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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 15, 1998
NORTHWEST AIRLINES CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-23642
(Commission File Number)
95-4205287
(I.R.S. Employer Identification No.)
2700 LONE OAK PARKWAY, EAGAN, MINNESOTA 55121
(Address of principal executive offices)(Zip Code)
(612) 726-2111
(Registrant's Telephone Number, Including Area Code)
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ITEM 7. EXHIBITS
Filed herewith as exhibits to the Registration Statements on Form S-3
(File No.'s 333-13307 and 333-28649) are the trust agreement, trust indenture
and security agreement, lease agreement, guarantee agreement, consent agreement
and participation agreement relating to the sale/leaseback by Northwest
Airlines, Inc. ("Northwest") and Northwest Airlines Corporation ("NWA Corp."
and, with Northwest, the "Registrants") of two British Aerospace AVRO RJ85
Aircraft referred to by the designations "[NW 1997 K]" and "[NW 1997 L]"
(respectively, the "New [NW 1997 K] RJ85" and the "New [NW 1997 L] RJ85"), on
April 15 and May 1, 1998, respectively, which relate to the offering of
Northwest's Pass Through Certificates, Series 1997-1, as fully and
unconditionally guaranteed by NWA Corp. as provided therein, which closed on
September 25, 1997. Pursuant to Instruction 2 to Item 601 of Regulation S-K,
Exhibit 99(b) filed herewith contains a list of documents relating to the
sale/leaseback of the New [NW 1997 K] RJ85, which documents are substantially
identical to those relating to the New [NW 1997 L] RJ85 and which are filed
herewith as Exhibits 4(a)(1) - 4(a)(6) and 99(a), and sets forth the material
details by which such documents differ from the corresponding documents for the
New [NW 1997 K] RJ85.
In addition, filed herewith as Exhibits 4(b)(1) and 4(b)(2) to the
Registrants' Registration Statements on Form S-3 (File No.'s 333-13307 and
333-2516) are the Form of 8.375% Note due 2004 relating to Northwest's issuance
of $150,000,000 aggregate principal amount of its 8.375% Notes due 2004 and the
Form of 8.70% Note due 2007 relating to its issuance of $100,000,000 aggregate
principal amount of its 8.70% Notes due 2007, each as fully and unconditionally
guaranteed by NWA Corp.; and filed herewith as exhibits 4(b)(3) and 4(b)(4) to
the Registrants' Registration Statements on Form S-3 (File No.'s 333-13307,
333-28649 and 333-41579) are the Form of 7 5/8% Note due 2005 relating to
Northwest's issuance of $200,000,000 aggregate principal amount of its 7 5/8%
Notes due 2005 and the Form of 7 7/8% Note due 2008, relating to Northwest's
issuance of $200,000,000 aggregate principal amount of its 7 7/8% Notes due
2008, each as fully and unconditionally guaranteed by NWA Corp.
The following exhibits are filed as part of this Report.
4(a)(1) Amended and Restated Trust Agreement [NW 1997 L], dated as of May 1,
1998, between Sumitomo Bank Capital Markets, Inc., as Owner
Participant, and First Security Bank, National Association, as Owner
Trustee.
4(a)(2) 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.
4(a)(3) First Amendment, dated as of May 1, 1998, to the 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
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Trust Company, not in its individual capacity except as expressly
stated therein but solely as Indenture Trustee.
4(a)(4) Lease Agreement [NW 1997 L], dated as of May 1, 1998, between First
Security Bank, National Association, not in its individual capacity
except expressly provided therein but solely as Lessor, and Northwest
Airlines, Inc., as Lessee.
4(a)(5) Amended and Restated Guarantee [NW 1997 L], dated as of May 1, 1998,
from Northwest Airlines Corporation.
4(a)(6) Consent and Agreement [NW 1997 L], dated as of May 1, 1998, from Aero
International (Regional) SAS, as agent for and on behalf of British
Aerospace (Operations) Limited.
4(b)(1) Form of 8.375% Note due 2004.
4(b)(2) Form of 8.70% Note due 2007.
4(b)(3) Form of 7 5/8% Note due 2005.
4(b)(4) Form of 7 7/8% Note due 2008.
99(a) Amended and Restated Participation Agreement [NW 1997 L], dated as of
May 1, 1998, among Northwest Airlines, Inc., as Lessee, Northwest
Airlines Corporation, as Guarantor, Sumitomo Bank Capital Markets,
Inc., 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, 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) Schedule I.
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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: June 18, 1998 By: /s/ DOUGLAS M. STEENLAND
------------------------------
Name: Douglas M. Steenland
Title: Senior Vice President,
General Counsel and
Secretary
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4(a)(1) Amended and Restated Trust Agreement [NW 1997 L], dated as of
May 1, 1998, between Sumitomo Bank Capital Markets, Inc., as
Owner Participant, and First Security Bank, National Association,
as Owner Trustee.
4(a)(2) 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.
4(a)(3) First Amendment, dated as of May 1, 1998, to the Trust Indenture
and Security Agreement [NW 1997 L], 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.
4(a)(4) Lease Agreement [NW 1997 L], dated as of May 1, 1998, between
First Security Bank, National Association, not in its individual
capacity except expressly provided therein but solely as Lessor,
and Northwest Airlines, Inc., as Lessee.
4(a)(5) Amended and Restated Guarantee [NW 1997 L], dated as of May 1,
1998, from Northwest Airlines Corporation.
4(a)(6) Consent and Agreement [NW 1997 L], dated as of May 1, 1998, from
Aero International (Regional) SAS, as agent for and on behalf of
British Aerospace (Operations) Limited.
4(b)(1) Form of 8.375% Note due 2004.
4(b)(2) Form of 8.70% Note due 2007.
4(b)(3) Form of 7 5/8% Note due 2005.
4(b)(4) Form of 7 7/8% Note due 2008.
99(a) Amended and Restated Participation Agreement [NW 1997 L], dated
as of May 1, 1998, among Northwest Airlines, Inc., as Lessee,
Northwest Airlines Corporation, as Guarantor, Sumitomo Bank
Capital Markets, Inc., 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, State
Street Bank and Trust Company of Connecticut,
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National Association, as Subordination Agent, and State Street
Bank and Trust Company, in its individual capacity and as
Indenture Trustee.
99(b) Schedule I.
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Exhibit 4(a)(1)
________________________________________________________________________________
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 L]
Dated as of May 1, 1998
between
SUMITOMO BANK CAPITAL MARKETS, INC.,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
________________________________________________________________________________
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AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 L]
This AMENDED AND RESTATED TRUST AGREEMENT [NW 1997 L] dated as of
May 1, 1998 between SUMITOMO BANK CAPITAL MARKETS, INC., a Delaware
corporation (the "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"), is an amendment and restatement
in its entirety of the Trust Agreement [NW 1997 L], dated as of
September 25, 1997, between Northwest Airlines, Inc. (the "Original
Trustor") and FSB, in its individual capacity and as Owner Trustee (said
Trust Agreement, prior to being amended and restated hereby, the
"Original Trust Agreement", and as so amended and restated in its
entirety hereby, and as hereafter from time to time supplemented or
amended, this or the "Trust Agreement");
WHEREAS, pursuant to the Original Trust Agreement the Original
Trustor created a trust for, among other things, the purpose of
borrowing for the Pass Through Trustee and issuing Secured Certificates
in respect of such borrowing, the proceeds of which issuance were
initially 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 Original 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;
WHEREAS, concurrently with the execution and delivery of this Trust
Agreement, the Original Trustor is transferring the Beneficial Interest
to the Owner Participant pursuant to the Assignment and Assumption
Agreement;
WHEREAS, the trust created under the Original Trust Agreement shall
continue and shall not be deemed liquidated or terminated by this Trust
Agreement; and
WHEREAS, the Owner Participant and FSB now desire to amend and
restate the Original Trust Agreement in its entirety on the terms and
conditions herein provided;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, FSB and the Owner Participant hereby amend
and restate the Original Trust Agreement in its entirety and agree as
follows:
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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:
"Control Rights" has the meaning ascribed to such term in Section
12.01 hereof.
"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 L], dated as of
the date hereof, between the Owner Trustee and Lessee, as said Lease
Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in
accordance with, the terms of this Trust Agreement. The term "Lease"
shall also include each Lease Supplement from time to time entered into
pursuant to the terms of the Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
"Owner Participant" means the 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.
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"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
"Subsequent Owner Participant" means any corporation to which the
Owner Participant or any transferee from the 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 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.
"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.
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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 shall continue to 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
SECTION 3.01. Acceptance of Aircraft. 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, on
the Delivery Date, subject to due compliance with the terms of Section
3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation
Agreement and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and
the FAA Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease,
and in furtherance thereof execute and deliver a Lease Supplement
covering the Aircraft;
(d) execute and deliver the Trust Supplement covering the
Aircraft;
(e) [Intentionally Omitted];
(f) execute and deliver the financing statements referred to in
Section 5(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 5 of the
Participation Agreement to which the Owner Trustee is a party; and
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(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 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 5 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the 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 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;
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(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):
(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
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(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 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.
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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 an 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 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, an
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.
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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 the
Participation Agreement, to pay the reasonable compensation of the Owner
Trustee for the services performed or to be performed by it pursuant to
such direction and any fees and disbursements of counsel or agents
employed by the Owner Trustee in connection therewith. The Owner
Trustee shall not be required to take any action under Section 5.01 or
5.02 hereof if the Owner Trustee shall reasonably determine, or shall
have been advised by counsel, that such action is contrary to the terms
of any of the Operative Documents to which the Owner Trustee is a party,
or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation
to manage, control, use, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with any of the
Operative Documents to which the Owner Trustee is a party, except as
expressly required by the terms of any of the Operative Documents to
which the Owner Trustee is a party, or (to the
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extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in written instructions from
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 3.02 hereof and in Section
5 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.
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
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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, or (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 Owner Participant of this Trust Agreement) the Operative
Documents to which it or the Owner Trustee is a party have been (or at
the time of execution and delivery of any such instrument by it or the
Owner Trustee hereunder or pursuant to the terms of the Participation
Agreement that such an instrument will be) duly executed and delivered
by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself
or the Owner Trustee, as the case may be.
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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.
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
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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 (a) in
the case of willful misconduct or gross negligence
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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
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(ii) may resign at any time without cause by giving at least sixty (60)
days' prior written notice to the Owner Participant, the Indenture
Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such
resignation to be effective upon the acceptance of appointment by the
successor Owner Trustee under Section 9.01(b) hereof. In addition, the
Owner Participant may at any time remove the Owner Trustee without cause
by a notice in writing delivered to the Owner Trustee, the Indenture
Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such removal
to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the
resignation or removal of the Owner Trustee, the Owner Participant may
appoint a successor Owner Trustee by an instrument signed by the Owner
Participant. If a successor Owner Trustee shall not have been appointed
within thirty (30) days after such notice of resignation or removal, the
Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee
may apply to any court of competent jurisdiction to appoint a successor
Owner Trustee to act until such time, if any, as a successor shall have
been appointed as above provided. Any successor Owner Trustee so
appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor
Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee and the Owner Participant an instrument
accepting such appointment, and thereupon such successor Owner Trustee,
without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of the predecessor Owner
Trustee in the trusts hereunder with like effect as if originally named
the Owner Trustee herein; but nevertheless, upon the written request of
such successor Owner Trustee, such predecessor Owner Trustee shall
execute and deliver an instrument transferring to such successor Owner
Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay
over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed.
Upon the appointment of any successor Owner Trustee hereunder, the
predecessor Owner Trustee will execute such documents as are provided to
it by such successor Owner Trustee and will take such further actions as
are requested of it by such successor Owner Trustee as are reasonably
required to cause registration of the Aircraft included in the Trust
Estate to be transferred upon the records of the Federal Aviation
Administration, or other governmental authority having jurisdiction,
into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a Citizen of the United States without making use of
a voting trust, voting powers agreement or similar arrangement and shall
also be a bank or trust company organized under the laws of the United
States or any state thereof having a combined capital and surplus of at
least $100,000,000, if there be such an institution willing, able and
legally qualified to perform the duties of the Owner Trustee hereunder
upon reasonable or customary terms.
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(d) Merger, etc. Any corporation into which the Owner
Trustee may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any
corporation to which substantially all the corporate trust business of
the Owner Trustee may be transferred, shall, subject to the terms of
Section 9.01(c) hereof, be the Owner Trustee hereunder without further
act.
SECTION 9.02. Co-Trustees and Separate Trustees. If at any
time it shall be necessary or prudent in order to conform to any law of
any jurisdiction in which all or any part of the Trust Estate is
located, or the Owner Trustee being advised by counsel shall determine
that it is so necessary or prudent in the interest of the Owner
Participant or the Owner Trustee, or the Owner Trustee shall have been
directed to do so by the Owner Participant, the Owner Trustee and the
Owner Participant shall execute and deliver an agreement supplemental
hereto and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons (any and
all of which shall be a Citizen of the United States without making use
of a voting trust, voting powers agreement or similar arrangement)
approved by the Owner Trustee and the Owner Participant, either to act
as co-trustee, jointly with the Owner Trustee, or to act as separate
trustee hereunder (any such co-trustee or separate trustee being herein
sometimes referred to as an "additional trustee"). In the event an
Indenture Event of Default not arising from a Lease Event of Default
shall occur and be continuing, the Owner Trustee may act under the
foregoing provisions of this Section 9.02 without the concurrence of the
Owner Participant; and the Owner Participant hereby appoints the Owner
Trustee its agent and attorney-in-fact to act for it under the foregoing
provisions of this Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent
permitted by law, be appointed and act, and the Owner Trustee and its
successors shall act, subject to the following provisions and
conditions:
(A) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and management
of monies, 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 conferr ed
or imposed upon the Owner Trustee shall be conferr ed or imposed upon
and exercis ed or perform ed by the Owner Trustee and such additio nal
trustee jointly, except to the extent that under any law of any jurisdi
ction in which any particu lar act or acts are to be perform ed (includ
ing the holding of title to the Trust Estate) the Owner Trustee shall be
incompe tent or unquali fied to perform such act or acts, in which event
such rights, powers, duties and obligat ions shall be exercis ed and
perform ed by such additional trustee;
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(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised
hereunder by such additional trustee, except jointly with, or with
the consent in writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in
writing may remove any such additional trustee unless such
additional trustee was appointed by the Owner Trustee without the
concurrence of the Owner Participant during the occurrence of an
Indenture Event of Default not arising from a Lease Event of
Default, in which case the Owner Trustee shall have the power to
remove any such additional trustee without the concurrence of the
Owner Participant; and the Owner Participant hereby appoints the
Owner Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee
will relieve the Owner Trustee of any of its obligations under, or
otherwise affect any of the terms of, the Trust Indenture or affect
the interests of the Indenture Trustee or the holders of the
Secured Certificates in the Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements
and Amendments. This Trust Agreement may not be amended, supplemented
or otherwise modified except by an instrument in writing signed by the
Owner Trustee and the Owner Participant. Subject to Section 10.02
hereof and the first sentence of Section 10 of the Participation
Agreement, the Owner Trustee will execute any amendment, supplement or
other modification of this Trust Agreement or of any other Operative
Document to which the Owner Trustee is a party which it is requested to
execute by the Owner Participant, except that the Owner Trustee shall
not execute any such amendment, supplement or other modification which,
by the express 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
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the execution of such document is authorized hereunder. If in the
opinion of the Owner Trustee any such document adversely affects any
right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner
Trustee is a party, the Owner Trustee may in its discretion decline to
execute such document.
SECTION 10.03. Absence of Requirements as to Form. It shall
not be necessary for any written request furnished pursuant to Section
10.01 hereof to specify the particular form of the proposed documents to
be executed pursuant to such Section, but it shall be sufficient if such
request shall indicate the substance thereof.
SECTION 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to
Section 10.01 hereof, the Owner Trustee shall mail, by certified mail,
postage prepaid, a conformed copy thereof to the Owner Participant, but
the failure of the Owner Trustee to mail such conformed copy shall not
impair or affect the validity of such document.
SECTION 10.05. No Request Needed as to Lease Supplement and
Trust Supplement. No written request pursuant to Section 10.01 hereof
shall be required to enable the Owner Trustee to enter into the Lease
Supplement covering the Aircraft with Lessee pursuant to the terms of
the Lease and Section 3.01 hereof and the Trust Supplement pursuant to
the terms of the Trust Indenture and Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust
Agreement and the trusts created hereby shall be of no further force or
effect upon the earlier of (a) both the final discharge of the Trust
Indenture pursuant to Section 10.01 thereof and the sale or other final
disposition by the Owner Trustee of all property constituting part of
the Trust Estate and the final distribution by the Owner Trustee of all
monies or other property or proceeds constituting part of the Trust
Estate in accordance with Article IV hereof, provided that at such time
Lessee shall have fully complied with all of the terms of the Lease and
the Participation Agreement or (b) twenty-one years less one day after
the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto; otherwise this
Trust Agreement and the trusts created hereby shall continue in full
force and effect in accordance with the terms hereof.
SECTION 11.02. 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.
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SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any
assignment, sale, transfer or other conveyance of its interest in the
Aircraft by the Owner Trustee made pursuant to the terms hereof or of
the Lease or the Participation Agreement shall bind the Owner
Participant and shall be effective to transfer or convey all right,
title and interest of the Owner Trustee and the Owner Participant in and
to the Aircraft. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of
such assignment, sale, transfer or conveyance or as to the application
of any sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. Trust Agreement for Benefit of Certain Parties
Only. Except for the terms of Section 8(n) of the Participation
Agreement incorporated in Article VIII hereof and except as otherwise
provided in Articles IX and X hereof, nothing herein, whether expressed
or implied, shall be construed to give any Person other than the Owner
Trustee and the Owner Participant any legal or equitable right, remedy
or claim under or in respect of this Trust Agreement; but this Trust
Agreement shall be held to be for the sole and exclusive benefit of the
Owner Trustee and the Owner Participant.
SECTION 11.05. Notices; Consent to Jurisdiction. (a) All
notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in
writing and shall be personally delivered or sent by registered or
certified mail, postage prepaid, or by telecopier, or by prepaid courier
service, and shall be deemed to be given for purposes of this Trust
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
19
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suit, action or proceeding is improper, or that the Participation
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or by such courts.
SECTION 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 11.07. Waivers, etc. No term or provision hereof may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing entered into in compliance with the terms of
Article X hereof; and any waiver of the terms hereof shall be effective
only in the specific instance and for the specific purpose given.
SECTION 11.08. Counterparts. This Trust Agreement may be
executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 11.09. Binding Effect, etc. All covenants and
agreements contained herein shall be binding upon, and inure to the
benefit of, the Owner Trustee and its successors and assigns, and the
Owner Participant, its successors and, to the extent permitted by
Article VIII hereof, its assigns. Any request, notice, direction,
consent, waiver or other instrument or action by the Owner Participant
shall bind its successors and assigns. Any Owner Participant which
shall cease to have any Ownership Interest shall thereupon cease to be a
party hereto or an Owner Participant for any reason and shall have no
further obligations hereunder.
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.
ARTICLE XII
CERTAIN LIMITATIONS
SECTION 12.01. Limitations on Control. Notwithstanding any
other provision of this Trust Agreement, but subject to Section 12.03
hereof, until termination of this
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Trust Agreement, (i) the Owner Participant shall not have any voting
rights or other rights or powers to direct, influence or control the
Owner Trustee in connection with matters involving the ownership and
operation of the Aircraft or any part thereof by the Owner Trustee
(collectively, the "Control Rights") and (ii) the Owner Trustee shall
have absolute and complete discretion in all matters as to which the
Owner Participant otherwise would have had Control Rights but for the
provisions of this Article XII and shall be free of any kind of
influence or control whatsoever by the Owner Participant, and the Owner
Trustee shall exercise the Control Rights solely to the extent it, in
its discretion, shall deem necessary to protect the interests of the
United States, notwithstanding any countervailing interest of any
foreign power which, or whose citizens, may have a direct or indirect
interest in the Owner Participant. Such discretion (x) is in addition
to the discretion given to the Owner Trustee under the other Sections of
this Trust Agreement, and (y) is expressly limited to the Control Rights
that, but for the provisions of this Article XII, would be held or
exercisable by the Owner Participant, and does not extend to any other
rights, powers or privileges in respect of the beneficial interest of
the Owner Participant in the Trust Estate. The Owner Trustee shall
notify the Owner Participant of its exercise of rights and duties under
this Trust Agreement in connection with matters involving the Control
Rights.
SECTION 12.02. Discretion and Actions of Owner Trustee. In
exercising its discretion under this Article XII, the Owner Trustee
shall exercise its best judgment and shall not be liable for any action
taken or omitted hereunder, except for its gross negligence or willful
misconduct, and shall exercise the Control Rights in connection with all
matters involving the ownership and operation of the Aircraft by the
Owner Trustee.
SECTION 12.03. Certain Exceptions. Subject to the
requirements of the preceding Sections 12.01 and 12.02, the Owner
Trustee agrees that it will not, without the prior written consent of
the Owner Participant, (i) sell, mortgage, pledge or otherwise dispose
of the Aircraft or other assets held in the Trust Estate relating
thereto except as otherwise expressly provided for herein, or (ii) amend
the Lease or any other document or give any consents thereunder.
SECTION 12.04. Purpose. The purpose of this Article XII is to
give the Owner Trustee the power to manage and control the Aircraft with
respect to matters involving the ownership and operation of the Aircraft
by the Owner Trustee so as to assure that (i) the Aircraft shall be
controlled with respect to such matters by a Citizen of the United
States, (ii) the Owner Participant shall have no power to influence or
control the exercise of the Owner Trustee's authority with respect to
such matters and (iii) the Owner Trustee shall be able to give the
affidavit required by Section 47.7(c)(2)(iii) of the Federal Aviation
Regulations, 14 C.F.R. 47.7(c)(2)(iii). This Article XII shall be
construed in furtherance of, and the powers given to the Owner Trustee
hereby shall be construed no more broadly than is required by, the
foregoing purpose.
SECTION 12.05. Amendments to Article XII. Notwithstanding any
other provision of this Trust Agreement, so long as the Aircraft shall
be registered under the laws of the United States and so long as this
Article XII shall not have been terminated pursuant to
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Section 12.06 hereof, this Article XII shall not be amended,
supplemented or modified unless either (i) the Owner Participant shall
have become a Citizen of the United States, or (ii) the FAA shall have
concluded that such amendment, supplement or modification would not
cause the Aircraft to be ineligible for registration in the United
States.
