exhibit B thereto (form of
Purchase Agreement Assignment) and Exhibit C thereto (form of Lease Agreement).
Guarantee [NW 1997 L], dated as of September 25, 1997, from Northwest Airlines
Corporation.
Trust Indenture and Security Agreement [NW 1997 L], dated as of September 25,
1997, between First Security Bank, National Association, not in its individual
capacity, except as expressly stated therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity, except as
expressly stated therein, but solely as Indenture Trustee.
Trust Agreement [NW 1997 L], dated as of September 25, 1997, between the Initial
Owner Participant, Trustor, and First Security Bank, National Association, Owner
Trustee.
-7-