SECTION 12.06. Termination. The provisions of this Article
XII shall terminate upon the earliest of (i) the Aircraft ceasing to be
registered under the laws of the United States, (ii) the Owner
Participant becoming a Citizen of the United States, or (iii) the
termination of this Trust Agreement pursuant to the provisions of
Section 11.01 hereof.
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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.
SUMITOMO BANK CAPITAL MARKETS, INC.
By: /s/ Toshiyuki Kashima
------------------------------
Title: President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
By: /s/ Greg A. Hawley
------------------------------
Title: Vice President
<PAGE>
Exhibit 4(a)(2)
- -------------------------------------------------------------------------------
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 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 N512XJ
LEASED BY NORTHWEST AIRLINES, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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GRANTING CLAUSE
ARTICLE I
DEFINITIONS
<S> <C> <C>
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...................24
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.................................................28
SECTION 2.21. No Make-Whole Amount...........................................28
</TABLE>
<PAGE>
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
<TABLE>
<S> <C> <C>
SECTION 3.01. Rent Distribution..............................................28
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.................................................33
SECTION 3.06. Payments to Owner Trustee......................................33
SECTION 3.07. Application of Payments Under Guarantee........................34
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF
INDENTURE TRUSTEE
SECTION 4.01. Covenants of Owner Trustee.....................................34
SECTION 4.02. Event of Default...............................................35
SECTION 4.03. Certain Rights.................................................37
SECTION 4.04. Remedies.......................................................38
SECTION 4.05. Return of Aircraft, Etc........................................40
SECTION 4.06. Remedies Cumulative............................................42
SECTION 4.07. Discontinuance of Proceedings..................................42
SECTION 4.08. Waiver of Past Defaults........................................42
SECTION 4.09. Appointment of Receiver........................................42
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale, Etc.....43
SECTION 4.11. Rights of Certificate Holders to Receive Payment...............43
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default.....................................43
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.......44
SECTION 5.03. Indemnification................................................46
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.................................................47
SECTION 5.05. No Action Except Under Lease, Trust Indenture or Instructions..47
SECTION 5.06. Replacement Airframes and Replacement Engines..................47
SECTION 5.07. Indenture Supplements for Replacements.........................50
SECTION 5.08. Effect of Replacement..........................................51
SECTION 5.09. Investment of Amounts Held by Indenture Trustee................51
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties................................52
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.02. Absence of Duties..............................................52
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents...53
SECTION 6.04. No Segregation of Monies; No Interest..........................53
SECTION 6.05. Reliance; Agreements; Advice of Counsel........................54
SECTION 6.06. Capacity in Which Acting.......................................54
SECTION 6.07. Compensation...................................................54
SECTION 6.08. Instructions from Certificate Holders..........................55
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.......................................55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..............................56
SECTION 8.02. Resignation of Indenture Trustee; Appointment of Successor.....56
SECTION 8.03. Appointment of Additional and Separate Trustees................57
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations..........................59
SECTION 9.02. Trustees Protected.............................................61
SECTION 9.03. Documents Mailed to Certificate Holders........................61
SECTION 9.04. No Request Necessary for Lease Supplement or Trust Agreement
and Indenture Supplement.....................................61
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture................................62
SECTION 10.02. No Legal Title to Trust Indenture Estate in Certificate
Holders......................................................62
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding..............62
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Certificate Holders...63
SECTION 10.05. Notices.......................................................63
SECTION 10.06. Severability..................................................63
SECTION 10.07. No Oral Modification or Continuing Waivers....................63
SECTION 10.08. Successors and Assigns........................................64
SECTION 10.09. Headings......................................................64
SECTION 10.10. Normal Commercial Relations...................................64
SECTION 10.11. Governing Law; Counterpart Form...............................64
SECTION 10.12. Voting by Certificate Holders.................................65
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 10.13. Bankruptcy....................................................65
SECTION 10.14. No Action Contrary to Lessee's Rights Under the Lease.........65
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
</TABLE>
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 L]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 L], 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;
2
<PAGE>
(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 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,
3
<PAGE>
except to the extent prohibited or excluded from doing so pursuant to the terms
and provisions thereof, and the Indenture Trustee and the Certificate Holders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Indenture Trustee
or the Certificate Holders be required or obligated in any manner to perform or
fulfill any obligations of the Owner Trustee under or pursuant to any of the
Indenture Agreements to which it is a party, or, except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall
4
<PAGE>
accept for distribution pursuant to the Trust Agreement any amounts distributed
to it by the Indenture Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Owner Trustee will promptly
and duly execute and deliver or cause to be duly executed and delivered any and
all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security interests created hereunder, in the Trust Indenture Estate or any
security interest that may be claimed to have been created by the Lease or the
ownership interest of the Owner Trustee in the Aircraft.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Indenture
Trustee and its predecessor(s) in this transaction, and that it will not, except
as otherwise provided in this Trust Indenture and except with respect to
Excluded Payments to which it is entitled, (i) accept any payment from Lessee
under any Indenture Agreement, (ii) enter into any agreement amending or
supplementing any Indenture Agreement, (iii) execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers or privileges
under, any Indenture Agreement, (iv) settle or compromise any claim (other than
those relating to an Excluded Payment) arising under any Indenture Agreement or
(v) submit or consent to the submission of any dispute, difference or other
matter arising under or in respect of any Indenture Agreement to arbitration
thereunder.
The Owner Trustee does hereby further agree that it will not without
the written consent of the Indenture Trustee:
(a) collect or agree to the receipt or collection of any payment of
Rent (other than Excluded Payments), including 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
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any part thereof or in any amount to be received by it from the use or
disposition of the Airframe and Engines, other than amounts distributed to
it pursuant to Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is
hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and
security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. 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 L] DATED AS OF SEPTEMBER 25, 1997.
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SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION
WITH THE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N512XJ.
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 L], 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 L], 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
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overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest and any other amounts
payable hereunder which are overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
All payments of Principal Amount, interest, Make-Whole Amount, if any,
and other amounts, if any, to be made by the Owner Trustee hereunder and under
the Trust Indenture or the Participation Agreement shall be payable only from
the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Indenture Trustee to make such payments
in accordance with the terms of Section 2.03 and Article III of the Trust
Indenture and each holder hereof, by its acceptance of this Secured Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee or
the Indenture Trustee is personally liable or liable in any manner extending to
any assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Secured Certificate or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Indenture Trustee, subject always to the terms and provisions of the
Trust Indenture, to accelerate the maturity of this Secured Certificate upon
occurrence of an Event of Default under the Trust Indenture in accordance with
Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment
against the Owner Trustee on this Secured Certificate for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and remedies provided
under the Trust Indenture or otherwise realize upon the Trust Indenture Estate.
There shall be maintained a Secured Certificate Register for the
purpose of registering transfers and exchanges of Secured Certificates at the
Corporate Trust Office of the Indenture Trustee or at the office of any
successor in the manner provided in Section 2.07 of the Trust Indenture.
The Principal Amount and interest and other amounts due hereunder
shall be payable in Dollars in immediately available funds at the Corporate
Trust Office of the Indenture Trustee, or as otherwise provided in the Trust
Indenture. Each such payment shall be made on the date such payment is due and
without any presentment or surrender of this Secured Certificate, except that in
the case of any final payment with respect to this Secured Certificate, the
Secured Certificate shall be surrendered promptly thereafter by the Indenture
Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of
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such payment, second to the payment of the Principal Amount of this Secured
Certificate then due, third, to the payment of Make-Whole Amount, if any, and
any other amount due hereunder or under the Trust Indenture, and fourth, the
balance, if any, remaining thereafter, to the payment of Principal Amount of
this Secured Certificate remaining unpaid in the inverse order of their normal
maturity.
This Secured Certificate is one of the Secured Certificates referred
to in the Trust Indenture which have been or are to be issued by the Owner
Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture
Estate is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Secured Certificate is exchangeable for a like aggregate
Principal Amount of Secured Certificates of different authorized denominations,
as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Secured
Certificate, the Owner Trustee and the Indenture Trustee shall treat the person
in whose name this Secured Certificate is registered as the owner hereof for all
purposes whether or not this Secured Certificate be overdue, and neither of the
Owner Trustee nor the Indenture Trustee shall be affected by notice to the
contrary.
This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series A Secured
Certificates](1) Certificate. [Series A and Series B Secured Certificates](2),
and this
- ----------------------
(1) To be inserted in the case of a Series C Secured Certificate
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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.]**
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.
* * *
- -------------------------------------------------------------------------------
(2) To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
** To be inserted in the case of a Series B Secured
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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. 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
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on the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) the Owner Trustee s pro rata share of all amounts owed to the
Liquidity Provider by the Subordination Agent under each Liquidity Facility
other than amounts due as (i) repayments of the principal of advances
thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied
Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity
Facility except to the extent included in Net Interest and Related Charges, and
(c) any and all amounts received by the Owner Trustee which are payable by
Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used
in this Section, "Owner Trustee s pro rata share" means as of any time:
(A) with respect to all amounts other than Net Interest and Related
Charges, a fraction the numerator of which is the aggregate principal
balance then outstanding of the Secured Certificates and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes, plus
(B) with respect to all Net Interest and Related Charges (x) if there
exists a Payment Default under any Secured Certificate a fraction, the
numerator of which is the aggregate principal balance then outstanding of
the Secured Certificates and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero.
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,
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modification or supplement thereto 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
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capacity, for which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or such other
agreements against the Owner Trustee in its individual capacity or against any
institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner Trustee, in its
individual capacity, the Owner Participant, the Indenture Trustee and any
officer, director, trustee, servant, employee, agent or direct or indirect
parent or controlling Person or Persons of any of them shall have any personal
liability for any amounts payable, or other obligation owed, hereunder, under
the Participation Agreement or any of the other Operative Documents or under the
Secured Certificates except as expressly provided herein or in the Participation
Agreement; provided, however, that nothing contained in this Section 2.03(a)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Trust Indenture or such other agreements of rights and remedies
against the Trust Estate. These provisions are not intended as any release or
discharge of the indebtedness represented by the Secured Certificates and the
Trust Indenture, but are intended only as a covenant not to sue the Owner
Participant, the Owner Trustee or the Indenture Trustee in their individual
capacities, except as expressly provided herein or in the Participation
Agreement, for a deficiency with respect to such indebtedness, the indebtedness
represented by this Trust Indenture and the Secured Certificates to remain in
full force and effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that the
Certificate Holders have expressly reserved all their rights and remedies
against the Trust Indenture Estate, including the right, in the event of a
default in the payment of all or part of the Principal Amount of, interest on,
Make-Whole Amount, if any, or any other amount due with respect to any Secured
Certificate within the periods provided for in Section 4.02(b) hereof, or upon
the occurrence and continuation of any other Event of Default under this Trust
Indenture, to foreclose upon this Trust Indenture, and/or to receive the
proceeds from the Trust Indenture Estate and otherwise to enforce any other
right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x)
release the Owner Participant from personal liability, or constitute a covenant
not to sue the Owner Participant, for any breach by it of any of its covenants,
representations or warranties contained in the Participation Agreement or for
any of the payments it has agreed to make pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents or (z)
release the Owner Trustee in its individual capacity from personal liability, or
constitute a covenant not to sue the Owner Trustee in its individual capacity
for any breach by it of any representations, warranties or covenants of the
Owner Trustee made in its individual capacity in the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee, directly or indirectly (other than the recourse liability
of the Owner Trustee
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(in its individual capacity), to make payment on account of any amount payable
as principal, Make-Whole Amount, if any, interest or other amounts on the
Secured Certificates or under this Indenture and (iii) any Certificate Holder or
the Indenture Trustee actually receives any Excess Amount (as hereinafter
defined) which reflects any payment by the Owner Trustee (in its individual
capacity) or the Owner Participant on account of clause (ii) above, then such
Certificate Holder or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the amount
by which such payment exceeds the amount that would have been received by a
Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. Method of Payment (a) The Principal Amount of,
interest on, Make-Whole Amount, if any, and other amounts due under each
Secured Certificate or hereunder will be payable in Dollars by wire transfer
of immediately available funds not later than 12:00 noon, New York City time,
on the due date of payment to the Indenture Trustee at the Corporate Trust
Office for distribution among the Certificate Holders in the manner provided
herein. The Owner Trustee shall not have any responsibility for the
distribution of such payment to any Certificate Holder. Notwithstanding the
foregoing or any provision in any Secured Certificate to the contrary, the
Indenture Trustee will use reasonable efforts to pay or cause to be paid, if
so directed in writing by any Certificate Holder (with a copy to the Owner
Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder s Secured Certificate or Secured Certificates to such holder or a
nominee therefor (including all amounts distributed pursuant to Article III
of this Trust Indenture) by transferring, or causing to be transferred, by
wire transfer of immediately available funds in Dollars, prior to 2:00 p.m.,
New York City time, on the due date of payment, to an account maintained by
such holder with a bank located in the continental United States the amount
to be distributed to such holder, for credit to the account of such holder
maintained at such bank. If the Indenture Trustee shall fail to make any
such payment as provided in the immediately preceding sentence after its
receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate such holders for loss of use of funds at the Debt Rate until such
payment is made and the Indenture Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any Secured
Certificate, except that, in the case of the final payment in respect of any
Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment.
Notwithstanding any other provision of this Trust Indenture to
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the contrary, the Indenture Trustee shall not be required to make, or cause
to be made, wire transfers as aforesaid prior to the first Business Day on
which it is practicable for the Indenture Trustee to do so in view of the
time of day when the funds to be so transferred were received by it if such
funds were received after 12:00 noon, New York City time, at the place of
payment. Prior to the due presentment for registration of transfer of any
Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem
and treat the Person in whose name any Secured Certificate is registered on
the Secured Certificate Register as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts
payable with respect to such Secured Certificate and for all other purposes,
and none of the Owner Trustee or the Indenture Trustee shall be affected by
any notice to the contrary. So long as any signatory to the Participation
Agreement or nominee thereof shall be a registered Certificate Holder, all
payments to it shall be made to the account of such Certificate Holder
specified in Schedule I thereto and otherwise in the manner provided in or
pursuant to the Participation Agreement 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
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Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the calendar year in which the payment is made (but
prior to the making of such payment), and has not notified the Indenture Trustee
of the withdrawal or inaccuracy of such certificate or form prior to the date of
such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Secured Certificates held by such holder, no
amount shall be withheld from payments in respect of United States federal
income tax. If any Certificate Holder has notified the Indenture Trustee that
any of the foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from United States
withholding tax or if the Code or the regulations thereunder or the
administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
SECTION 2.05. Application of Payments In the case of each Secured
Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and
interest or other amounts due thereon shall be applied:
First: to the payment of accrued interest on such Secured Certificate
(as well as any interest on any overdue Principal Amount, any overdue
Make-Whole Amount, if any, and to the extent permitted by Law, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment;
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.
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SECTION 2.06. Termination of Interest in Trust Indenture Estate
A Certificate Holder shall not, as such, have any further interest in, or
other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates The Indenture Trustee shall keep a register (the "Secured
Certificate Register") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and
until registration hereunder shall have occurred. The Secured Certificate
Register shall be kept at the Corporate Trust Office of the Indenture
Trustee. The Indenture Trustee is hereby appointed "Secured Certificate
Registrar" for the purpose of registering Secured Certificates and transfers
of Secured Certificates as herein provided. A holder of any Secured
Certificate intending to exchange such Secured Certificate shall surrender
such Secured Certificate to the Indenture Trustee at the Corporate Trust
Office, together with a written request from the registered holder thereof
for the issuance of a new Secured Certificate, specifying, in the case of a
surrender for transfer, the name and address of the new holder or holders.
Upon surrender for registration of transfer of any Secured Certificate, the
Owner Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Secured Certificates of a like aggregate Principal Amount and of the same
series. At the option of the Certificate Holder, Secured Certificates may be
exchanged for other Secured Certificates of any authorized denominations of a
like aggregate Principal Amount, upon surrender of the Secured Certificates
to be exchanged to the Indenture Trustee at the Corporate Trust Office.
Whenever any Secured Certificates are so surrendered for exchange, the Owner
Trustee shall execute, and the Indenture Trustee shall authenticate and
deliver, the Secured Certificates which the Certificate Holder making the
exchange is entitled to receive. All Secured Certificates issued upon any
registration of transfer or exchange of Secured Certificates (whether under
this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust
Indenture) shall be the valid obligations of the Owner Trustee evidencing the
same respective obligations, and entitled to the same security and benefits
under this Trust Indenture, as the Secured Certificates surrendered upon such
registration of transfer or exchange. Every Secured Certificate presented or
surrendered for registration of transfer, shall (if so required by the
Indenture Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by the Certificate Holder or such holder s attorney duly authorized
in writing, and the Indenture Trustee shall require evidence satisfactory to
it as to the compliance of any such transfer with the Securities Act, and the
securities Laws of any applicable state. The Indenture Trustee shall make a
notation on each new Secured Certificate of the amount of all payments of
Principal Amount previously made on the old Secured Certificate or Secured
Certificates with respect to which such new Secured Certificate is issued and
the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on
such new Secured Certificate to the date on which interest shall
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have been paid on such old Secured Certificate, and all payments of the
Principal Amount marked on such new Secured Certificate, as provided above,
shall be deemed to have been made thereon. The Owner Trustee shall not be
required to exchange any surrendered Secured Certificates as provided above
during the ten-day period preceding the due date of any payment on such Secured
Certificate. The Owner Trustee shall in all cases deem the Person in whose name
any Secured Certificate shall have been issued and registered as the absolute
owner and holder of such Secured Certificate for the purpose of receiving
payment of all amounts payable by the Owner Trustee with respect to such Secured
Certificate and for all purposes until a notice stating otherwise is received
from the Indenture Trustee and such change is reflected on the Secured
Certificate Register. The Indenture Trustee will promptly notify the Owner
Trustee, the Owner Participant and Lessee of each registration of a transfer of
a Secured Certificate. Any such transferee of a Secured Certificate, by its
acceptance of a Secured Certificate, agrees to the provisions of the
Participation Agreement applicable to Certificate Holders, including Sections 6,
8(c), 8(e), 8(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
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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.
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.
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(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.
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
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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 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
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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.
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
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connection with the issuance of such new Secured Certificate shall be borne by
the Owner Participant.
SECTION 2.15. Subordinations. (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. 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 L] 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
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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
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.
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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 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
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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 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
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Second: the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner Trustee; provided, however, that if an
Event of Default shall have occurred and be continuing, then such balance
shall not be distributed as provided in this clause "Second" but shall be
held by the Indenture Trustee as part of the Trust Indenture Estate and
invested in accordance with Section 5.09 hereof until whichever of the
following shall first occur: (i) all Events of Default shall have been
cured or waived, in which event such balance shall be distributed as
provided in this clause "Second" without reference to this proviso, (ii)
Section 3.03 hereof shall be applicable, in which event such balance shall
be distributed in accordance with the provisions of such Section 3.03, or
(iii) the 120th day after the receipt of such payment in which case such
payment shall be distributed as provided in this clause "Second" without
reference to this proviso.
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing. Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
First: (a) to reimburse the Indenture Trustee and the Certificate
Holders for any reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to reimbursement, or indemnity
by Lessee, under the Operative Documents and then (b) to pay any other
amounts then due to the Indenture Trustee and the Certificate Holders under
this Trust Indenture, the Participation Agreement or the Secured
Certificates;
Second: (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and
payable in respect of the Series A Secured Certificates;
(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
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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 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
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to be distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that the
aggregate unpaid Principal Amount of all Series A Secured Certificates held
by each holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series A Secured Certificates held by all
such holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series B Secured Certificates,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series B Secured
Certificates to the date of distribution, shall be distributed to the
Certificate Holders of Series B, and in case the aggregate amount so to
be distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series B Secured
Certificates held by each holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series B Secured Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Secured Certificates,
and the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series C Secured
Certificates to the date of distribution, shall be distributed to the
Certificate Holders of Series C, and in case the aggregate amount so to
be distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series C Secured
Certificates held by each holder plus the accrued but unpaid interest
and other amounts due hereunder or thereunder to the date of
distribution, bears to the aggregate unpaid Principal Amount of all
Series C Secured Certificates held by all such holders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; and
Fourth: the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. Certain Payments. (a) Any payments received by the
Indenture Trustee for which no provision as to the application thereof is
made in this Trust Indenture and for which such provision is made in the
Lease, the Participation Agreement or any other Operative Document shall be
applied forthwith to the purpose for which such
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payment was made in accordance with the terms of the Lease, the Participation
Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted].
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. Other Payments. Any payments received by the
Indenture Trustee for which no provision as to the application thereof is
made in the Lease, the Participation Agreement, elsewhere in this Trust
Indenture or in any other Operative Document shall be distributed by the
Indenture Trustee to the extent received or realized at any time (i) prior to
the payment in full of all Secured Obligations due the Certificate Holders,
in the order of priority specified in Section 3.01 hereof subject to the
proviso thereto, and (ii) after payment in full of all Secured Obligations
due the Certificate Holders, in the following order of priority:
First: to the extent payments or amounts described in clause
"First" of Section 3.03 hereof are otherwise obligations of Lessee under
the Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of Section
3.03 hereof, and
Second: in the manner provided in clause "Fourth" of Section
3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04
hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or
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release of the Aircraft after the termination of the Lease with respect
thereto), to the extent received or realized at any time after payment in full
of all Secured Obligations due the Certificate Holders, shall be distributed by
the Indenture Trustee in the order of priority specified in clause (ii) of the
immediately preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee. Any amounts distributed
hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the
Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire
transfer of funds of the type received by the Indenture Trustee at such office
and to such account or accounts of such entity or entities as shall be
designated by notice from the Owner Trustee to the Indenture Trustee from time
to time. The Owner Trustee hereby notifies the Indenture Trustee that unless
and until the Indenture Trustee receives notice to the contrary from the Owner
Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause
"Second" of Section 3.01 hereof shall be distributed by wire transfer of funds
of the type received by the Indenture Trustee to the Owner Participant s account
(within the time limits contemplated by Section 2.04(a)) specified in Schedule I
to the Participation Agreement.
SECTION 3.07. Application of Payments Under Guarantee. All payments
received by the Indenture Trustee pursuant to the Guarantee shall be distributed
forthwith by the Indenture Trustee in the same order of priority, and in the
same manner, as it would have distributed the payment in respect of which such
payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
--------------------------------------
SECTION 4.01. Covenants of Owner Trustee. The Owner Trustee hereby
covenants and agrees (the covenants and agreements only in clause (b) below
being made by the Owner Trustee in its individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts due
under the Secured Certificates and hereunder in accordance with the terms
of the Secured Certificates and this Trust Indenture and all amounts, if
any, payable by it to the Certificate Holders under the Participation
Agreement;
(b) the Owner Trustee in its individual capacity covenants and agrees
that it shall not, directly or indirectly, cause or permit to exist a
Lessor Lien attributable to it in its individual capacity with respect to
the Aircraft or any other portion of the Trust Estate; that it will
promptly, at its own expense, take such action as may be necessary to duly
discharge such Lessor Lien attributable to it in its individual capacity;
and that it will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from such Lessor
Liens attributable to it in its individual capacity;
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(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will
give prompt written notice of such Event of Default, Default or Event of
Loss to the Indenture Trustee, each Certificate Holder, Lessee and the
Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee, promptly
upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to the
Owner Trustee under the Lease, including, without limitation, a copy of any
Termination Notice and a copy of each report or notice received pursuant to
Section 9(a) and 11(c) of the Lease to the extent that the same shall not
have been furnished to the Indenture Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent of
the Indenture Trustee (acting pursuant to instructions given in accordance
with Section 9.01 hereof), the Owner Trustee will not contract for, create,
incur, assume or suffer to exist any Debt, and will not guarantee (directly
or indirectly or by an instrument having the effect of assuring another s
payment or performance on any obligation or capability of so doing, or
otherwise), endorse or otherwise be or become contingently liable, directly
or indirectly, in connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions contemplated
hereby and by the Lease, the Participation Agreement, the Trust Agreement
and the other Operative Documents.
SECTION 4.02. Event of Default. "Event of Default" means any of the
following events (whatever the reason for such Event of Default and whether such
event shall be voluntary or involuntary or come about or be effected by
operation of Law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or
the Owner Participant when due any amount that is included in the
definition of Excluded Payments shall not constitute an Event of Default
unless notice is given by the Owner Trustee to the Indenture Trustee that
such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other
amount due and payable under any Secured Certificate or hereunder (other
than any such failure arising by virtue of a tax withheld pursuant to
Section 2.04(b) hereof or as a result of a Lease Event of Default or a
Lease Default) and such failure shall have continued unremedied for ten
Business Days in the case of any payment of Principal Amount or interest or
Make-Whole Amount, if any, thereon and, in the case of any other amount,
for ten Business Days after the Owner Trustee or the Owner Participant
receives written demand from the Indenture Trustee or any Certificate
Holder; or
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(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual
or trust capacity pursuant to Section 8(h) of the Participation Agreement,
or by the Owner Participant pursuant to Section 8(h) of the Participation
Agreement shall remain undischarged for a period of 30 days after the Owner
Trustee and the Owner Participant shall have received written notice from
the Indenture Trustee or any Certificate Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or
the Owner Trustee herein, in the Participation Agreement or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Indenture Trustee or any Certificate Holder in connection with the
transactions contemplated by the Operative Documents shall prove to have
been false or incorrect when made in any material respect and continues to
be material; and if such misrepresentation is capable of being corrected
and if such correction is being sought diligently, such misrepresentation
shall not have been corrected within 60 days (or, without affecting Section
4.02(f) hereof, in the case of the representations made in Section 8(c) of
the Participation Agreement as to the citizenship of the Owner Trustee in
its individual capacity or of the Owner Participant, respectively, as soon
as is reasonably practicable but in any event within 60 days) following
notice thereof from the Indenture Trustee or any Certificate Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by
the Owner Trustee or Owner Participant to observe or perform any other
covenant or obligation of the Owner Trustee or Owner Participant, as the
case may be, for the benefit of the Indenture Trustee or the Certificate
Holders contained in the Participation Agreement, Section 4.01(a) of the
Trust Agreement, the Secured Certificates or this Trust Indenture which is
not remedied within a period of 60 days after notice thereof has been given
to the Owner Trustee and the Owner Participant; or
(f) if at any time when the Aircraft is registered under the laws of
the United States, the Owner Participant shall not be a Citizen of the
United States, and as the result thereof the registration of the Aircraft
under the Federal Aviation Act, and regulations then applicable thereunder,
shall cease to be effective; provided that no Event of Default shall be
deemed to have occurred under this paragraph (f) unless such circumstances
continue unremedied for more than 60 days after the Owner Participant has
Actual Knowledge of the state of facts that resulted in such
ineffectiveness and of such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or
other proceeding in respect of the Owner Participant, the Owner Trustee or
the Trust Estate under the federal bankruptcy Laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar Law in the United States or seeking the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner Participant, the Owner
Trustee or the Trust Estate or for all or substantially all of its
property, or seeking the winding-up or
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liquidation of its affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of 90 consecutive days; or
(ii) the commencement by the Owner Participant, the Owner Trustee or the
Trust Estate of a voluntary case or proceeding under the federal bankruptcy
Laws, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar Law in the United
States, or the consent by the Owner Participant, the Owner Trustee or the
Trust Estate to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of the Owner Participant, the Owner Trustee or the Trust Estate
or for all or substantially all of its property, or the making by the Owner
Participant, the Owner Trustee or the Trust Estate of any assignment for
the benefit of creditors or the Owner Participant or the Owner Trustee
shall take any action to authorize any of the foregoing; provided, however,
that an event referred to in this Section 4.02(g) with respect to the Owner
Participant shall not constitute an Event of Default if within 30 days of
the commencement of the case or proceeding a final non-appealable order,
judgment or decree shall be entered in such case or proceeding by a court
or a trustee, custodian, receiver or liquidator, to the effect that, no
part of the Trust Estate (except for the Owner Participant s beneficial
interest therein) and no right, title or interest under the Trust Indenture
Estate shall be included in, or be subject to, any declaration or
adjudication of, or proceedings with respect to, the bankruptcy, insolvency
or liquidation of the Owner Participant referred to in this Section
4.02(g).
SECTION 4.03. Certain Rights. The Indenture Trustee shall give the
Certificate Holders, the Owner Trustee and the Owner Participant prompt written
notice of any Event of Default of which the Indenture Trustee has Actual
Knowledge and, if any such Event of Default results from a Lease Event of
Default, shall give the Certificate Holders, the Owner Trustee and the Owner
Participant not less than ten Business Days prior written notice of the date
(the "Enforcement Date") on or after which the Indenture Trustee may commence
and consummate the exercise of any remedy or remedies described in Section 4.04,
4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the
provisions of Section 15 of the Lease. If an Event of Default shall have
occurred and be continuing, the Owner Trustee shall have the following rights
hereunder, any of which may be exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of
the nonpayment by Lessee of 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
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of payments of Basic Rent, such payment by the Owner Trustee shall, solely for
purposes of this Trust Indenture be deemed to cure any Event of Default which
would otherwise have arisen on account of the nonpayment by Lessee of such
installment of Basic Rent (but not any other Default or Event of Default which
shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the
Owner Participant may, but shall not be obligated to, cure such Event of Default
prior to the Enforcement Date as is necessary to accomplish the observance or
performance of the defaulted covenant, condition or agreement.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Indenture Trustee in and to
the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner
Participant pursuant to the first or second preceding paragraphs of this Section
4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be
subrogated to the rights of the Indenture Trustee and the Certificate Holders in
respect of the Basic Rent which was overdue at the time of such payment and
interest payable by Lessee on account of its being overdue and any Supplemental
Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant
to the immediately preceding paragraph (but in either case shall have no rights
as a secured party hereunder), and thereafter, the Owner Trustee or the Owner
Participant, as the case may be, shall be entitled to receive such overdue Basic
Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt
thereof by the Indenture Trustee (and shall be entitled to bring an action
against Lessee to enforce such payment); provided, however, that (i) if the
Principal Amount and interest on the Secured Certificates shall have become due
and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until
the Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to all Secured Certificates shall have been paid in
full, be subordinate to the rights of the Indenture Trustee and the Certificate
Holders in respect of such payment of overdue Basic Rent, Supplemental Rent and
such interest and (ii) the Owner Trustee shall not be entitled to seek to
recover any such payment (or any payment in lieu thereof) except pursuant to the
foregoing right of subrogation by demand or suit for damages.
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
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remedies pursuant to Section 15 of the Lease and may take possession of all or
any part of the properties covered or intended to be covered by the Lien created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and Lessee and all persons claiming under any of them wholly or partly
therefrom, provided that the Indenture Trustee shall give the Owner Trustee and
the Owner Participant twenty days prior written notice of its intention to sell
the Aircraft. Without limiting any of the foregoing, it is understood and agreed
that the Indenture Trustee may exercise any right of sale of the Aircraft
available to it, even though it shall not have taken possession of the Aircraft
and shall not have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder as a
result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "Continuous Stay Period"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee s assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee s own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
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(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid interest thereon (without Make-Whole Amount) and other amounts due
thereunder, shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived.
This Section 4.04(b), however, is subject to the condition that, if at
any time after the Principal Amount of the Secured Certificates shall have
become so due and payable, and before any judgment or decree for the payment of
the money so due, or any thereof, shall be entered, all overdue payments of
interest upon the Secured Certificates and all other amounts payable under the
Secured Certificates (except the Principal Amount of the Secured Certificates
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Certificate Holders may (but shall not be
obligated to), by written instrument filed with the Indenture Trustee, rescind
and annul the Indenture Trustee s declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.
(c) Any Certificate Holder shall be entitled, at any sale pursuant to
Section 15 of the Lease or this Section 4.04, to credit against any purchase
price bid at such sale by such holder all or any part of the unpaid obligations
owing to such Certificate Holder and secured by the Lien of this Trust Indenture
(but only to the extent that such purchase price would have been paid to such
Certificate Holder pursuant to Article III hereof if such purchase price were
paid in cash and the foregoing provisions of this subsection (c) were not given
effect).
(d) In the event of any sale of the Trust Indenture Estate, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Trust Indenture, the
unpaid Principal Amount of all Secured Certificates then outstanding, together
with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(e) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Mortgaged Property or take any
action with respect to any Mortgaged Property so acquired by it if such
acquisition or action would cause any Trust to fail to qualify as a "grantor
trust" for federal income tax purposes.
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SECTION 4.05. Return of Aircraft, Etc. (a) If an Event of Default
shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof,
at the request of the Indenture Trustee, the Owner Trustee shall promptly
execute and deliver to the Indenture Trustee such instruments of title and other
documents as the Indenture Trustee may deem necessary or advisable to enable the
Indenture Trustee or an agent or representative designated by the Indenture
Trustee, at such time or times and place or places as the Indenture Trustee may
specify, to obtain possession of all or any part of the Mortgaged Property
included in the Trust Indenture Estate to which the Indenture Trustee shall at
the time be entitled hereunder. If the Owner Trustee shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on
the Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be
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required or authorized to make under any provision of this Trust Indenture, as
well as just and reasonable compensation for the services of the Indenture
Trustee, and of all persons properly engaged and employed by the Indenture
Trustee with respect hereto.
SECTION 4.06. Remedies Cumulative. Each and every right, power and
remedy given to the Indenture Trustee specifically or otherwise in this Trust
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in the
pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the Indenture
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Trust Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall
continue as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Defaults. Upon written instruction from
a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive
any past Default hereunder and its consequences and upon any such waiver such
Default shall cease to exist and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose of this Trust Indenture, but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon; provided that in the absence of written instructions from
all the Certificate Holders, the Indenture Trustee shall not waive any Default
(i) in the payment of the Principal Amount, Make-Whole Amount, if any, and
interest and other amounts due under any Secured Certificate then outstanding,
or (ii) in respect of a covenant or provision hereof which, under Article IX
hereof, cannot be modified or amended without the consent of each Certificate
Holder.
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
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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
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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
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Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture
Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall
not be deemed to have knowledge of a Default or an Event of Default (except, in
the case of the Indenture Trustee, the failure of Lessee to pay any installment
of Basic Rent within one Business Day after the same shall become due, if any
portion of such installment was then required to be paid to the Indenture
Trustee, which failure shall constitute knowledge of a Default) unless notified
in writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Certificate Holders, the Indenture Trustee
shall, subject to the terms of this Section 5.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as shall be
specified in such instructions; (ii) give such notice or direction or exercise
such right, remedy or power under the Lease, the Participation Agreement, the
Purchase Agreement, or any other part of the Trust Indenture Estate as shall be
specified in such instructions; and (iii) after the occurrence and during the
continuance of an Event of Default, approve as satisfactory to the Indenture
Trustee all matters required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written instructions of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall not
approve any such matter as satisfactory to the Indenture Trustee; provided that
anything contained in this Trust Indenture, the Lease or the other Operative
Documents to the contrary notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or to give or receive any notice, consent, waiver or approval
in respect of any Excluded Payment and seek legal or equitable remedies to
require Lessee or the Guarantor to maintain the insurance coverage referred
to in Section 11 of the Lease; provided that the rights referred to in this
clause (1) shall not be deemed to include the exercise of any remedies
provided for in Section 15 of the Lease other than the right to proceed by
appropriate court action, either at law or in equity, to enforce payment by
Lessee or the Guarantor of such amounts included in Excluded Payments or
performance by Lessee or the Guarantor of such insurance covenant, or to
recover damages for the breach thereof or for specific performance of any
covenant of Lessee or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing and except as provided in clause (4) below,
the Indenture Trustee shall not, without the consent of the Owner Trustee,
which consent shall not be withheld if no right or interest of the Owner
Trustee or the Owner Participant shall be diminished or impaired thereby,
(i) enter into, execute and deliver amendments, modifications, waivers or
consents in respect of any of the provisions of the Lease, or (ii)
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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 the Lease; provided that the foregoing
shall not limit (A) any rights separately granted to the Indenture Trustee
under the Operative Documents or (B) the right of the Indenture Trustee to
receive any funds to be delivered to the "Lessor" under the Lease (except
with respect to Excluded Payments) and under the Purchase Agreement.
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Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file or
cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(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 of this Trust Indenture or any other Operative Document be deemed to
impose a duty on the Indenture Trustee to take any action, if the Indenture
Trustee shall have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
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SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions. The Indenture Trustee shall not have any duty or obligation to
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
this Trust Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions. The Owner Trustee and the Indenture Trustee agree that they will
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Aircraft or any other part of the Trust Indenture Estate except
(i) as required by the terms of the Lease or (ii) in accordance with the powers
granted to, or the authority conferred upon, the Owner Trustee and the Indenture
Trustee pursuant to this Trust Indenture and in accordance with the express
terms hereof.
SECTION 5.06. Replacement Airframes and Replacement Engines. At any
time an Airframe or Engine is to be replaced under or pursuant to Section 10 of
the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of
Default is continuing, the Owner Trustee shall direct the Indenture Trustee to
execute and deliver to the Owner Trustee an appropriate instrument releasing
such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture
and the Indenture Trustee shall execute and deliver such instrument as
aforesaid, but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease and upon receipt by or deposit with the Indenture
Trustee of the following:
(1) A written request from the Owner Trustee, requesting such release
specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
(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;
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(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
(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
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(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 Replacement
Airframe or Replacement Engine, and a Trust Agreement and Indenture
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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 and effect as if
such Replacement Airframe or Replacement Engine or Engines were the
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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
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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.
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
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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 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
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powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee as herein and in the Trust Agreement provided, and
not in its individual capacity, except as otherwise expressly provided herein,
in the Trust Agreement and in the Participation Agreement.
SECTION 6.07. Compensation. The Indenture Trustee shall be entitled
to reasonable compensation, including expenses and disbursements (including the
reasonable fees and expenses of counsel), for all services rendered hereunder
and shall, on and subsequent to an Event of Default hereunder, have a priority
claim on the Trust Indenture Estate for the payment of such compensation, to the
extent that such compensation shall not be paid by Lessee, and shall have the
right, on and subsequent to an Event of Default hereunder, to use or apply any
monies held by it hereunder in the Trust Indenture Estate toward such payments.
The Indenture Trustee agrees that it shall have no right against the Loan
Participants, the Certificate Holders, the Owner Trustee or the Owner
Participant for any fee as compensation for its services as trustee under this
Trust Indenture.
SECTION 6.08. Instructions from Certificate Holders. In the
administration of the trusts created hereunder, the Indenture Trustee shall have
the right to seek instructions from a Majority in Interest of Certificate
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Indenture Trustee s duties or obligations
hereunder be unclear, and the Indenture Trustee shall incur no liability in
refraining from acting until it receives such instructions. The Indenture
Trustee shall be fully protected for acting in accordance with any instructions
received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not in
its individual capacity, but solely as Owner Trustee, hereby agrees, except as
otherwise provided in Section 2.03 hereof, to assume liability for, and does
hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its
individual and trust capacities), and its successors, assigns, agents and
servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding 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
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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 not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in
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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
56
<PAGE>
Trustee and such additional or separate trustee jointly except to the extent
that applicable Law of any jurisdiction in which any particular act is to be
performed renders the Indenture Trustee incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations (including
the holding of title to all or part of the Trust Indenture Estate in any such
jurisdiction) shall be exercised and performed by such additional or separate
trustee. No additional or separate trustee shall take any discretionary action
except on the instructions of the Indenture Trustee or a Majority in Interest of
Certificate Holders. No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, except that the Indenture
Trustee shall be liable for the consequences of its lack of reasonable care in
selecting, and Indenture Trustee s own actions in acting with, any additional or
separate trustee. Each additional or separate trustee appointed pursuant to
this Section 8.03 shall be subject to, and shall have the benefit of Articles IV
through VIII and Article X hereof insofar as they apply to the Indenture
Trustee. The powers of any additional or separate trustee appointed pursuant to
this Section 8.03 shall not in any case exceed those of the Indenture Trustee
hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations. (a) Except as
provided in Section 5.02 hereof, and except with respect to Excluded Payments,
the Owner Trustee agrees it shall not enter into any amendment of or supplement
to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Guarantee, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, unless such supplement, amendment, waiver, modification or
consent is consented to in writing by the Indenture Trustee and a Majority in
Interest of Certificate Holders. Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of any of the Certificate
Holders (or the Indenture Trustee, 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
57
<PAGE>
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 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
58
<PAGE>
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 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.
59
<PAGE>
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement. No written request or consent of the
Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to
Section 9.01 hereof shall be required to enable the Owner Trustee to enter into
any Lease Supplement specifically required by the terms of the Lease or to
execute and deliver a Trust Agreement and Indenture Supplement specifically
required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders. No holder of a Secured Certificate shall have legal title
to any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding. Any
sale or other conveyance of the Trust Indenture Estate, or any part thereof
(including any part thereof or interest therein), by the Indenture Trustee made
pursuant to the terms of this Trust Indenture shall bind the Certificate Holders
and shall be effective to transfer or convey all right, title and interest of
the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders
in and to such Trust Indenture Estate or part thereof. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity
60
<PAGE>
of such sale or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Indenture Trustee.
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant, Lessee and Certificate Holders. Nothing
in this Trust Indenture, whether express or implied, shall be construed to give
any person other than the Owner Trustee, the Indenture Trustee, the Owner
Participant, Lessee and the Certificate Holders, any legal or equitable right,
remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this Trust
Indenture to be made, given, furnished or filed shall be in writing, personally
delivered or mailed by certified mail, postage prepaid, or by facsimile or
confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office
at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee,
addressed to it at its office at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617)
664-5371), (iii) if to any Participant, Lessee or any Certificate Holder,
addressed to such party at such address as such party shall have furnished by
notice to the Owner Trustee and the Indenture Trustee, or, until an address is
so furnished, addressed to the address of such party (if any) set forth on the
signature pages to the Refunding Agreement or in the Secured Certificate
Register. Whenever any notice in writing is required to be given by the Owner
Trustee, any Participant or the Indenture Trustee or any Certificate Holder or
Lessee to any of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice is mailed
by certified mail, postage prepaid, three Business Days after being mailed,
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. Severability. Any provision of this Trust Indenture
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers. No term
or provision of this Trust Indenture or the Secured Certificates may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the Owner Trustee and the Indenture Trustee, in compliance with
Section 9.01 hereof. Any waiver of the terms hereof or of any Secured
Certificate shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto
61
<PAGE>
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.
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
62
<PAGE>
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.
63
<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
64
<PAGE>
EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 L]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 L], 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 L] 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 L], 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:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ ----------------
<S> <C> <C> <C>
</TABLE>
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- --------------
<S> <C> <C>
</TABLE>
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee s right, title and interest in and
to all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts).
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
<TABLE>
<CAPTION>
Principal Amount Interest Rate
----------------- --------------
<S> <C> <C>
Series A................ $10,568,876.29 7.068%
Series B................ $ 3,393,846.48 7.248%
Series C................ $ 1,990,500.02 7.039%
</TABLE>
Schedule I-1
<PAGE>
<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 14.308298144%
July 2, 2014 0.000000000%
January 2, 2015 15.356657657%
July 2, 2015 0.000000000%
January 2, 2016 16.481829782%
</TABLE>
<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>
<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 5, 2005 45.104043757%
July 2, 2005 0.000000000%
January 2, 2006 15.074940818%
July 2, 2006 0.000000000%
January 2, 2007 0.473433303%
</TABLE>
<PAGE>
Exhibit 4(a)(3)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
FIRST AMENDMENT
TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 L]
Dated as of
May 1, 1998
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 N512XJ
LEASED BY NORTHWEST AIRLINES, INC.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Amendment of Second "Whereas" Clause of the Original Trust
Indenture.....................................................1
SECTION 2. Amendment of Third "Whereas" Clause of the Original Trust
Indenture.....................................................2
SECTION 3. Amendment of the Granting Clause of the Original Trust
Indenture.....................................................2
SECTION 4. Amendment of Section 1.01 of the Original Trust Indenture.....2
SECTION 5. Amendment of Section 2.07 of the Original Trust Indenture.....2
SECTION 6. Amendment of Sections 2.10(c), 2.10(d), 2.10(e) and 2.10(f)
of the Original Trust Indenture...............................2
SECTION 7. Amendment of Sections 2.12(a) of the Original Trust
Indenture.....................................................2
SECTION 8. Amendment of Section 2.13 of the Original Trust Indenture.....2
SECTION 9. Amendment of Sections 2.16, 2.17, 2.18, 2.19 and 2.20 of the
Original Trust Indenture......................................2
SECTION 10. Amendment of Section 3.01 of the Original Trust Indenture.....2
SECTION 11. Amendment of Section 3.02 of the Original Trust Indenture.....2
SECTION 12. Amendment of Section 9.01(a) of the Original Trust
Indenture.....................................................3
SECTION 13. Amendment of Section 9.01(c) of the Original Trust
Indenture.....................................................3
SECTION 14. Amendment of Schedule I to the Original Trust Indenture
and the Secured Certificates Issued Thereunder................3
SECTION 15. Amendment of Exhibit A to Original Trust Indenture............3
SECTION 16. Ratification..................................................3
SECTION 17. Miscellaneous.................................................3
ANNEX A Definitions
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
</TABLE>
i
<PAGE>
FIRST AMENDMENT TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 L]
This FIRST AMENDMENT TO TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 L],
dated as of May 1, 1998 (the or this "Amendment"), between FIRST SECURITY BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as expressly stated in the Original Trust Indenture (as defined
below), but solely as Owner Trustee under the Trust Agreement (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 in the Original Trust Indenture, but solely
as Indenture Trustee hereunder (together with its successors hereunder, the
"Indenture Trustee"), hereby amends the Trust Indenture and Security Agreement
[NW 1997 L], dated as of September 25, 1997 (said Trust Indenture and Security
Agreement, prior to being amended hereby, the "Original Trust Indenture", and as
amended hereby, the "Trust Indenture"), between the Owner Trustee and the
Indenture Trustee.
Unless the context otherwise requires, capitalized terms utilized herein
shall have the respective meanings set forth in Annex A hereto for all purposes
of this Amendment.
W I T N E S S E T H:
WHEREAS, as contemplated by the Original Participation Agreement, the
Initial Owner Participant transferred the Beneficial Interest to the Owner
Participant pursuant to the Assignment and Assumption Agreement;
WHEREAS, concurrently with the execution and delivery of this Amendment,
the Owner Trustee, the Indenture Trustee, and certain other parties executed and
delivered the Participation Agreement;
WHEREAS, concurrently with the execution and delivery of this Amendment,
pursuant to Section 2.18 of the Original Trust Indenture the Indenture Trustee
released from the Collateral Account to the Owner Trustee an amount of cash
equal to the Debt Portion;
WHEREAS, pursuant to Section 1(c) of the Participation Agreement and
Section 2.20 of the Original Trust Indenture, the Owner Trustee hereby elects to
amend Schedule I to the Original Trust Indenture and Schedule I to each Secured
Certificate;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree that the Original Trust Indenture is amended as
follows:
SECTION 1. Amendment of Second "Whereas" Clause of the Original Trust
Indenture. The second "Whereas" Clause of the Original Trust Indenture is
hereby amended by deleting "Initial" each time it appears therein.
<PAGE>
SECTION 2. Amendment of Third "Whereas" Clause of the Original Trust
Indenture. The third "Whereas" Clause of the Original Trust Indenture is hereby
amended by deleting from clause (ii) thereof "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,".
SECTION 3. Amendment of the Granting Clause of the Original Trust
Indenture. The Granting Clause of the Original Trust Indenture is hereby
amended by deleting clause (5) thereof in its entirety and inserting in lieu
thereof "[Intentionally Omitted]".
SECTION 4. Amendment of Section 1.01 of the Original Trust Indenture.
Section 1.01 of the Original Trust Indenture is hereby amended by deleting the
word "hereto" therein and inserting in lieu thereof "to the First Amendment to
Trust Indenture and Security Agreement [NW 1997 L], dated as of May 1, 1998,
between the Owner Trustee and the Indenture Trustee".
SECTION 5. Amendment of Section 2.07 of the Original Trust Indenture.
Section 2.07 of the Original Trust Indenture is hereby amended by inserting
"8(aa)," between "8(t)," and "10," in the penultimate sentence thereof.
SECTION 6. Amendment of Sections 2.10(c), 2.10(d), 2.10(e) and 2.10(f) of
the Original Trust Indenture. Sections 2.10(c), 2.10(d), 2.10(e) and 2.10(f) of
the Original Trust Indenture are hereby deleted in their entirety.
SECTION 7. Amendment of Sections 2.12(a) of the Original Trust Indenture.
Sections 2.12(a) of the Original Trust Indenture is hereby amended by deleting
the third, fourth, fifth and sixth sentences thereof.
SECTION 8. Amendment of Section 2.13 of the Original Trust Indenture.
Section 2.13 of the Original Trust Indenture is hereby amended by deleting
"Section 1(e)(i) or" from the first sentence thereof.
SECTION 9. Amendment of Sections 2.16, 2.17, 2.18, 2.19 and 2.20 of the
Original Trust Indenture. Sections 2.16, 2.17, 2.18, 2.19 and 2.20 of the
Original Trust Indenture are hereby deleted in their entirety.
SECTION 10. Amendment of Section 3.01 of the Original Trust Indenture.
Section 3.01 of the Original Trust Indenture is hereby amended by deleting "or
18(c)" from the first paragraph thereof.
SECTION 11. Amendment of Section 3.02 of the Original Trust Indenture.
Section 3.02 of the Original Trust Indenture is hereby amended by deleting
"Lessee Operative Documents" from the proviso thereof and inserting in lieu
thereof "Operative Documents".
<PAGE>
SECTION 12. Amendment of Section 9.01(a) of the Original Trust Indenture.
The second sentence of Section 9.01(a) of the Original Trust Indenture is hereby
amended by (a) deleting "(or the Indenture Trustee, in the case of (i) or (ii)
below") therefrom and inserting in lieu thereof "or the Indenture Trustee,", (b)
inserting "and" before clause (ii) thereof, and (c) deleting clause (iii) and
the "and" which immediately precedes such clause.
SECTION 13. Amendment of Section 9.01(c) of the Original Trust Indenture.
Section 9.01(c) of the Original Trust Indenture is hereby amended by (a)
inserting "and" immediately prior to clause (ii) thereof and (b) deleting clause
(viii) thereof and the "and" which immediately precedes such clause.
SECTION 14. Amendment of Schedule I to the Original Trust Indenture and
the Secured Certificates Issued Thereunder. Schedule I to the Original Trust
Indenture is hereby amended by deleting such Schedule in its entirety and
replacing it with Schedule I attached hereto. Schedule I to each Secured
Certificate is hereby amended accordingly, and the Indenture Trustee shall
deliver an amended Schedule I to the registered holders of the Secured
Certificates.
SECTION 15. Amendment of Exhibit A to Original Trust Indenture. Exhibit A
to the Original Trust Indenture is hereby amended by deleting such Exhibit A in
its entirety and replacing it with Exhibit A attached hereto.
SECTION 16. Ratification. Except as hereby modified, the Original Trust
Indenture shall continue in full force and effect as originally executed. From
and after the date of this Amendment, each and every reference in the Trust
Indenture, as amended hereby, to "this Agreement", "herein", "hereof" or similar
words or phrases referring to the Trust Indenture or any word or phrase
referring to a section or provision of the Trust Indenture is deemed for all
purposes to be a reference to the Original Trust Indenture or such section or
provision as amended pursuant to this Amendment.
SECTION 17. Miscellaneous. THIS AMENDMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. This Amendment 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
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
<PAGE>
EXHIBIT A TO FIRST
AMENDMENT TO TRUST
INDENTURE AND
SECURITY AGREEMENT
EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 L]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 L], 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 Amended and
Restated Trust Agreement [NW 1997 L] dated as of May 1, 1998 (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 L], 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:
<TABLE>
<CAPTION>
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
<S> <C> <C> <C>
</TABLE>
together with all of the Owner Trustee s right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
<TABLE>
<CAPTION>
Manufacturer Manufacturer s Model Serial Number
- ------------ -------------------- -------------
<S> <C> <C>
</TABLE>
together with all of Owner Trustee s right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee s right, title and interest in and to
all Parts of whatever nature, which from time to time are included within the
definition of "Airframe" or "Engine", whether now owned or hereafter acquired,
including all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which constitute
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment excluded from the definition of Parts).
As further security for the obligations referred to above and secured by
the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does
hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and
confirm, unto the Indenture Trustee, its successors and assigns, for the
security and benefit of the 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.
<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.
<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:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount Interest Rate
---------------- -------------
<S> <C> <C>
Series A............. $10,568,876.29 7.068%
Series B............. $3,393,846.48 7.248%
Series C............. $1,990,500.02 7.039%
</TABLE>
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: NW512XJ
<TABLE>
<CAPTION>
Percentage of
Payment Date Principal Amount to be Paid
- ------------ ---------------------------
<S> <C>
July 2, 1998 0.00000000
January 2, 1999 1.81124544
July 2, 1999 0.00000000
January 2, 2000 3.03676560
July 2, 2000 0.00000000
January 2, 2001 3.03676560
July 2, 2001 0.00000000
January 2, 2002 3.03676561
July 2, 2002 0.00000000
January 2, 2003 3.03676560
July 2, 2003 0.00000000
January 2, 2004 3.03676560
July 2, 2004 0.00000000
January 2, 2005 3.03676560
July 2, 2005 0.00000000
January 2, 2006 3.03676560
July 2, 2006 0.00000000
January 2, 2007 3.03676560
July 2, 2007 0.00000000
January 2, 2008 3.03676560
July 2, 2008 0.00000000
January 2, 2009 4.04902081
July 2, 2009 0.00000000
January 2, 2010 4.04902081
July 2, 2010 0.00000000
January 2, 2011 4.04902081
July 2, 2011 0.00000000
January 2, 2012 6.68790169
July 2, 2012 0.00000000
January 2, 2013 0.00000000
July 2, 2013 12.44977315
January 2, 2014 14.22873030
July 2, 2014 0.00000000
January 2, 2015 12.22436279
July 2, 2015 0.00000000
January 2, 2016 13.12003379
</TABLE>
<PAGE>
Secured Certificates Amortization
SERIES B
Aircraft: NW512XJ
<TABLE>
<CAPTION>
Percentage of
Payment Date Principal Amount to be Paid
- ------------ ---------------------------
<S> <C>
July 2, 1998 15.59295104
January 2, 1999 4.77648417
July 2, 1999 0.00000000
January 2, 2000 1.72936785
July 2, 2000 0.00000000
January 2, 2001 2.55297199
July 2, 2001 0.00000000
January 2, 2002 11.10099506
July 2, 2002 0.00000000
January 2, 2003 0.74617753
July 2, 2003 0.00000000
January 2, 2004 0.00000000
July 2, 2004 0.00000000
January 2, 2005 0.00000000
July 2, 2005 0.00000000
January 2, 2006 10.55862138
July 2, 2006 0.00000000
January 2, 2007 10.20142873
July 2, 2007 0.00000000
January 2, 2008 11.04440116
July 2, 2008 0.00000000
January 2, 2009 7.68028258
July 2, 2009 0.00000000
January 2, 2010 0.32853873
July 2, 2010 0.00000000
January 2, 2011 14.72481631
July 2, 2011 0.00000000
January 2, 2012 8.96296346
July 2, 2012 0.00000000
January 2, 2013 0.00000000
</TABLE>
<PAGE>
Secured Certificates Amortization
SERIES C
Aircraft: NW512XJ
<TABLE>
<CAPTION>
Percentage of
Payment Date Principal Amount to be Paid
- ------------ ---------------------------
<S> <C>
July 2, 1998 0.00000000
January 2, 1999 0.00000000
July 2, 1999 0.00000000
January 2, 2000 0.00000000
July 2, 2000 0.00000000
January 2, 2001 0.00000000
July 2, 2001 0.00000000
January 2, 2002 0.00000000
July 2, 2002 0.00000000
January 2, 2003 23,80106544
July 2, 2003 0.00000000
January 2, 2004 28.08521650
July 2, 2004 0.00000000
January 2, 2005 31.31548181
July 2, 2005 0.00000000
January 2, 2006 16.79823625
July 2, 2006 0.00000000
January 2, 2007 0.00000000
</TABLE>
<PAGE>
Exhibit 4(a)(4)
-------------------------------------------------------
-------------------------------------------------------
LEASE AGREEMENT
[NW 1997 L]
Dated as of
May 1, 1998
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
<TABLE>
<S> <C> <C>
SECTION 1. Definitions.......................................... 1
SECTION 2. Acceptance and Lease................................. 17
SECTION 3. Term and Rent........................................ 18
(a) Basic Term...................................... 18
(b) [Intentionally Omitted]......................... 18
(c) Basic Rent...................................... 18
(d) Adjustments to Basic Rent....................... 18
(e) Supplemental Rent............................... 20
(f) Payments in General............................. 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................................... 24
(d) Storage Upon Return............................. 24
SECTION 6. Liens................................................ 24
SECTION 7. Registration, Maintenance and Operation; Possession
and Subleases; Insignia.............................. 25
(a) Registration and Maintenance.................... 25
(b) Possession and Subleases........................ 26
(c) Insignia........................................ 30
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions.......................... 31
(a) Replacement of Parts............................ 31
(b) Pooling of Parts................................ 32
(c) Alterations, Modifications and Additions........ 32
SECTION 9. Voluntary Termination................................ 33
(a) Termination Event............................... 33
(b) [Intentionally Omitted]......................... 33
(c) Optional Sale of the Aircraft................... 33
(d) Termination as to Engines....................... 35
</TABLE>
(i)
<PAGE>
Page
<TABLE>
<S> <C> <C>
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......... 38
(c) Application of Payments from Governmental
Authorities for Requisition of Title, etc. ..... 39
(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................................ 41
SECTION 11. Insurance............................................ 41
(a) Public Liability and Property Damage Insurance.. 41
(b) Insurance Against Loss or Damage to the
Aircraft........................................ 42
(c) Reports, etc. .................................. 45
(d) Self-Insurance.................................. 46
(e) Additional Insurance by Lessor and Lessee....... 46
(f) Indemnification by Government in Lieu of
Insurance....................................... 46
(g) Application of Payments During Existence of
an Event of Default............................. 46
SECTION 12. Inspection........................................... 47
SECTION 13. Assignment........................................... 47
SECTION 14. Events of Default.................................... 48
SECTION 15. Remedies............................................. 50
SECTION 16. Lessee's Cooperation Concerning Certain Matters...... 53
SECTION 17. Notices.............................................. 54
SECTION 18. No Set-Off, Counterclaim, etc. ...................... 55
SECTION 19. Renewal Options; Purchase Options; Valuation......... 55
(a) Renewal Options................................. 55
(b) Purchase Options................................ 57
(c) Valuation....................................... 57
(d) Special Purchase Option......................... 58
SECTION 20. Security for Lessor's Obligation to Holders of
Secured Certificates................................. 59
SECTION 21. Lessor's Right to Perform for Lessee................. 59
SECTION 22. Investment of Security Funds; Liability of Lessor
Limited.............................................. 59
(a) Investment of Security Funds.................... 59
(b) Liability of Lessor Limited..................... 60
</TABLE>
(ii)
<PAGE>
Page
<TABLE>
<S> <C> <C>
SECTION 23. Service of Process................................... 60
SECTION 24. Miscellaneous........................................ 60
SECTION 25. Successor Trustee.................................... 61
SECTION 26. Covenant of Quiet Enjoyment.......................... 61
</TABLE>
(iii)
<PAGE>
EXHIBITS
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Lessor's Cost and Special Purchase Price Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation Verification
EXHIBIT F - Schedule of Domiciles of Permitted Sublessees
EXHIBIT G - Return Conditions
EXHIBIT H - Return Conditions (EBT)
(iv)
<PAGE>
LEASE AGREEMENT
[NW 1997 L]
This LEASE AGREEMENT [NW 1997 L], dated as of May 1, 1998, 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 L] 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
<PAGE>
aircraft (except Engines or engines from time to time installed
thereon); provided, however, that at such time as an aircraft (except
Engines or engines from time to time installed thereon) shall be
deemed part of the property leased hereunder in substitution for the
Airframe pursuant to the applicable provisions hereof, the replaced
Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then outstanding
and, if no Secured Certificates shall be outstanding, the Base Rate.
"Asset Value Agreement" means that certain Asset Value Agreement
(N512XJ), dated April 27, 1998, between the Manufacturer and Lessee,
as such Asset Value Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Assignment and Assumption Agreement" means that certain
Assignment and Assumption Agreement [NW 1997 L], dated as of the date
hereof, between the Initial Owner Participant and the Owner
Participant, as such Assignment and Assumption Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"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 April 27, 2017, 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
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<PAGE>
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 September 25, 1997.
"Certificate Holder" means Certificate Holder as defined in the
Trust Indenture.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States
Code, for aircraft capable of carrying ten or more individuals or
6,000 pounds or more of cargo or that otherwise is certified or
registered to the extent required to fall within the purview of 11
U.S.C. Section 1110 or any analogous successor provision of the
Bankruptcy Code.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Account Control Agreement" means that certain
Collateral Account Control Agreement [NW 1997 L], dated as of the
Certificate Closing Date, 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 that certain Consent and Agreement
[NW 1997 L], 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.
3
<PAGE>
"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, 2005, 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.
"EBO Date" means [July 2, 2013] (or, if [July 2, 2013] is not a
Business Day, the Business Day immediately succeeding [July 2, 2013].
"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
4
<PAGE>
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, if earlier, until the end of the Term or, in the case of a
requisition of title, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of title
or, if earlier, at the end of the Term; (iv) as a result of any law,
rule, regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of
registry of the Aircraft having jurisdiction, the use of such
property in the normal course of the business of air transportation
shall have been prohibited for a period of 180 consecutive days,
unless Lessee (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), provided, further that, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss if such
use shall have been prohibited for a period of three consecutive
years or such use shall be prohibited at the expiration of the Term;
(v) the requisition for use by the United States
5
<PAGE>
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.
"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.
"First Amendment to Trust Indenture" means that certain First
Amendment to Trust Indenture and Security Agreement [NW 1997 L],
dated as of the date hereof, between Lessor and the Indenture
Trustee, amending the Original Trust Indenture.
"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 that certain Amended and Restated Guarantee
[NW 1997 L], dated as of the date hereof, made by the Guarantor, as
such Guarantee
6
<PAGE>
may be amended or supplemented from time to time pursuant to the
applicable provisions thereof, which Guarantee amended and restated in
its entirety the Original Guarantee.
"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) inclusive, (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) inclusive.
"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.
7
<PAGE>
"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 L] 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 July 2, 1998 and each succeeding
January 2 and July 2 to and including January 2, 2017, April 27,
2017, and each succeeding October 27 and April 27, 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, the Assignment and
Assumption Agreement 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
8
<PAGE>
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.
"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.
9
<PAGE>
"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 that certain Manufacturer
Support Agreement, dated February 5, 1997, between the Manufacturer
and Lessee.
"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 7.0 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
Collateral Account Control Agreement, the Assignment and Assumption
Agreement, the Purchase Agreement Assignment and the Consent and
Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 L],
dated as of the Certificate Closing Date, made by the Guarantor, as
such Guarantee may have been amended or supplemented from time to
time pursuant to the applicable provisions thereof prior to the
Delivery Date.
"Original Participation Agreement" means that certain
Participation Agreement [NW 1997 L], 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 was
amended or supplemented from time to time prior to the Delivery Date
pursuant to the applicable provisions thereof.
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<PAGE>
"Original Trust Agreement" means that certain Trust Agreement
[NW 1997 L], 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 prior to the Delivery Date pursuant
to the applicable provisions thereof.
"Original Trust Indenture" means that certain Trust Indenture
and Security Agreement [NW 1997 L], 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 but prior to being amended by the First Amendment to Trust
Indenture.
"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 thereafter any
Person to which such corporation transfers all 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, the Assignment and Assumption Agreement, the
Residual Agreement and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Original
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 Amended and
Restated Participation Agreement [NW 1997 L], 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
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<PAGE>
applicable provisions thereof, which Participation Agreement amended and
restated in its entirety the Original Participation Agreement.
"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 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, limited
liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
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"Purchase Agreement" means that certain 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 that certain Purchase
Agreement Assignment [NW 1997 L], 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.
"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 that certain Agreement (N512XJ),
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.
"Special Purchase Price" means 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 April 27, 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 April 27, 2017 shall be the amount
determined as provided in Section 19(a) hereof.
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<PAGE>
"Stipulated Loss Value Date" means the 2nd calendar day of each
calendar month during the Basic Term and the 27th calendar day of
each calendar month during 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.
"Successor Residual Agreement" means an agreement in
substantially the same form as the Residual Agreement, or with such
changes in such form as are reasonably approved by the Owner
Participant, among the Owner Participant, Lessor and the Manufacturer
or, in lieu of the Manufacturer, another Person whose unsecured
long-term debt is rated "A" or better by Standard & Poor's Rating
Group or equivalent rating of Moody's Investor Services, Inc., which
Successor Residual Agreement shall protect an Agreed Residual Value
(as such term is used in the Residual Agreement) at the end of such
Renewal Term in an amount that shall be calculated to preserve the
Owner Participant's originally assumed economic return, taking into
account the Basic Rent paid during the previous Renewal Terms and to
be paid during such Renewal Term (such calculation to be made by the
Owner Participant and subject to verification pursuant to Exhibit E
hereto).
"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
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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 L], 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 April 27, 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 Owner Participant, 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
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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 Thelen, Marrin, Johnson & Bridges LLP, special counsel
to the Owner Participant, such fees not to exceed the
amount previously agreed to by the Owner Participant and
Lessee;
(8) the reasonable 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 Amended and Restated Trust
Agreement [NW 1997 L], 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
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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, which Trust
Agreement amended and restated in its entirety the Original Trust
Agreement and continued the trusts thereby created.
"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 the Original Trust Indenture, as
originally executed or as modified, amended or supplemented in
accordance with the provisions thereof (including, without
limitation, by the First Amendment to Trust Indenture).
"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 performance by such employees of
similar functions within the United States of America or such other
jurisdiction of registry (it is understood that cabin attendants need
not be regular employees of Lessee (or any Sublessee)) and (ii) shall
be maintained by Lessee (or any Sublessee) in accordance with its
normal maintenance practices.
SECTION 2. Acceptance and Lease. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 5(a) of the Participation
Agreement) to accept
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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 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 April 27, 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 applicable Lease Period Date specified in Exhibit B
hereto. Lessor and Lessee agree that each installment of Basic Rent that is
indicated to be payable in advance shall be allocated over the six-month period
beginning on the Lease Period Date on which such advance payment is scheduled
to be made, and each installment of Basic Rent that is indicated to be payable
in arrears shall be allocated over the six-month period ending on the Lease
Period Date on which such arrears payment is scheduled to be made.
(d) Adjustments to Basic Rent.
(i) In the event that (A) the Delivery Date occurs other than
on May 4, 1998, (B) Transaction Expenses paid by Lessor pursuant to
Section 16(a) of the Participation Agreement are determined to be
other than 2.085% of Lessor's Cost, or (C) there is a change in tax
law (including the issuance of proposed regulations) after December
1, 1997 and on or prior to the Delivery Date, then in each case the
Basic Rent percentages set forth in Exhibit B, the Stipulated Loss
Value percentages set forth in Exhibit C, the Termination Value
percentages set forth in Exhibit D and the Special Purchase Price
shall be recalculated by the Owner Participant, on or prior to July
15, 1998, using the same methods and assumptions used to calculate
original Basic Rent, Stipulated Loss Value and Termination Value
percentages and the Special Purchase Price in order to: (1) maintain
the Owner Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible consistent
with clause (1) hereof. 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
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Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit
C, the Termination Value percentages set forth in Exhibit D and the
Special Purchase Price shall be recalculated (upwards or downwards) by
the Owner Participant as contemplated by such Section to (1) maintain
the Owner Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net Present
Value of Rents to Lessee and (B) in the event that Lessee elects to
satisfy any indemnity obligation under the Tax Indemnity Agreement
pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, then the
Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value
percentages set forth in Exhibit C, the Termination Value percentages
set forth in Exhibit D and the Special Purchase Price shall be
recalculated (upwards or downwards) by the Owner Participant, 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, the Termination
Value percentages and the Special Purchase Price on the Delivery Date,
in order to (1) maintain the Owner Participant's Net Economic Return and
(2) to the extent possible consistent with clause (1) hereof, minimize
the Net Present Value of Rents to Lessee.
(iii) [Intentionally Omitted].
(iv) Any recalculation of Basic Rent, Stipulated Loss Value and
Termination Value percentages and the Special Purchase Price pursuant
to this Section 3(d) shall be determined by the Owner Participant and
shall be subject to the verification procedures set forth in Exhibit
E hereto. Such recalculated Basic Rent, Stipulated Loss Value and
Termination Value percentages and Special Purchase Price shall be set
forth in a Lease Supplement or an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this
Lease to the contrary notwithstanding, each installment of Basic Rent
payable hereunder, whether or not adjusted in accordance with this
Section 3(d), shall, and each payment of Termination Value and
Stipulated Loss Value, whether or not adjusted in accordance with
this Section 3(d), shall, together with all other amounts (including
an amount equal to the premium, if any, payable by Lessor on the
Secured Certificates) payable simultaneously by Lessee pursuant to
this Lease, in each case be, under any circumstances and in any
event, in an amount at least sufficient to pay in full, on the date
on which such amount of Rent is due, any payments then required to be
made on account of the principal of, premium, if any, and interest on
the Secured Certificates. It is agreed that no installment of Basic
Rent or payment of Termination Value or Stipulated Loss Value shall
be increased or adjusted by reason of (i) any attachment or diversion
of Rent on account of (A) Lessor Liens or (B) any Loan Participant
Lien on or
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against the Trust Estate, any part thereof or the Operative Documents
arising as a result of claims against the Indenture Trustee not related
to the transactions contemplated by the Operative Documents, (ii) any
modification of the payment terms of the Secured Certificates made
without the prior written consent of Lessee or (iii) the acceleration of
any Secured Certificate or Secured Certificates due to the occurrence of
an "Event of Default" (as defined in the Trust Indenture) which does not
constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d) shall
be (A) in compliance with the tests of Sections 4.02(5) 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 then in effect and (B) subject to verification pursuant to Exhibit
E.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid) promptly
to Lessor, or to whomsoever shall be entitled thereto, any and all Supplemental
Rent constituting Stipulated Loss Value or Termination Value as the same shall
become due and owing and all other amounts of Supplemental Rent within five
days after demand or within such other relevant period as may be provided in
any Operative Document, and in the event of any failure on the part of Lessee
to pay any Supplemental Rent when due, Lessor shall have all rights, powers and
remedies provided for herein or in any other Operative Document or by law or
equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall pay
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 L (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
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Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW
1997 L (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 10 Business Days
prior to the due date thereof. All payments of Supplemental Rent payable to
the Owner Participant, to the extent that such amounts constitute Excluded
Payments (as defined in the Trust Indenture), shall be made in Dollars in
immediately available funds prior to 10:30 A.M., New York time, on the due
date thereof, to the account of the Owner Participant specified in Schedule I
to the Participation Agreement (or to such other account as may be specified
in writing by the Owner Participant from time to time).
Notwithstanding anything to the contrary contained herein, if any date on
which a payment of Rent becomes due and payable is not a Business Day, then
such payment shall not be made on such scheduled date but shall be made on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
SECTION 4. Lessor's Representations and Warranties. 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
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not directly or indirectly create, incur, assume or suffer to exist any
Lessor Lien attributable to it on or with respect to the Airframe or any
Engine or any portion of the Trust Estate and (v) represents and warrants
that it is a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement, and agrees that if at
any time it shall cease to be a Citizen of the United States without making
use of a voting trust, voting powers agreement or similar arrangement it will
promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it
is not necessary, if and so long as the Owner Trustee's citizenship would
have any material adverse effect on the Loan Participants, the Owner
Participant or Lessee), effective upon the appointment of a successor Owner
Trustee in accordance with Section 9.01 of the Trust Agreement. None of the
provisions of this Lease shall be deemed to amend, modify or otherwise affect
the representations, warranties or other obligations (express or implied) of
the Manufacturer, any subcontractor or supplier of the Manufacturer with
respect to the Airframe, the Engines or any Parts, or to release the
Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the
Term (so long as this Lease shall not have been declared or deemed to have
been declared in default pursuant to Section 15 hereof) it will not, through
its own actions or inactions interfere in the quiet enjoyment of the Aircraft
by Lessee or any Sublessee and agrees that it will not directly or indirectly
create, incur, assume or suffer to exist any Lessor Lien attributable to it
on or with respect to the Airframe or any Engine.
SECTION 5. Return of the Aircraft. (a) Condition Upon Return.
Unless purchased by Lessee pursuant to Section 19 hereof, upon the termination
of this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c) or 15, Lessee, at its own expense, will return the Airframe to
Lessor at a major airport in one of the forty-eight contiguous states of the
United States chosen by Lessee and reasonably acceptable to Lessor (taking into
account whether the state or local government of such proposed place of return
would impose any transfer taxes on Lessor in connection with a sale of the
Aircraft by Lessor on the date of such return while the Aircraft is located at
the place of such return), 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
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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)) 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 by the Manufacturer to Lessee, 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) unless the return conditions set forth in Exhibit H are applicable,
Exhibit G, or (b) Exhibit H, in the event such return occurs at the
expiration of this Lease on April 27, 2017 or at the expiration of any
Renewal Term but only if, in any such case, Lessor shall have irrevocably
exercised its option to sell the Aircraft at such expiration, and shall be
simultaneously exercising its rights, pursuant to the Residual Agreement or a
Successor Residual Agreement. 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. In view of the fact that the required return
conditions of the Aircraft for purposes of the Residual Agreement are
identical to Lessee's obligations herein, Lessee agrees that any
determination of Half-Life Adjustment under the Residual Agreement or any
Successor Residual Agreement shall be binding on Lessee for purposes of
Exhibit H to this Lease. Lessee further agrees to pay to Lessor on the
expiration of the Term the amount deducted from the Agreed Residual Value (as
such term is used in the Residual Agreement or any comparable term is used in
any Successor Residual Agreement) pursuant to clause (y) in the definition of
Agreed Residual Value. Lessor authorizes Lessee, with the participation of
Lessor, to negotiate such Half-Life Adjustments and amount directly with the
Manufacturer or any Person who is the counterparty to any Successor 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 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. Without
limiting the foregoing, Lessee agrees to fully cooperate with any requests by
the Manufacturer under the Residual Agreement or any Person who is the
counterparty to any Successor Residual Agreement in connection with the
remarketing of the Aircraft.
(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no
cost to Lessor, furnish, or cause to be furnished, to Lessor a full warranty
(as to title) bill of sale with respect to each such engine, in form and
substance satisfactory to Lessor (together with an opinion of counsel to the
effect that
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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)), 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,
maintenance, modification and overhaul records required to be maintained with
respect thereto under applicable rules and regulations of each country under
the laws of which the Aircraft has been registered during the period of
operation thereof, which logs, manuals, data and records, if not maintained in
English, shall be translated into English at Lessee's expense.
(d) Storage Upon Return. If, at least sixty (60) days prior to
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with (i) free parking facilities for the
Aircraft (maintenance costs and other out-of-pocket costs other than parking
fees to be for the account of Lessor) for a period not exceeding thirty (30)
days commencing on the date of such termination and (ii) parking facilities for
the Aircraft (maintenance costs, other out-of-pocket costs and parking fees to
be for the account of Lessor) for a period not exceeding an additional thirty
(30) days commencing at the end of such initial thirty (30) day period, in each
case at a location in the continental United States selected by Lessee and
which Lessee would utilize as a location for the parking or storage of aircraft
owned or leased by Lessee; provided that Lessee shall have no obligation to
move the Aircraft from such location during the storage periods. Lessee,
unless instructed by Lessor to the contrary, will maintain insurance for the
Aircraft during such period not exceeding sixty (60) days and be reimbursed by
Lessor for the premiums thereon.
SECTION 6. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens 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
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(or any Sublessee) either not yet due or being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
any interest therein, or, so long as any Secured Certificates shall be
outstanding, adversely affect the Lien of the Trust Indenture,
(v) materialmen's, mechanics', workmen's, repairmen's, employees' or other like
Liens arising in the ordinary course of Lessee's (or, if a Sublease is then in
effect, 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 when delivered by the
Manufacturer to Lessee, ordinary wear and tear excepted, so as to maintain in
effect all material Manufacturer's warranties, 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
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jurisdiction in which the Aircraft may then be registered from time to time
in accordance with Section 8(f) of the Participation Agreement, and
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 Lessee's or any
Sublessee's response to extraordinary circumstances involving an isolated
occurrence or isolated 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
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Default of the type referred to in Section 14(a), 14(b) or 14(e) or Event of
Default shall have occurred and be continuing at the time of such sublease,
delivery, transfer or relinquishment of possession or installation or such
Wet Lease, and so long as the action to be taken shall not deprive the
Indenture Trustee of the perfected first priority Lien of the Trust Indenture
on the Airframe or (subject to the further proviso (B) to clause (i) of this
Section 7(b)) any Engine, and so long as Lessee (or any Sublessee) shall
comply with the provisions of Sections 7(a) and 11 hereof, Lessee (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 which is 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
27
<PAGE>
clear of all Liens, except: (A) the rights of the parties to the lease
or conditional sale or other security agreement covering such airframe,
or their assignees, and (B) Liens of the type permitted by subparagraph
(iii) of this paragraph (b) and (y) such lease, conditional sale or
other security agreement effectively provides that such Engine shall not
become subject to the lien of such lease, conditional sale or other
security agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss with
respect to such Engine and Lessee shall (or shall cause any Sublessee
to) comply with Section 10(b) hereof in respect thereof, Lessor not
intending hereby to waive any right or interest it may have to or in
such Engine under applicable law until compliance by Lessee with such
Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject any
appliances, Parts or other equipment owned by Lessor and removed from
the Airframe or any Engine to any pooling arrangement referred to in
Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall
(A) promptly notify Lessor upon subjecting the Airframe or any Engine
to the Civil Reserve Air Fleet Program in any contract year and
provide Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States Air
Force to whom notice must be given pursuant to Section 15 hereof, and
(B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any agency
or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide Lessor
written notice of such Wet Lease (such notice to be given prior to
entering into such Wet Lease, if practicable, but in any event
promptly after entering into such Wet Lease);
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(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
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
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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 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:
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Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee
will not allow the name of any Person to be placed on the Airframe or on any
Engine as a designation that might be interpreted as a claim of ownership;
provided that nothing herein contained shall prohibit Lessee (or any Sublessee)
from placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own
cost and expense, will promptly replace or cause to be replaced all Parts which
may from time to time be incorporated or installed in or attached to the
Airframe or any Engine and which may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided
in paragraph (c) of this Section 8 or if the Airframe or an Engine to which a
Part relates has suffered an Event of Loss. In addition, Lessee (or any
Sublessee) may, at its own cost and expense, remove in the ordinary course of
maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use, provided that Lessee (or any Sublessee),
except as otherwise provided in paragraph (c) of this Section 8, will, at its
own cost and expense, replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and pooling arrangements to the extent permitted by paragraph (b) of this
Section 8 and except in the case of replacement property temporarily installed
on an emergency basis) and shall be in as good operating condition as, and
shall have a value and utility at least equal to, the Parts replaced assuming
such replaced Parts were in the condition and repair required to be maintained
by the terms hereof. Except as otherwise provided in paragraph (c) of this
Section 8, all Parts at any time removed from the Airframe or any Engine shall
remain the property of Lessor, no matter where located, until such time as such
Parts shall be replaced by Parts which have been incorporated or installed in
or attached to the Airframe or such Engine and which meet the requirements for
replacement Parts specified above. Immediately upon any replacement part
becoming incorporated or installed in or attached to the Airframe or any Engine
as above provided, without further act (subject only to Permitted Liens and any
pooling arrangement to the extent permitted by paragraph (b) of this Section 8
and except in the case of replacement property temporarily installed on an
emergency basis), (i) title to such replacement Part shall thereupon vest in
Lessor, (ii) such replacement Part shall become subject to this Lease and be
deemed part of the Airframe or such Engine for all purposes hereof to the same
extent as the Parts originally incorporated or installed in or attached to the
Airframe or such Engine, and (iii) title to the replaced Part shall thereupon
vest in Lessee (or, if a Sublease is then in effect, any Sublessee), free and
clear of all rights of Lessor, and shall no longer be deemed a Part hereunder.
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(b) Pooling of Parts. Any Part removed from the Airframe or any Engine
as provided in paragraph (a) of this Section 8 may be subjected by Lessee (or
any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee)
is a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating
or installing in or attaching to the Airframe or Engine a further replacement
Part owned by Lessee (or any Sublessee) free and clear of all Liens except
Permitted Liens (other than pooling arrangements) and by causing title to such
further replacement Part to vest in Lessor in accordance with such paragraph
(a).
(c) Alterations, Modifications and Additions. Lessee, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any other governmental authority
having jurisdiction; 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 by more than a de minimis amount diminish the
value, utility or remaining useful life of the Airframe or such Engine below
the value, utility or remaining useful life thereof immediately prior to such
alteration, modification or addition, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease,
except that the value (but not the utility or remaining useful life) of the
Airframe or any Engine may be reduced by the value of Obsolete Parts which
shall have been removed so long as the aggregate original cost of all Obsolete
Parts which shall have been removed and not replaced shall not exceed $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
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originally incorporated or installed in or attached to the Airframe or any
Engine at the time of delivery thereof hereunder or any Part in replacement of,
or substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Section 7 hereof or the first sentence of this paragraph (c) and (iii)
can be removed from the Airframe or such Engine without diminishing or
impairing the value, utility or remaining useful life which the Airframe or
such Engine would have had at the time of removal had such alteration,
modification or addition not occurred, assuming that such Airframe or Engine
was in the condition and repair required to be maintained by the terms hereof.
Upon the removal by Lessee (or Sublessee) of any Part as provided above, title
thereto shall, without further act, vest in Lessee (or any Sublessee, as the
case may be) and such Part shall no longer be deemed part of the Airframe or
Engine from which it was removed. Any Part not removed by Lessee (or any
Sublessee) as above provided prior to the return of the Airframe or Engine to
Lessor hereunder shall remain the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on any
Lease Period Date occurring on or after the fifth anniversary of the Delivery
Date if Lessee shall have made the good faith determination, which shall be
evidenced by a resolution duly adopted by its Board of Directors (or the
Executive Committee thereof), that the Aircraft is obsolete or surplus to its
needs.
(3) Lessee shall give to Lessor at least one hundred twenty (120) days'
revocable advance written notice of Lessee's intention to so terminate this
Lease (any such notice, a "Termination Notice") 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 all-cash 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
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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 all-cash 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 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 net cash proceeds from the
sale of the Aircraft after deducting the reasonable expenses, including
reasonable brokerage commissions and transfer taxes, 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 Lessor for payment to the Indenture
Trustee on the Termination Date the amount required to pay in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination
Date plus interest accrued thereon through the Termination Date and, without
affecting the obligations of Lessee in respect of such amounts under the second
succeeding sentence, together with the Make-Whole Amount, if any, due on the
Secured Certificates. Upon receipt of notice of such an election by Lessor and
the accompanying undertaking by the Owner Participant, Lessee shall cease its
efforts to obtain bids as provided above and shall reject all bids theretofore
or thereafter received. On the
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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
Termination Value) due on or prior to the Termination Date, including
Supplemental Rent of the type described in the second sentence of Section
3(e). If no sale shall have occurred on the Termination Date and Lessor has
not made the payment contemplated by the preceding sentence and thereby
caused this Lease to terminate, or if Lessee revokes its Termination Notice,
this Lease shall continue in full force and effect as to the Aircraft, Lessee
shall pay the reasonable costs and expenses incurred by the Owner Participant
and Lessor (unless such failure to terminate the Lease is a consequence of
the failure of Lessor or the Owner Participant without due cause to make, or
cause to be made, the payment referred to in the immediately preceding
sentence), if any, in connection with preparation for such sale and Lessee
may give one or more additional Termination Notices in accordance with
Section 9(a)(2), subject to the last sentence of this Section 9(c). In the
event of any such sale or such retention of the Aircraft by Lessor and upon
compliance by Lessee with the provisions of this paragraph, the obligation of
Lessee to pay Basic Rent or any other amounts hereunder shall cease to accrue
and this Lease shall terminate. Lessor may, but shall be under no duty to,
solicit bids, inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale other than to transfer (in
accordance with the foregoing provisions) to the purchaser named in the
highest bid certified by Lessee to Lessor all of Lessor's right, title and
interest in the Aircraft, against receipt of the payments provided herein.
Lessee may revoke a Termination Notice given pursuant to Section 9(a)(2) no
more than two times during the Term.
(d) Termination as to Engines. So long as no Event of Default shall have
occurred and be continuing, Lessee shall have the right at its option at any
time during the Term, on at least thirty (30) days' prior written notice, to
terminate this Lease with respect to any Engine. In such event, and prior to
the date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and Lessor shall transfer such
right, title and interest as it may have to the replaced Engine as provided in
Section 5(b). No termination of this Lease with respect to any Engine as
contemplated by this Section 9(d) shall result in any reduction of Basic Rent.
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
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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 on or prior to the Loss
Payment Date with respect to which Stipulated Loss Value is
determined, Lessee shall pay on such Lease Period Date (A) if the
Lease Period Date occurs on the Loss Payment Date with respect to
which Stipulated Loss Value is determined, an amount equal to the
Basic Rent that would have been due on such Lease Period Date (but
only to the extent payable in arrears as indicated on Exhibit B) if
such Event of Loss had not occurred and (B) if the Lease Period Date
occurs prior to the Loss Payment Date with respect to which
Stipulated Loss Value is determined, 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) so long as no Default of the type referred to in Section
14(a), 14(b) or 14(e) or Event of Default shall have occurred and be
continuing, substitute an aircraft or an airframe or an airframe and
one or more engines, as the case may be;
provided that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor on the
Business Day next succeeding the 120th day following the occurrence of such
Event of Loss the amount specified in clause (i) above.
At such time as Lessor shall have received the amounts specified in
subparagraph (i) above, together with all other amounts that then may be due
hereunder (including, without limitation, all Basic Rent due 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
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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 (without regard to hours or cycles) 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 any airframe so substituted hereunder shall have been
delivered by the Manufacturer pursuant to the Purchase Agreement on a date
after the Airframe was delivered by the Manufacturer pursuant to the Purchase
Agreement and Lessee shall comply with the provisions of any asset value
agreement applicable to such substituted airframe which are comparable to
Section 10(d) of the Asset Value Agreement 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 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
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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 (without regard to hours or cycles) 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 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
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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 Stipulated Loss Value
as is attributable to compensation for loss of Lessor's interest in
the Aircraft as distinguished from the loss of use of the Aircraft;
or (B) if such property is replaced pursuant to the last paragraph of
Section 10(a), such payments shall be paid over to, or retained by,
Lessee; provided that Lessee shall have fully performed or,
concurrently therewith, will fully perform the terms of the last
paragraph of Section 10(a) with respect to the Event of Loss for
which such payments are made; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by Section 10(b) hereof, so much of
such payments remaining after reimbursement of Lessor (as provided
for in Section 7.01 of the Trust Agreement) for reasonable costs and
expenses shall be paid over to, or retained by, Lessee, provided that
Lessee shall have fully performed, or concurrently therewith will
perform, the terms of Section 10(b) with respect to the Event of Loss
for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States Government
or the Government of Registry of the Aircraft. 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
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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 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
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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 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
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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
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violation of any warranty, declaration or condition contained in such
policies by Lessee (or, if a Sublease is then in effect, any Sublessee), (vi)
shall be primary without any right of contribution from any other insurance
which is carried by Lessor, the Owner Participant or the Indenture Trustee
(or, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), (vii) shall waive any right of subrogation of the
insurers against Lessor, the Owner Participant and the Indenture Trustee
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease), and (viii) shall waive any right of the insurers to
set-off or counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of Lessor, the Indenture Trustee, the
Owner Participant or Lessee (or any Sublessee) to the extent of any moneys
due to Lessor, the Indenture Trustee or the Owner Participant. In the case of
a loss with respect to an engine (other than an Engine) installed on the
Airframe, Lessor shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of Lessee or any other third party that
is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance payments
received as the result of the occurrence of an Event of Loss will be applied as
follows:
(x) if such payments are received with respect to the
Airframe (or the Airframe and the Engines installed thereon), (i)
unless such property is replaced pursuant to the last paragraph of
Section 10(a), so much of such payments remaining, after
reimbursement of Lessor (as provided in Section 7.01 of the Trust
Agreement) for reasonable costs and expenses, as shall not exceed
the Stipulated Loss Value required to be paid by Lessee pursuant to
Section 10(a) hereof shall be applied in reduction of Lessee's
obligation to pay such Stipulated Loss Value, if not already paid
by Lessee, or, if already paid by Lessee, shall be applied to
reimburse Lessee for its payment of such Stipulated Loss Value, and
the balance, if any, of such payments remaining thereafter will be
paid over to, or retained by, Lessee (or if directed by Lessee, any
Sublessee); or (ii) if such property is replaced pursuant to the
last paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), provided that Lessee shall have fully performed, or
concurrently therewith will fully perform, the terms of the last
paragraph of Section 10(a) with respect to the Event of Loss for
which such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so much
of such payments remaining, after reimbursement of Lessor (as provided
in Section 7.01 of the Trust Agreement) for reasonable costs and
expenses, shall be paid over to, or 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
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be applied in payment for repairs or for replacement property in accordance
with the terms of Sections 7 and 8, if not already paid for by Lessee (or any
Sublessee), and any balance (or if already paid for by Lessee (or any
Sublessee), all such insurance proceeds) remaining after compliance with such
Sections with respect to such loss shall be paid to Lessee (or any Sublessee
if directed by Lessee).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned 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
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provided, Lessor or the Indenture Trustee may at its sole option provide such
insurance and, in such event, Lessee shall, upon demand, reimburse Lessor or
the Indenture Trustee, as Supplemental Rent, for the cost thereof to Lessor
or the Indenture Trustee, as the case may be, without waiver of any other
rights Lessor or the Indenture Trustee may have; provided, however, that no
exercise by Lessor or the Indenture Trustee, as the case may be, of said
option shall affect the provisions of this Lease, including the provisions of
Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
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
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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 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, unless an Event of Default has
occurred and is continuing (when such observation right shall not be so
limited), Lessee shall be required to so cooperate only to the extent
necessary to enable the Owner Participant's authorized representative to
observe (i) one scheduled major overhaul during each three year period of the
Term and (ii) (notwithstanding the foregoing clause (i) 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, further 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. In addition and
notwithstanding the foregoing, Lessee agrees to (i) perform all of Owner
Participant's obligations under Section 3(c) of the Residual Agreement or any
comparable provision of any Successor Residual Agreement and (ii) fully
cooperate with any inspections of the Aircraft and any books, record or logs
related thereto, conducted by or behalf of by the Manufacturer under the
Residual Agreement or any Person who is the counterparty to any Successor
Residual Agreement. 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
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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 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) any covenant or agreement (except the
covenants set forth in the Tax Indemnity Agreement and in clauses
(i)(B) and (ii) of the first sentence of second paragraph of Exhibit G)
to be performed or observed by it under any Operative Document, and
such failure shall continue unremedied for a period of thirty (30) days
after receipt by Lessee of written notice thereof from Lessor or the
Indenture Trustee; provided, however, that if Lessee shall have
undertaken to cure any such failure which arises under clause (ii) or
clause (iii) of the first sentence of Section 7(a), or under the second
sentence of Section 7(a) as it relates to maintenance, service, repair
or overhaul or under Section 8 and, notwithstanding the diligence of
Lessee in attempting to cure such failure, such failure is not cured
within said thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so long as
Lessee is proceeding with due diligence to cure such failure and such
failure is remedied not later than 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
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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 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
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caused solely by reason of an event that constitutes an Event of Loss so long
as Lessee is continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. Remedies. Upon the occurrence of any Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may, at its option, declare by written notice to Lessee this Lease
Agreement to be in default, provided, that, if an Event of Default referred
to in Section 14(e) or 14(f) shall have occurred, this Lease Agreement shall
be deemed to be declared in default without further act; and at any time
thereafter, so long as any such outstanding Events of Default shall not have
been remedied, Lessor may do one or more of the following with respect to all
or any part of the Airframe and any or all of the Engines as Lessor in its
sole discretion shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable law then in effect;
provided, however, that during any period the Aircraft is subject to the
Civil Reserve Air Fleet Program in accordance with the provisions of Section
7(b) hereof and in possession of the United States government or an agency or
instrumentality of the United States, Lessor shall not, on account of any
Event of Default, be entitled to do any of the following in such manner as to
limit Lessee's control under this Lease (or any Sublessee's control under any
Sublease) of any Airframe or any Engines installed thereon, unless at least
sixty (60) days' (or such lesser period as may then be applicable under the
Air Mobility Command program of the United States Government) written notice
of default hereunder shall have been given by Lessor by registered or
certified mail to Lessee (and any Sublessee) with a copy addressed to the
Contracting Office Representative for the Air Mobility Command of the United
States Air Force under any contract with Lessee (or any Sublessee) relating
to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's expense,
cause Lessee to return promptly, and Lessee shall return promptly, the
Airframe or any Engine as Lessor may so demand to Lessor or its order
in the manner and condition required by, and otherwise in accordance
with all the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at
its option, may enter upon the premises where all or any part of the
Airframe or any Engine is located and take immediate possession of and
remove the same by summary proceedings or otherwise (and/or, at
Lessor's option, store the same at Lessee's premises until disposal
thereof by Lessor), all without liability accruing to Lessor for or by
reason of such entry or taking of possession or removing whether for
the restoration of damage to property caused by such action or
otherwise;
(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
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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 and, if any Basic Rent
is payable in arrears on such payment date as indicated on Exhibit
B, any Basic Rent payable on such payment date (including, in each
case, without limitation, any adjustments to Basic Rent payable
pursuant to Section 3(d)) plus whichever of the following amounts
Lessor, in its sole discretion, shall specify in such notice
(together with interest, if any, on such amount at the Past Due
Rate from such specified payment date until the date of actual
payment of such amount): (i) an amount equal to the excess, if any,
of the Stipulated Loss Value for the Aircraft, computed as of the
Lease Period Date specified as the payment date in such notice,
over the aggregate fair market rental value (computed as hereafter
in this Section 15 provided) of such Aircraft for the remainder of
the Term, after discounting such aggregate fair market rental value
to present value as of the Lease Period Date specified as the
payment date in such notice at an annual rate equal to the Base
Rate plus 1%; or (ii) an amount equal to the excess, if any, of the
Stipulated Loss Value for such Aircraft, computed as of the Lease
Period Date specified as the payment date in such notice over the
fair market sales value of such Aircraft (computed as hereafter in
this Section provided) as of the Lease Period Date specified as the
payment date in such notice;
(d) in the event Lessor, pursuant to paragraph (b) above,
shall have sold the Airframe and/or any Engine, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such
Aircraft, may, if it shall so elect, demand that Lessee pay Lessor, and
Lessee shall pay to Lessor, on the date of such sale, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of the
installments of 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, in each case, without limitation, any adjustments to
Basic Rent payable pursuant to Section 3(d)) plus the amount of any
deficiency between the net proceeds of such sale (after deduction of
all reasonable costs of sale) and the Stipulated Loss Value of such
Aircraft, computed as of the Stipulated Loss Value Date on or
immediately preceding the date of such sale together with interest, if
any, on the amount of such deficiency, at the Past Due Rate, from the
date of such sale to the date of actual payment of such amount; and/or
(e) Lessor may rescind, terminate or cancel this Lease
Agreement as to the Aircraft, and/or may exercise any other right or
remedy which may be
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available to it under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for breach
hereof.
For the purposes of paragraph (c) above, the "fair market rental value"
or the "fair market sales value" of the Aircraft shall be the rental value or
sales value, as the case may be, which would be obtained in an arm's-length
transaction between an informed and willing lessee or purchaser, as the case may
be, under no compulsion to lease or purchase, as the case may be, and an
informed and willing lessor or seller in possession under no compulsion to sell,
as the case may be, in each case based upon the actual condition and location of
the Aircraft, which value shall be determined by mutual agreement or, in the
absence of mutual written agreement, pursuant to an appraisal prepared and
delivered by a nationally recognized firm of independent aircraft appraisers
nominated by Lessor, and Lessor shall immediately notify Lessee of such
nomination. Unless Lessee shall have objected in writing within ten days after
its receipt of Lessor's notice, Lessor's nomination shall be conclusive and
binding. If Lessee shall object, however, Lessor and Lessee shall endeavor,
within ten days after such objection is made, to select a mutually acceptable
appraiser; provided that, if Lessee shall not so endeavor to make such
selection, Lessor's nomination referred to in the preceding sentence hereof
shall be conclusive and binding. If Lessor and Lessee fail to reach agreement
(except for the reason referred to in the proviso in the preceding sentence), or
if any appraiser selected fails to act for any reason, then the question shall
be determined by an appraisal (applying the definitions of "fair market rental
value" and "fair market sales value" as set forth above based upon the actual
condition of the Aircraft) mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business Days after the end of such five-day period, each shall render
its own appraisal and shall by mutual consent choose another appraiser within
five Business Days after the end of such twenty-day period. If, within such
five-day period, such two appraisers fail to appoint a third appraiser, then
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal 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.
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In addition, Lessee shall be liable, except as otherwise provided above
and without duplication of amounts payable hereunder, for any and all unpaid
Rent due hereunder before, after or during the exercise of any of the foregoing
remedies and for all reasonable legal fees and other costs and expenses
(including fees of the appraisers hereinabove referred to) incurred by Lessor,
the Indenture Trustee, the Loan Participants and the Owner Participant in
connection with the return of the Airframe or any Engine in accordance with the
terms of Section 5 or in placing such Airframe or Engine in the condition and
airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the
execution and delivery of any amendment to this Lease, to the Trust Indenture
or to the Trust Agreement, Lessee will cause such Lease Supplement, Trust
Supplement (and, in the case of the initial Lease Supplement and Trust
Supplement, this Lease, the Trust Agreement and the Trust Indenture as well)
or amendment to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. In addition, Lessee will promptly and duly execute and deliver to
Lessor such further documents and take such further action as Lessor or the
Indenture Trustee may from time to time reasonably request in order more
effectively to carry out the intent and purpose of this Lease and to
establish and protect the rights and remedies created or intended to be
created in favor of Lessor and the Indenture Trustee hereunder, including,
without limitation, if requested by Lessor or the Indenture Trustee, at 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
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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 1999, 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 10Q 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 10K 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 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
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Loan Participant, the Indenture Trustee or the Owner Participant at its
address or telecopy number set forth in Schedule I to the Participation
Agreement.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be
paid by Lessee to Lessor in funds of the type specified in Section 3(f).
Lessee's obligation to pay all Rent payable hereunder shall be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or
other right which Lessee may have against Lessor, in its individual capacity
or as Owner Trustee under the Trust Agreement, the Indenture Trustee (in its
individual capacity or as Indenture Trustee), any Loan Participant, the Owner
Participant, or anyone else for any reason whatsoever (whether in connection
with the transactions contemplated hereby or any other transactions),
including, without limitation, any breach by Lessor or the Owner Participant
of their respective warranties, agreements or covenants contained in any of
the Operative Documents, (ii) any defect in the title, registration,
airworthiness, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interruption or
cessation in or prohibition of the use or possession thereof by Lessee (or
any Sublessee) for any reason whatsoever, including, without limitation, any
such interruption, cessation or prohibition resulting from the act of any
government authority, (iii) any insolvency, bankruptcy, reorganization or
similar case or proceedings by or against Lessee (or any Sublessee) or any
other person, or (iv) any other circumstance, happening, or event whatsoever,
whether or not unforeseen or similar to any of the foregoing. If for any
reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise except as specifically provided herein, Lessee
nonetheless agrees without limitation of the other rights or remedies of
Lessor hereunder to pay to Lessor an amount equal to each Rent payment at the
time such payment would have become due and payable in accordance with the
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. Subject to mutual agreement between
Lessor and Lessee at the time notice is required to be delivered, Lessee
shall have the option to renew this Lease for a one year renewal term which
shall commence only upon the expiration of the Basic Term (the "first Fixed
Renewal Term"), a one year renewal term which shall commence only upon the
expiration of the first Fixed Renewal Term (the "second Fixed Renewal Term"),
and a one year renewal term which shall commence only upon the expiration of
the second Fixed Renewal Term (the "third Fixed Renewal Term") (the first
Fixed Renewal Term, the second Fixed Renewal Term and the third Fixed Renewal
Term, each 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).
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(2) Fair Market Renewal Term. Not less than ninety (90) days before the
end of the third Fixed Renewal Term or any Fair Market Renewal Term and subject
to mutual agreement between Lessor and Lessee at such time, Lessee shall have
the option to renew this Lease by delivery to Lessor of a written notice
irrevocably electing to renew this Lease for a renewal term of one year for a
Basic Rent equal to the "fair market rental value" of the Aircraft for such
period (such renewal term, a "Fair Market Renewal Term"). The aggregate length
of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not
exceed two years.
(3) If no written notice is delivered by Lessee to Lessor pursuant to
Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee has
elected to renew this Lease as aforesaid, and provided that there shall not then
have occurred and be continuing a Default of the type referred to in Section
14(a), 14(b) or 14(e) or an Event of Default and that a Successor Residual
Agreement applicable to the expiration date of the proposed Renewal Term shall
have been delivered to Lessor and the Owner Participant at least ninety (90)
days prior to the commencement of such Renewal Term 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), each semi-annual installment of Basic Rent not to exceed in the
case of a Fixed Renewal Term 66.66% 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, 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 "agreed residual value"
(as in effect under the Residual Agreement or Successor Residual Agreement, as
the case may be) for such date and shall be calculated on a monthly basis based
on the same methodology utilized to calculate Stipulated Loss Values during the
Basic Term on a continuing basis and assuming that the last such Stipulated Loss
Value for such Renewal Term is the "agreed residual value" (as in effect under a
Successor Residual Agreement) for the last day of such Renewal Term.
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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 fair market sales value of the Aircraft; provided,
however, that, notwithstanding any such notice, in the event that the purchase
price would not be equal to or greater than the "Agreed Residual Value"
applicable to such date pursuant to the Residual Agreement or a Successor
Residual Agreement, as the case may be, or in the event that the fair market
sales value shall not have been determined by the ninetieth day prior to the end
of the Basic Term or any Renewal Term, as the case may be, Lessor shall be
entitled to exercise its option to sell the Aircraft pursuant to the Residual
Agreement or a Successor Residual Agreement, as the case may be, and Lessee
shall not be entitled to exercise its purchase option pursuant to this Section
19(b). 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
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determined by an appraisal mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and
one by Lessee within five Business Days after Lessor or Lessee shall have
received written notice from the other party of a demand that such an
appraisal be made, which notice shall specify the appraiser chosen by the
party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent
choose another appraiser within five Business Days after the end of such
twenty-day period. If, within such five-day period, such two appraisers fail
to appoint a third appraiser, then either Lessor or Lessee, on behalf of
both, may request such appointment by the then President of the Association
of the Bar of the City of New York (or any successor organization thereto)
or, in his absence, failure, refusal or inability to act, then either Lessor
or Lessee may apply to the American Arbitration Association (or any successor
organization thereto) in New York, New York for the appointment of such third
appraiser. The decision of the third appraiser so appointed shall be given
within twenty Business Days after the appointment of such third appraiser. As
soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all
three determinations than each of the other two determinations, then the
determination of such appraiser shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and binding
upon the parties hereto. If no determination is more disparate from the
average of all three determinations than each of the other determinations,
then such average shall be final and binding upon the parties thereto. Lessee
and Lessor shall share equally all expenses relating to such appraisal
procedure provided if Lessee elects not to renew this Lease or purchase the
Aircraft following such appraisal, Lessee shall pay all expenses of such
appraisal.
(d) Special Purchase Option. On the EBO Date, 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, in lieu of paying the Special Purchase Price on the EBO Date
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
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outstanding after such payment, exercise such rights as it has to cause the
Aircraft to be released from the Lien of the Trust Indenture.
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein set
forth. To the extent, if any, that this Lease, the Lease Supplements and any
amendments to this Lease constitute chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the assignment
of all Lessor's right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. Subject to Section 3(f) hereof, Lessee agrees to
pay directly to the Indenture Trustee (or, after receipt by Lessee of notice
from the Indenture Trustee of the discharge of the Trust Indenture, to Lessor),
all amounts of Rent due or to become due hereunder and assigned to the Indenture
Trustee and Lessee agrees that the Indenture Trustee's right to such payments
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an 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
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from date of purchase thereof; and (iii) commercial paper of any holding
company of a bank, trust company or national banking association described in
(ii) and commercial paper of any corporation or finance company incorporated
or doing business under the laws of the United States of America or any state
thereof having a rating assigned to such commercial paper of A1 by S&P or P1
by Moody's and having a final maturity of ninety (90) days or less from the
date of purchase thereof; provided, however, that the aggregate amount at any
one time so invested in certificates of deposit issued by any one bank shall
not be in excess of 5% of such bank's capital and surplus. There shall be
promptly remitted to Lessee or its order (but no more frequently than monthly)
any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions and other expenses, if any, incurred
in connection with such investment) unless an Event of Default shall have
occurred and be continuing. Lessee shall be responsible for any net loss
realized as a result of any such investment and shall reimburse Lessor (or
the Indenture Trustee, as the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and understood
that all representations, warranties and undertakings of Lessor hereunder shall
be binding upon Lessor only in its capacity as trustee under the Trust
Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither
-60-
<PAGE>
Lessee nor any affiliate of Lessee will file any tax returns in a manner
inconsistent with the foregoing fact or with Lessor's ownership of the
Aircraft. The section and paragraph headings in this Lease and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of
this Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event of Default
shall have occurred and be continuing and notwithstanding any default by Lessor,
the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's (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.
-61-
<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
-------------------------------
Name: Mark D. Powers
Title: Vice President-Finance and
Assistant Treasurer
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on the _____ day of May, 1998.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: /s/ Donald E. Smith
-------------------------------
Name: Donald E. Smith
Title: Vice President
-Signature Page-
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1997 L]
LEASE SUPPLEMENT No.
[NW 1997 L]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner
Trustee under the Amended and Restated Trust Agreement [NW 1997 L], dated as of
May 1, 1998, 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 L], dated as of May 1, 1998, 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 Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE>
(ii) Engines: four (4) AlliedSignal LF507 type engines
bearing, respectively, manufacturer's serial nos. ______, ______,
______ and ______ (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 April 27, 2017.
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:
--------------------------------------
Name: Mark D. Powers
Title: Vice President - Finance and
Assistant Treasurer
Receipt of this original counterpart of the foregoing Lease Supplement
is hereby acknowledged on this ____ day of May, 1998.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
--------------------------------------
Name: Donald E. Smith
Title: Vice President
- -----------------------------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1997 L]
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent:
<TABLE>
<CAPTION>
Basic Rent Payable in Basic Rent Payable in Total Basic Rent
Lease Period Advance (Percentage of Arrears (Percentage (Percentage of
Date Lessor's Cost) of Lessor's Cost) Lessor's Cost)
- -------------- ----------------------- ---------------------- ----------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1997 L]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<TABLE>
<CAPTION>
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<S> <C>
</TABLE>
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW 1997 L]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
form the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<TABLE>
<CAPTION>
Termination
Termination Value
Date Percentage
---------------- -------------
<S> <C>
</TABLE>
<PAGE>
EXHIBIT E
to
Lease Agreement
[NW 1997 L]
RENT RECALCULATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
1. Any recalculation of Basic Rent, Stipulated Loss Value percentages,
Termination Value percentages and the Special Purchase Price 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 10 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, Stipulated
Loss Value percentages, Termination Value percentages and Special Purchase Price
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, in each case computed from the Delivery
Date through the EBO Date and through April 27, 2017, 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, the Special Purchase Price, Stipulated Loss Value and
Termination Value percentages as of the Delivery Date.
<PAGE>
EXHIBIT F
to
Lease Agreement
[NW 1997 L]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
<TABLE>
<S> <C>
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
</TABLE>
- ------------------------------------
* 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 L]
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 expiration of the Lease at the end of
the Basic Term or any Renewal Term (unless at the expiration of the Basic Term
or such Renewal Term, as the case may be, Lessor shall have irrevocably
exercised its option to sell the Aircraft, and shall be simultaneously
exercising its rights, pursuant to the Residual Agreement or a Substitute
Residual Agreement) or upon the termination of the Lease 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
<PAGE>
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.
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 L]
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
expiration of the Lease at the end of the Basic Term or any Renewal Term but
only if, in any such case, Lessor shall have irrevocably exercised its option to
sell the Aircraft at such expiration, and shall be simultaneously exercising its
rights, pursuant to the Residual Agreement or a Successor Residual Agreement:
1. Definitions. Capitalized terms used in this Exhibit H without other
definition have the respective meanings ascribed thereto in the Lease Agreement
[NW 1997 L], dated as of May 1, 1998, 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
expiration of the Basic Term or at the expiration of a Renewal Term, as
applicable, 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.
<PAGE>
"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.
"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 expiration of the
Basic Term or at the expiration of a Renewal 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 the expiration of the Basic Term or a
Renewal Term in the event that Lessor shall have irrevocably exercised
its option to sell the Aircraft at such expiration, and shall be
simultaneously exercising its rights, pursuant to the Residual
Agreement or a Successor Residual Agreement.
(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
EXHIBIT H - PAGE 2
<PAGE>
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 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 expiration of the Basic Term or a Renewal Term in the event Lessor
shall have irrevocably exercised its option to sell the Aircraft at such
expiration, and shall be simultaneously exercising its rights, pursuant to the
Residual Agreement or a Successor Residual Agreement, 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
EXHIBIT H - PAGE 3
<PAGE>
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 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
EXHIBIT H - PAGE 4
<PAGE>
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
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
EXHIBIT H - PAGE 5
<PAGE>
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) 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
EXHIBIT H - PAGE 6
<PAGE>
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 the expiration of the Basic Term or a
Renewal Term in the event Lessor shall have irrevocably exercised its option to
sell the Aircraft at such expiration, and shall be simultaneously exercising its
rights, pursuant to the Residual Agreement or a Successor Residual Agreement,
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 7
<PAGE>
Exhibit 4(a)(5)
AMENDED AND RESTATED
GUARANTEE
[NW 1997 L]
Dated as of May 1, 1998
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
------------------------------
Page
----
<TABLE>
<CAPTION>
<S> <C> <C>
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
14. Enforcement Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .7
15. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
16. No Guarantee of Secured Certificates. . . . . . . . . . . . . . . . . . .7
</TABLE>
<PAGE>
GUARANTEE
[NW 1997 L]
This AMENDED AND RESTATED GUARANTEE [NW 1997 L], dated as of May 1, 1998
(as amended, modified or supplemented from time to time, the or 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")
does hereby amend and restate in its entirety the Guarantee [NW 1997 L], dated
as of September 25, 1997 (the "Original Guarantee"), from the Guarantor to the
entities named therein.
WHEREAS, on September 25, 1997, Northwest Airlines, Inc., a Minnesota
corporation (the "Lessee"), an indirect wholly-owned subsidiary of the
Guarantor, the Guarantor, two of the Parties, and certain other entities entered
into a Participation Agreement [NW 1997 L], dated as of September 25, 1997 (the
"Original Participation Agreement");
WHEREAS, pursuant to the Assignment and Assumption Agreement, the Initial
Owner Participant has assigned the Beneficial Interest to the Owner Participant;
WHEREAS, the Lessee, the Guarantor, the Owner Participant, the Owner
Trustee, the Indenture Trustee, the Pass Through Trustee and the Subordination
Agent have concurrently herewith amended and restated the Original Participation
Agreement in its entirety by entering into an Amended and Restated Participation
Agreement [NW 1997 L], dated as of the date hereof (as amended, modified or
supplemented from time to time, the "Participation Agreement"); and
WHEREAS, the Lessee wishes to enter into a Lease Agreement [NW 1997 L],
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 the Participation Agreement; 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 has assigned 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 L], dated as of
September 25, 1997, as amended by the First Amendment thereto dated as of the
date hereof, between the Lessor and the
<PAGE>
Indenture Trustee (as so amended and 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 hereby amend and restate the Original
Guarantee in its entirety and agree as follows:
1. Guarantee.
(a) The Guarantor does hereby acknowledge that it is fully aware of the
terms and conditions of the Lease, the Participation Agreement and the other
Operative Documents and the transactions and the other documents contemplated
thereby, and does hereby irrevocably and fully and unconditionally guarantee,
as primary obligor and not as surety merely, to the Parties, as their
respective interests may appear, the payment by the Lessee of all payment
obligations when due under the Lease (including, without limitation, Basic
Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity
Agreement and the other Operative Documents to which the Lessee is a party
(such obligations of the Lessee guaranteed hereby being 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
2
<PAGE>
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 other Operative Document to which the Lessee is a
party, any amendment, waiver or other modification of the Lease or such other
Operative Document (except that any such amendment or other modification shall
be given effect in determining the obligations of the Guarantor hereunder), or
by any substitution, release or exchange of collateral for or other guaranty of
any of the Obligations (except to the extent that such substitution, release or
exchange is undertaken in accordance with the terms of the Operative Documents)
without the consent of the Guarantor, or by any priority or preference to which
any other obligations of the Lessee may be entitled over the Lessee's
obligations under the Lease and the other Operative Documents to which the
Lessee is a party, or by any other circumstance that might otherwise constitute
a legal or equitable defense to or discharge of the obligations of a surety or
guarantor including, without limitation, any defense arising out of any laws of
the United States of America or any State thereof which would excuse, discharge,
exempt, modify or delay the due or punctual payment and performance of the
obligations of the Guarantor hereunder. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not, to the fullest extent permitted by law, affect the liability of the
Guarantor hereunder: (a) the extension of the time for or waiver of, at any
time or from time to time, without notice to the Guarantor, the Lessee's
performance of or compliance with any of its obligations under the Operative
Documents (except that such extension or waiver shall be given effect in
determining the obligations of the Guarantor hereunder), (b) any assignment,
transfer, sublease or other arrangement by which the Lessee transfers possession
or loses control of the use of the Aircraft, (c) any defect in the title,
condition, design, operation or fitness for use of, or damage to or loss or
destruction of, the Aircraft, whether or not due to 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
3
<PAGE>
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 agrees, to the fullest extent permitted by law, that,
without limiting the generality of this Guarantee, if an Event of Default
shall have occurred and be continuing and the Lessor (or any assignee thereof
including, without limitation, the Indenture Trustee) shall be prevented by
applicable law from exercising its remedies (or any of them) under Section 15
of the Lease, the Lessor (or any assignee thereof, including, without
limitation, the Indenture Trustee) shall be, nevertheless, entitled to
receive hereunder from the Guarantor, upon demand therefor the sums that
would otherwise have been due from the Lessee under the Lease had such
remedies been able to be exercised. The Guarantor hereby unconditionally
waives, to the fullest extent permitted by law, any requirement that, as a
condition precedent to the enforcement of the obligations of the Guarantor
hereunder, the Lessee or all or any one or more of any other guarantors of
any of the Obligations be joined as parties to any proceedings for the
enforcement of any provision of this Guarantee.
2. No Implied Third Party Beneficiaries. This Guarantee shall not be
deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit
of any other Person.
3. Waiver; No Set-off; Reinstatement; Subrogation. The Guarantor
waives notice of the acceptance of this Guarantee and of the performance or
nonperformance by the Lessee, demand for payment from the Lessee or any other
Person, notice of nonpayment or failure to perform on the part of the Lessee,
diligence, presentment, protest, dishonor and, to the fullest extent
permitted by law, all other demands or notices whatsoever, other than the
request for payment hereunder and notice provided for in Section 1 hereof.
The obligations of the Guarantor shall be absolute and unconditional and
shall remain in full force and effect until satisfaction of all Obligations
hereunder and, without limiting the generality of the foregoing, to the
extent not prohibited by applicable law, shall not be released, discharged or
otherwise affected by the existence of any claims, set-off, defense or other
rights that the Guarantor may have at any time and from time to time against
any Party, whether in connection herewith or any unrelated transactions.
This Guarantee shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any Financial Obligation is rescinded
or must otherwise be returned by any Party upon the insolvency, bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, liquidation
or similar proceeding with respect to the Lessee or otherwise, all as though
such payment had not been made. The Guarantor, by virtue of any payment or
performance hereunder to a Party, shall be subrogated to such Party's claim
against the Lessee or any other Person relating
4
<PAGE>
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
Lease, the Participation Agreement or any other Operative Document in which
such Obligation is contained; provided that the Guarantor consents to all the
terms of the Trust Indenture and agrees to make all payments hereunder
directly to the Indenture Trustee until such time as the Indenture Trustee
shall give notice to the Guarantor that the Lien of the Trust Indenture has
been fully discharged and thereafter to the Owner Trustee; provided, further,
that the Guarantor shall pay directly to the Lessor, in its individual
capacity, or to the Owner Participant or another Party, as the case may be,
any amount owing to such Person as Supplemental Rent for indemnities provided
in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or
otherwise not constituting part of the Trust Indenture Estate.
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
5
<PAGE>
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.
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
6
<PAGE>
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.
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/ Joseph E. Francht
--------------------------------------
Name: Joseph E. Francht, Jr.
Title: Senior Vice President - Finance
and 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
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW 1997 L]
-----------
PARTIES
-------
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
Sumitomo Bank Capital Markets, Inc., Owner Participant
<PAGE>
Exhibit 4(a)(6)
CONSENT AND AGREEMENT
[NW 1997 L]
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 L] dated as of May 1, 1998
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, whereupon the Manufacturer will not be
required to
<PAGE>
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 L, Attention: Corporate Trust Department, Reference:
Northwest/NW 1997 L, 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 L.
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).
2
<PAGE>
Dated as of May 1, 1998
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British Aerospace
(Operations) Limited
By: /s/ Alain Brodin
---------------------------------------
Title: SVP Commercial
3
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO NORTHWEST
AIRLINES, INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY 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
HEREON 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 AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE THEREOF TO
DTC OR ANOTHER NOMINEE THEREOF OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF
DTC OR SUCH SUCCESSOR'S NOMINEE, UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN
WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM AND TRANSFERS IN PART OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
Registered Principal Amount: $150,000,000
No. CR-1 CUSIP No.: 667281AH2
NORTHWEST AIRLINES, INC.
8.375% Notes due 2004
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
NORTHWEST AIRLINES CORPORATION
NORTHWEST AIRLINES, INC., a corporation duly organized and existing
under the laws of the State of Minnesota (herein called the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to CEDE & CO., or registered
assigns, the principal sum of ONE HUNDRED FIFTY MILLION AND NO/100 DOLLARS
($150,000,000) on March 15, 2004, and to pay interest thereon from March 15,
1997 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, on March 15 and September 15 (each an "Interest
Payment Date") in each year, commencing September 15, 1997 at the rate of 8.375%
per annum until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more predecessor Securities) is registered at the
close of business on the Record Date for such interest, which shall be the 1st
day of March or the 1st day of September (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
<PAGE>
the Holder on such Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, PROVIDED, HOWEVER, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Register or by wire transfer to an account located in the United States
designated by the Holder.
As provided in the Indenture and subject to certain limitations set
forth therein, the obligation of the Company to pay principal of, and interest
on, this Security is unconditionally guaranteed on an unsecured basis pursuant
to the Guarantee endorsed hereon (the "Guarantee") by Northwest Airlines
Corporation (the "Guarantor"). The Indenture provides that the Guarantor shall
be released from the Guarantee and that the holder hereof shall have no further
claim against the Guarantor upon compliance with certain conditions.
This Security is one of a duly authorized series of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an indenture, dated as of March 1, 1997 (herein called the
"Indenture"), between the Company, Northwest Airlines Corporation and State
Street Bank and Trust Company, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Guarantor, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated as the 8.375% Notes
due 2004 of the Company, limited in aggregate principal amount to $150,000,000.
The Company may, at any time prior to the Maturity Date at its option,
redeem this Security, in whole or in part, at a redemption price equal to 100%
of the principal amount hereof to be redeemed plus accrued and unpaid interest
to the date fixed for redemption plus a Make-Whole Premium, if any, upon notice
given not less than 30 nor more than 60 days prior to such date to the
registered Holder of the Securities at its address as it appears on the
Register. The amount of the Make-Whole Premium with respect to any Security (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
<PAGE>
(i) the sum of the present values, calculated as of the
Redemption Date, of:
A. each interest payment that, but for such redemption,
would have been payable on the Security (or portion thereof)
being redeemed on each Interest Payment Date occurring after the
Redemption Date (excluding any accrued interest for the period
prior to the Redemption Date); and
B. the principal amount that, but for such redemption,
would have been payable at the final maturity of the Security (or
portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion thereof)
being redeemed.
The present values of interest and principal payments referred to in
clause (i) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the Treasury Yield (as defined
below) plus 37.5 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided that
if the Company fails to make such appointment at least 45 Business Days prior to
the Redemption Date, or if the institution so appointed is unwilling or unable
to make such calculation, such calculation will be made by Goldman, Sachs & Co.
or, if such firm is unwilling or unable to make such calculation, by an
independent investment banking institution of national standing appointed by the
Trustee (in any such case, an "INDEPENDENT INVESTMENT BANKER").
For purposes of determining the Make-Whole Premium, "TREASURY YIELD"
means a rate of interest per annum equal to the weekly average yield to maturity
of United
States Treasury Notes that have a constant maturity that corresponds to the
remaining term to maturity of the Securities, calculated to the nearest 1/12th
of a year (the "REMAINING TERM"). The Treasury Yield will be determined as of
the third Business Day immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates Release" or any successor release (the "H.15 STATISTICAL RELEASE"). If
the H.15 Statistical Release sets forth a weekly average yield for United States
Treasury Notes having a constant maturity that is the same as the Remaining
Term, then the Treasury Yield will be equal to such weekly average yield. In
<PAGE>
all other cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Upon (i) payment of the amount of principal so declared due and
payable, (ii) payment of interest on any overdue principal and overdue interest
(in each case to the extent that the payment of such interest shall be legally
enforceable) and (iii) the occurrence of certain other events as set forth in
the Indenture, all of the Company's and the Guarantor's obligations in respect
of the payment of the principal of and interest, if any, on the Securities of
this series shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company, the Guarantor and the rights of the Holders of the Securities of each
series to be affected under the Indenture at any time by the Company, the
Guarantor and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (if any) on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest (if any) on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of this
series, of authorized
<PAGE>
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Security, or for any claim based hereon or
otherwise in respect hereof, or based on or in respect of the Indenture, any
indenture supplemental thereto or the Guarantee, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company, the Guarantor or of any successor corporation of either, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee or an Authenticating Agent, by manual signature, this Security shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES, INC.
Dated: By:
---------------------- ------------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
-------------------------
Name: Michael L. Miller
Title: Assistant Secretary
The Guarantor has unconditionally guaranteed, to the extent set forth in
the Indenture and subject to the provisions in the Indenture, the due and
punctual payment of each series of Securities issued thereunder. In case of the
failure of the Company punctually to make any such payment, the Guarantor hereby
agrees to cause such payment to be made punctually.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to the Guarantee are expressly set forth in Article Twelve of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES CORPORATION
Dated:
----------------------- By:
----------------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
---------------------------
Name: Michael L. Miller
Title: Assistant Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of a series issued under the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
-----------------------------
Name:
Title:
Dated:
----------------------
<PAGE>
************************
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please insert Social Security, Taxpayer Identification No. or other identifying
number of Assignee)
(Please print or typewrite name and address including postal zip code of
Assignee)
the within Security of NORTHWEST AIRLINES, INC. (the "COMPANY") and does hereby
irrevocably constitute and appoint _____________________ attorney to transfer
the said Security on the books of the Company, with full power of substitution
in the premises.
Dated:
-------------------------- ----------------------------------------
(The signature must be guaranteed by an
eligible institution member of the
medallion signature guarantee program.)
[NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the within investment in every particular, without
alteration or enlargement or any change whatever.]
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO NORTHWEST
AIRLINES, INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY 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
HEREON 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 AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE THEREOF TO
DTC OR ANOTHER NOMINEE THEREOF OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF
DTC OR SUCH SUCCESSOR'S NOMINEE, UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN
WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM AND TRANSFERS IN PART OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.
Registered Principal Amount: $100,000,000
No. CR-1 CUSIP No.: 667281AJ8
NORTHWEST AIRLINES, INC.
8.70% Notes due 2007
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
NORTHWEST AIRLINES CORPORATION
NORTHWEST AIRLINES, INC., a corporation duly organized and existing
under the laws of the State of Minnesota (herein called the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to CEDE & CO., or registered
assigns, the principal sum of ONE HUNDRED MILLION AND NO/100 DOLLARS
($100,000,000) on March 15, 2007, and to pay interest thereon from March 15,
1997 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, on March 15 and September 15 (each an "Interest
Payment Date") in each year, commencing September 15, 1997 at the rate of 8.70%
per annum until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more predecessor Securities) is registered at the
close of business on the Record Date for such interest, which shall be the 1st
day of March or the 1st day of September (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
<PAGE>
the Holder on such Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such Special Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, PROVIDED, HOWEVER, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Register or by wire transfer to an account located in the United States
designated by the Holder.
As provided in the Indenture and subject to certain limitations set
forth therein, the obligation of the Company to pay principal of, and interest
on, this Security is unconditionally guaranteed on an unsecured basis pursuant
to the Guarantee endorsed hereon (the "Guarantee") by Northwest Airlines
Corporation (the "Guarantor"). The Indenture provides that the Guarantor shall
be released from the Guarantee and that the holder hereof shall have no further
claim against the Guarantor upon compliance with certain conditions.
This Security is one of a duly authorized series of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an indenture, dated as of March 1, 1997 (herein called the
"Indenture"), between the Company, Northwest Airlines Corporation and State
Street Bank and Trust Company, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Guarantor, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated as the 8.70% Notes due
2007 of the Company, limited in aggregate principal amount to $100,000,000.
The Company may, at any time prior to the Maturity Date at its option,
redeem this Security, in whole or in part, at a redemption price equal to 100%
of the principal amount hereof to be redeemed plus accrued and unpaid interest
to the date fixed for redemption plus a Make-Whole Premium, if any, upon notice
given not less than 30 nor more than 60 days prior to such date to the
registered Holder of the Securities at its address as it appears on the
Register. The amount of the Make-Whole Premium with respect to any Security (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
<PAGE>
(i) the sum of the present values, calculated as of the
Redemption Date, of:
A. each interest payment that, but for such redemption,
would have been payable on the Security (or portion thereof)
being redeemed on each Interest Payment Date occurring after the
Redemption Date (excluding any accrued interest for the period
prior to the Redemption Date); and
B. the principal amount that, but for such redemption,
would have been payable at the final maturity of the Security (or
portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion thereof)
being redeemed.
The present values of interest and principal payments, referred to in
clause (i) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the Treasury Yield (as defined
below) plus 50 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided that
if the Company fails to make such appointment at least 45 Business Days prior to
the Redemption Date, or if the institution so appointed is unwilling or unable
to make such calculation, such calculation will be made by Goldman, Sachs & Co.
or, if such firm is unwilling or unable to make such calculation, by an
independent investment banking institution of national standing appointed by the
Trustee (in any such case, an "INDEPENDENT INVESTMENT BANKER").
For purposes of determining the Make-Whole Premium, "TREASURY YIELD"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the Securities, calculated to the nearest
1/12th of a year (the "REMAINING TERM"). The Treasury Yield will be determined
as of the third Business Day immediately preceding the applicable Redemption
Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates Release" or any successor release (the "H.15 STATISTICAL RELEASE"). If
the H.15 Statistical Release sets forth a weekly average yield for United States
Treasury Notes having a constant maturity that is the same as the Remaining
Term, then the Treasury Yield will be equal to such weekly average yield. In
<PAGE>
all other cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Upon (i) payment of the amount of principal so declared due and
payable, (ii) payment of interest on any overdue principal and overdue interest
(in each case to the extent that the payment of such interest shall be legally
enforceable) and (iii) the occurrence of certain other events as set forth in
the Indenture, all of the Company's and the Guarantor's obligations in respect
of the payment of the principal of and interest, if any, on the Securities of
this series shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company, the Guarantor and the rights of the Holders of the Securities of each
series to be affected under the Indenture at any time by the Company, the
Guarantor and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (if any) on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest (if any) on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of this
series, of authorized
<PAGE>
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Security, or for any claim based hereon or
otherwise in respect hereof, or based on or in respect of the Indenture, any
indenture supplemental thereto or the Guarantee, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company, the Guarantor or of any successor corporation of either, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee or an Authenticating Agent, by manual signature, this Security shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES, INC.
Dated: By:
------------------------- -------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
--------------------------
Name: Michael L. Miller
Title: Assistant Secretary
The Guarantor has unconditionally guaranteed, to the extent set forth in
the Indenture and subject to the provisions in the Indenture, the due and
punctual payment of each series of Securities issued thereunder. In case of the
failure of the Company punctually to make any such payment, the Guarantor hereby
agrees to cause such payment to be made punctually.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to the Guarantee are expressly set forth in Article Twelve of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES CORPORATION
Dated: By:
----------------------- ----------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
--------------------------------
Name: Michael L. Miller
Title: Assistant Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of a series issued under the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
-------------------------------
Name:
Title:
Dated:
<PAGE>
************************
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please insert Social Security, Taxpayer Identification No. or other identifying
number of Assignee)
(Please print or typewrite name and address including postal zip code of
Assignee)
the within Security of NORTHWEST AIRLINES, INC. (the "COMPANY") and does hereby
irrevocably constitute and appoint attorney to transfer the said Security on
the books of the Company, with full ________________________ power of
substitution in the premises.
Dated:
------------------------- ----------------------------------------
(The signature must be guaranteed by an
eligible institution member of the
medallion signature guarantee program.)
[NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the within investment in every particular, without
alteration or enlargement or any change whatever.]
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO NORTHWEST
AIRLINES, INC. 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 AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE THEREOF TO
DTC OR ANOTHER NOMINEE THEREOF OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF
DTC OR SUCH SUCCESSOR'S NOMINEE, UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN
WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM AND TRANSFERS IN PART OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO.
Registered Principal Amount: $200,000,000
No. CR-1 CUSIP No.: 667281 AL 3
NORTHWEST AIRLINES, INC.
7 5/8% NOTES DUE 2005
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
NORTHWEST AIRLINES CORPORATION
1. PRINCIPAL AND INTEREST. NORTHWEST AIRLINES, INC., a corporation
duly organized and existing under the laws of the State of Minnesota (herein
called the "Company", which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED MILLION
DOLLARS ($200,000,000) on March 15, 2005, and to pay interest thereon from March
4, 1998 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, on March 15 and September 15 (each an "Interest
Payment Date") in each year, commencing September 15, 1998 at the rate of 7 5/8%
per annum until the principal hereof is paid or made available for payment.
Interest will be computed on the basis of a 360 day year of twelve 30 day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more predecessor Securities) is
registered at the close of business on the first day of the month of such
interest payment date, which shall be the first
<PAGE>
2
day of March or the first day of September (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by STATE STREET BANK AND TRUST COMPANY,
notice whereof shall be given to Holders of Securities of this series not less
than 10 days prior to such Special Record Date, or be paid on a specified date
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
2. INDENTURE. This Security is one of a duly authorized series of
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an indenture, dated as of March 1, 1997
(herein called the "Indenture"), among the Company, as issuer, Northwest
Airlines Corporation, as guarantor, and STATE STREET BANK AND TRUST COMPANY, as
trustee (in such capacity, the "Trustee," which term includes any successor
trustee under the Indenture), and with respect to which, the terms of this
Security were established pursuant to the Officers' Certificate delivered
pursuant to Section 3.1 of the Indenture and dated the date hereof, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Guarantor, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
This Security is one of the series designated as the 7 5/8% Notes due
2005 of the Company, limited in aggregate principal amount to $200,000,000. The
Securities are unsecured obligations of the Company and rank pari passuwith all
unsecured and unsubordinated obligations of the Company.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S.C. sections 777aaa-777bbbb) (the "TIA"), as in effect
on the date of the Indenture (except as otherwise indicated in the Indenture).
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and holders of Securities are referred to the Indenture and the
TIA for a statement of them.
3. METHOD OF PAYMENT. Payment of the principal of, premium, if any,
and interest on each of the Securities shall be payable at the office or agency
of the Company to be maintained in the City of New York; PROVIDED, HOWEVER, that
payments of principal, premium or interest on the Securities may be made, at the
option of the Company or the Guarantor, as the case may be, by check mailed to
the address of the person entitled thereto as of the Regular Record Date and as
shown on the Register or by wire transfer to an account located in the United
States designated by the holder of such Security. Principal of, premium, if
any, and interest on the Securities shall be payable in Dollars.
<PAGE>
3
4. REGISTRAR AND PAYING AGENT. The Registrar and Paying Agent shall
be initially STATE STREET BANK AND TRUST COMPANY.
5. OPTIONAL REDEMPTION. The Securities shall be redeemable, at the
option of the Company, at any time in whole or from time to time in part, upon
not less than 30 and not more than 60 days' notice mailed to each holder of
Securities to be redeemed at the holder's address appearing in the Register, on
any date prior to maturity at a price equal to 100% of the principal amount
thereof plus accrued interest to the Redemption Date (subject to the right of
holders of record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the Redemption Date) plus a
Make-Whole Premium (as defined below), if any (the "Redemption Price"). In no
event shall the Redemption Price ever be less than 100% of the principal amount
of the Securities plus accrued interest to the Redemption Date.
"Make-Whole Premium" with respect to the Securities (or portion
thereof) to be redeemed shall be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such
redemption, would have been payable on the Security (or
portion thereof) being redeemed on each Interest Payment
Date occurring after the Redemption Date (excluding any
accrued interest for the period prior to the Redemption
Date); and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion
thereof) being redeemed.
The present values of interest and principal payments referred to in
clause (i) above shall be determined in accordance with generally accepted
principles of financial analysis. Such present values shall be calculated
by discounting the amount of each payment of interest or principal from the
date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Treasury
Yield (as defined below) plus 37.5 basis points.
The Make-Whole Premium shall be calculated by an independent
investment banking institution of national standing appointed by the
Company; provided, that if the Company fails to make such appointment at
least 45 Business Days prior to the Redemption Date, or if the institution
so appointed is unwilling or unable to make
<PAGE>
4
such calculation, such calculation shall be made by MORGAN STANLEY & CO.
INCORPORATED or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent
Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Securities to be
redeemed, calculated to the nearest 1/12th of a year (the "Remaining
Term"). The Treasury Yield shall be determined as of the third Business Day
immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes shall be
determined by reference to the most recent statistical release published by
the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release (the "H.15 Statistical Release").
If the H.15 Statistical Release sets forth a weekly average yield for
United States Treasury Notes having a constant maturity that is the same as
the Remaining Term, then the Treasury Yield shall be equal to such weekly
average yield. In all other cases, the Treasury Yield shall be calculated
by interpolation, on a straight-line basis, between the weekly average
yields on the United States Treasury Notes that have a constant maturity
closest to and greater than the Remaining Term and the United States
Treasury Notes that have a constant maturity closest to and less than the
Remaining Term (in each case as set forth in the H.15 Statistical Release).
Any weekly average yields so calculated by interpolation shall be rounded
to the nearest 1/100th of 1%, with any figure of 1/200% or above being
rounded upward. If weekly average yields for United States Treasury Notes
are not available in the H.15 Statistical Release or otherwise, then the
Treasury Yield shall be calculated by interpolation of comparable rates
selected by the Independent Investment Banker.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed by such method as the Trustee
shall deem fair and appropriate. The Trustee may select for redemption
Securities and portions of Securities in amounts of $1,000 or integral
multiples of $1,000.
6. SINKING FUND. The Company shall have no sinking fund or
analogous obligations in respect of the Securities.
7. DISCHARGE AND DEFEASANCE. The Securities are not subject to
defeasance or covenant defeasance.
8. DENOMINATIONS; TRANSFERS; EXCHANGE. The Securities are in fully
registered form, without coupons, in denominations of $1,000 or any integral
multiple of $1,000 in excess of $1,000. A Holder may register transfers of or
exchange securities in accordance with the Indenture. No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any
<PAGE>
5
tax or other governmental charge payable in connection therewith. Prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
9. EVENTS OF DEFAULT; REMEDIES. The Events of Default are as set
forth in Section 5.1 of the Indenture. If an Event of Default with respect to
Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture. Upon a declaration of acceleration of
the Securities, the principal of the Securities may be declared due and payable
in the manner, and with the effect, provided in the Indenture.
10. AMENDMENTS AND WAIVERS. The Indenture permits, with certain
exceptions as therein provided, that with the written consent of the Holders of
not less than a majority of the aggregate principal amount of the Outstanding
Securities of each series to be adversely affected thereby, the Company, the
Guarantor and the Trustee may enter into an indenture or indentures thereto to
add any provisions or to change or eliminate any provisions of the Indenture or
any other indenture supplemental thereto or to modify the rights of the Holders
of each such series. The Indenture also provides, with certain exceptions
therein provided, that the Holders of not less than a majority of the aggregate
principal amount of the Outstanding Securities of any series by notice to the
Trustee may waive on behalf of the Holders of all Securities of such series a
past Default or Event of Default with respect to that series and its
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
11. OBLIGATIONS ABSOLUTE. No reference herein to the Indenture and
no provision of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest (if any) on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.
12. GUARANTEE. As provided in the Indenture and subject to certain
limitations set forth therein, the obligation of the Company to pay principal
of, and interest on, this Security is fully and unconditionally guaranteed on a
senior basis pursuant to the Guarantee endorsed hereon (the "Guarantee") by
NORTHWEST AIRLINES CORPORATION (the "Guarantor"). The Indenture provides that
the Guarantor shall be released from the Guarantee and that the holder hereof
shall have no further claim against the Guarantor upon compliance with certain
conditions.
13. NO RECOURSE AGAINST OTHERS. No recourse shall be had for the
payment of the principal of, or premium, if any, or interest on, this Security,
or for any claim based hereon or otherwise in respect hereof, or based on or in
respect of the Indenture, any indenture supplemental thereto or the Guarantee,
against any incorporator, stockholder, officer
<PAGE>
6
or director, as such, past, present or future, of the Company, the Guarantor or
of any successor corporation of either, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
14. DEFINED TERMS. All capitalized terms used in this Security which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
15. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. SUCCESSORS AND ASSIGNS. All covenants and agreements of the
Company in the Indenture and the Securities shall bind its successors and
assigns. All agreements of the Trustee in the Indenture shall bind its
successor.
17. AUTHENTICATION. Unless the certificate of authentication hereon
has been executed by the Trustee or an Authenticating Agent, by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
18. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities, and the Trustee may use CUSIP
numbers in notices as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice and reliance may be placed only on the other identification
numbers placed thereon.
<PAGE>
7
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES, INC.
Dated: March 4, 1998 By:
------------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
---------------------------
Name: Michael L. Miller
Title: Assistant Secretary
The Guarantor has fully and unconditionally guaranteed, to the extent set
forth in the Indenture and subject to the provisions in the Indenture, the due
and punctual payment of each series of Securities issued thereunder. In case of
the failure of the Company punctually to make any such payment, the Guarantor
hereby agrees to cause such payment to be made punctually.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to the Guarantee are expressly set forth in Article Twelve of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES CORPORATION
Dated: March 4, 1998 By:
-----------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
------------------------------
Name: Michael L. Miller
Title: Assistant Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 7 5/8 Notes due 2005 described in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------
Name:
Title:
Dated: March , 1998
<PAGE>
************************
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(PLEASE INSERT SOCIAL SECURITY, TAXPAYER IDENTIFICATION NO. OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
the within Security of NORTHWEST AIRLINES, INC. (the "COMPANY") and NORTHWEST
AIRLINES CORPORATION and does hereby irrevocably constitute and appoint
____________________________ attorney to transfer the said Security on the books
of the Company, with full power of substitution in the premises.
Dated:
-------------------------- ----------------------------------------
(THE SIGNATURE MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION MEMBER OF THE
MEDALLION SIGNATURE GUARANTEE PROGRAM.)
[NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INVESTMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.]
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO NORTHWEST
AIRLINES, INC. 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 AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE THEREOF TO
DTC OR ANOTHER NOMINEE THEREOF OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF
DTC OR SUCH SUCCESSOR'S NOMINEE, UNLESS AND UNTIL THIS SECURITY IS EXCHANGED IN
WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM AND TRANSFERS IN PART OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO.
Registered Principal Amount: $200,000,000
No. CR-1 CUSIP No.: 667281 AM 1
NORTHWEST AIRLINES, INC.
7 7/8% NOTES DUE 2008
GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
NORTHWEST AIRLINES CORPORATION
1. PRINCIPAL AND INTEREST. NORTHWEST AIRLINES, INC., a corporation
duly organized and existing under the laws of the State of Minnesota (herein
called the "Company", which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of TWO HUNDRED MILLION
DOLLARS ($200,000,000) on March 15, 2008, and to pay interest thereon from March
4, 1998 or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, on March 15 and September 15 (each an "Interest
Payment Date") in each year, commencing September 15, 1998 at the rate of 7 7/8%
per annum until the principal hereof is paid or made available for payment.
Interest will be computed on the basis of a 360 day year of twelve 30 day
months. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more predecessor Securities) is
registered at the close of business on the first day of the month of such
interest payment date, which shall be the first
<PAGE>
2
day of March or the first day of September (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the STATE STREET BANK AND TRUST COMPANY,
notice whereof shall be given to Holders of Securities of this series not less
than 10 days prior to such Special Record Date, or be paid on a specified date
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
2. INDENTURE. This Security is one of a duly authorized series of
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an indenture, dated as of March 1, 1997
(herein called the "Indenture"), among the Company, as issuer, Northwest
Airlines Corporation, as guarantor, and STATE STREET BANK AND TRUST COMPANY, as
trustee (in such capacity, the "Trustee," which term includes any successor
trustee under the Indenture), and with respect to which, the terms of this
Security were established pursuant to the Officers' Certificate delivered
pursuant to Section 3.1 of the Indenture and dated the date hereof, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Guarantor, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
This Security is one of the series designated as the 7 7/8% Notes
due 2008 of the Company, limited in aggregate principal amount to $200,000,000.
The Securities are unsecured obligations of the Company and rank pari passuwith
all unsecured and unsubordinated obligations of the Company.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S.C. sections 777aaa-777bbbb) (the "TIA"), as in effect
on the date of the Indenture (except as otherwise indicated in the Indenture).
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and holders of Securities are referred to the Indenture and the
TIA for a statement of them.
3. METHOD OF PAYMENT. Payment of the principal of, premium, if any,
and interest on each of the Securities shall be payable at the office or agency
of the Company to be maintained in the City of New York; PROVIDED, HOWEVER, that
payments of principal, premium or interest on the Securities may be made, at the
option of the Company or the Guarantor, as the case may be, by check mailed to
the address of the person entitled thereto as of the Regular Record Date and as
shown on the Register or by wire transfer to an account located in the United
States designated by the holder of such Security. Principal of, premium, if
any, and interest on the Securities shall be payable in Dollars.
<PAGE>
3
4. REGISTRAR AND PAYING AGENT. The Registrar and Paying Agent shall
be initially STATE STREET BANK AND TRUST COMPANY.
5. OPTIONAL REDEMPTION. The Securities shall be redeemable, at the
option of the Company, at any time in whole or from time to time in part, upon
not less than 30 and not more than 60 days' notice mailed to each holder of
Securities to be redeemed at the holder's address appearing in the Register, on
any date prior to maturity at a price equal to 100% of the principal amount
thereof plus accrued interest to the Redemption Date (subject to the right of
holders of record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the Redemption Date) plus a
Make-Whole Premium (as defined below), if any (the "Redemption Price"). In no
event shall the Redemption Price ever be less than 100% of the principal amount
of the Securities plus accrued interest to the Redemption Date.
"Make-Whole Premium" with respect to the Securities (or portion
thereof) to be redeemed shall be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such
redemption, would have been payable on the Security (or
portion thereof) being redeemed on each Interest Payment
Date occurring after the Redemption Date (excluding any
accrued interest for the period prior to the Redemption
Date); and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the Security (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion
thereof) being redeemed.
The present values of interest and principal payments referred to in
clause (i) above shall be determined in accordance with generally accepted
principles of financial analysis. Such present values shall be calculated
by discounting the amount of each payment of interest or principal from the
date that each such payment would have been payable, but for the
redemption, to the Redemption Date at a discount rate equal to the Treasury
Yield (as defined below) plus 50.0 basis points.
The Make-Whole Premium shall be calculated by an independent
investment banking institution of national standing appointed by the
Company; provided, that if the Company fails to make such appointment at
least 45 Business Days prior to the Redemption Date, or if the institution
so appointed is unwilling or unable to make
<PAGE>
4
such calculation, such calculation shall be made by MORGAN STANLEY & CO.
INCORPORATED or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent
Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Securities to be
redeemed, calculated to the nearest 1/12th of a year (the "Remaining
Term"). The Treasury Yield shall be determined as of the third Business Day
immediately preceding the applicable Redemption Date.
The weekly average yields of United States Treasury Notes shall be
determined by reference to the most recent statistical release published by
the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release (the "H.15 Statistical Release").
If the H.15 Statistical Release sets forth a weekly average yield for
United States Treasury Notes having a constant maturity that is the same as
the Remaining Term, then the Treasury Yield shall be equal to such weekly
average yield. In all other cases, the Treasury Yield shall be calculated
by interpolation, on a straight-line basis, between the weekly average
yields on the United States Treasury Notes that have a constant maturity
closest to and greater than the Remaining Term and the United States
Treasury Notes that have a constant maturity closest to and less than the
Remaining Term (in each case as set forth in the H.15 Statistical Release).
Any weekly average yields so calculated by interpolation shall be rounded
to the nearest 1/100th of 1%, with any figure of 1/200% or above being
rounded upward. If weekly average yields for United States Treasury Notes
are not available in the H.15 Statistical Release or otherwise, then the
Treasury Yield shall be calculated by interpolation of comparable rates
selected by the Independent Investment Banker.
If less than all of the Securities are to be redeemed, the Trustee,
shall select the Securities to be redeemed by such method as the Trustee
shall deem fair and appropriate. The Trustee may select for redemption
Securities and portions of Securities in amounts of $1,000 or integral
multiples of $1,000.
6. SINKING FUND. The Company shall have no sinking fund or
analogous obligations in respect of the Securities.
7. DISCHARGE AND DEFEASANCE. The Securities are not subject to
defeasance or covenant defeasance.
8. DENOMINATIONS; TRANSFERS; EXCHANGE. The Securities are in fully
registered form, without coupons, in denominations of $1,000 or any integral
multiple of $1,000 in excess of $1,000. A Holder may register transfers of or
exchange securities in accordance with the Indenture. No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any
<PAGE>
5
tax or other governmental charge payable in connection therewith. Prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee, as trustee, and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
9. EVENTS OF DEFAULT; REMEDIES. The Events of Default are as set
forth in Section 5.1 of the Indenture. If an Event of Default with respect to
Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture. Upon a declaration of acceleration of
the Securities, the principal of the Securities may be declared due and payable
in the manner, and with the effect, provided in the Indenture.
10. AMENDMENTS AND WAIVERS. The Indenture permits, with certain
exceptions as therein provided, that with the written consent of the Holders of
not less than a majority of the aggregate principal amount of the Outstanding
Securities of each series to be adversely affected thereby, the Company, the
Guarantor and the Trustee may enter into an indenture or indentures thereto to
add any provisions or to change or eliminate any provisions of the Indenture or
any other indenture supplemental thereto or to modify the rights of the Holders
of each such series. The Indenture also provides, with certain exceptions
therein provided, that the Holders of not less than a majority of the aggregate
principal amount of the Outstanding Securities of any series by notice to the
Trustee may waive on behalf of the Holders of all Securities of such series a
past Default or Event of Default with respect to that series and its
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
11. OBLIGATIONS ABSOLUTE. No reference herein to the Indenture and
no provision of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest (if any) on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.
12. GUARANTEE. As provided in the Indenture and subject to certain
limitations set forth therein, the obligation of the Company to pay principal
of, and interest on, this Security is fully and unconditionally guaranteed on a
senior basis pursuant to the Guarantee endorsed hereon (the "Guarantee") by
NORTHWEST AIRLINES CORPORATION (the "Guarantor"). The Indenture provides that
the Guarantor shall be released from the Guarantee and that the holder hereof
shall have no further claim against the Guarantor upon compliance with certain
conditions.
13. NO RECOURSE AGAINST OTHERS. No recourse shall be had for the
payment of the principal of, or premium, if any, or interest on, this Security,
or for any claim based hereon or otherwise in respect hereof, or based on or in
respect of the Indenture, any
<PAGE>
6
indenture supplemental thereto or the Guarantee, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company, the Guarantor or of any successor corporation of either, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
14. DEFINED TERMS. All capitalized terms used in this Security which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
15. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. SUCCESSORS AND ASSIGNS. All covenants and agreements of the
Company in the Indenture and the Securities shall bind its successors and
assigns. All agreements of the Trustee in the Indenture shall bind its
successor.
17. AUTHENTICATION. Unless the certificate of authentication hereon
has been executed by the Trustee or an Authenticating Agent, by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
18. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities, and the Trustee may use CUSIP
numbers in notices as a convenience to Holders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice and reliance may be placed only on the other identification
numbers placed thereon.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES, INC.
Dated: March , 1998 By:
----------------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
------------------------------
Name: Michael L. Miller
Title: Assistant Secretary
The Guarantor has fully and unconditionally guaranteed, to the extent set
forth in the Indenture and subject to the provisions in the Indenture, the due
and punctual payment of each series of Securities issued thereunder. In case of
the failure of the Company punctually to make any such payment, the Guarantor
hereby agrees to cause such payment to be made punctually.
The obligations of the Guarantor to the Holders and to the Trustee pursuant
to the Guarantee are expressly set forth in Article Twelve of the Indenture and
reference is hereby made to the Indenture for the precise terms of the
Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this instrument to be duly
executed and its corporate seal to be hereunto affixed and attested.
NORTHWEST AIRLINES CORPORATION
Dated: March , 1998 By:
-------------------------------
Name: James A. Lawrence
Title: Executive Vice President
and Chief Financial Officer
Attest:
----------------------------
Name: Michael L. Miller
Title: Assistant Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 7 7/8 Notes due 2008 described in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------------
Name:
Title:
Dated: March , 1998
<PAGE>
************************
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(PLEASE INSERT SOCIAL SECURITY, TAXPAYER IDENTIFICATION NO. OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE)
the within Security of NORTHWEST AIRLINES, INC. (the "COMPANY") and NORTHWEST
AIRLINES CORPORATION and does hereby irrevocably constitute and appoint
____________________________ attorney to transfer the said Security on the
books of the Company, with full power of substitution in the premises.
Dated:
------------------------ ----------------------------------------
(THE SIGNATURE MUST BE GUARANTEED BY AN
ELIGIBLE INSTITUTION MEMBER OF THE
MEDALLION SIGNATURE GUARANTEE PROGRAM.)
[NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN INVESTMENT IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.]
<PAGE>
Exhibit 99(a)
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 L]
Dated as of
May 1, 1998
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
SUMITOMO BANK CAPITAL MARKETS, INC.,
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
N512XJ
Leased to Northwest Airlines, Inc.
<PAGE>
INDEX TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Participations in Lessor's Cost of the Aircraft.................. 4
SECTION 2. Lessee's Notice of Delivery Date................................. 7
SECTION 3. Instructions to the Owner Trustee................................ 7
SECTION 4. [Intentionally Omitted.]......................................... 8
SECTION 5. Delivery Date Closing Conditions................................. 8
(a) Conditions Precedent to the Delivery Date Closing........... 8
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor...................................................17
SECTION 6. Extent of Interest of Certificate Holders........................19
SECTION 7. Representations and Warranties of Lessee and the Guarantor;
Indemnities......................................................19
(a) Representations and Warranties...............,..............19
(b) General Tax Indemnity............ Error! Bookmark not defined.
(c) General Indemnity................ Error! Bookmark not defined.
(d) Income Tax....................... Error! Bookmark not defined.
SECTION 8. Representations, Warranties and Covenants........................22
SECTION 9. Reliance of Liquidity Provider...................................41
SECTION 10. Other Documents.................................................42
SECTION 11. Certain Covenants of Lessee.....................................42
SECTION 12. Owner for Federal Tax Purposes..................................43
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction...........43
SECTION 14. Change of Situs of Owner Trust..................................44
SECTION 15. Miscellaneous...................................................45
SECTION 16. Expenses........................................................46
SECTION 17. Refinancings....................................................47
SECTION 18. Collateral Account..............................................49
</TABLE>
(i)
<PAGE>
APPENDICES
----------
Appendix A - Definitions
SCHEDULES
---------
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
--------
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibits B-H - [Intentionally Omitted]
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 Thelen, Marrin, Johnson &
Bridges LLP, special counsel for the Owner Participant
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant
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
(ii)
<PAGE>
Exhibit Q - Form of Delivery Date Opinion of Bingham, Dana & Gould LLP,
special counsel for the Pass Through Trustee
Exhibit R - Section 7(b) - General Tax Indemnity
Exhibit S - Section 7(c) - General Indemnity
(iii)
<PAGE>
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 L]
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT [NW 1997 L] dated as
of May 1, 1998, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation
(the "Guarantor"), (iii) SUMITOMO BANK CAPITAL MARKETS, INC., 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"), does hereby amend and restate in
its entirety the Participation Agreement dated as of September 25, 1997 among
the Lessee, Northwest Airlines, Inc., as the Initial Owner Participant (the
"Initial Owner Participant"), the Guarantor, the Pass Through Trustee, the
Owner Trustee, the Subordination Agent and the Indenture Trustee (the
"Original Participation Agreement"; and as so amended and restated hereby,
the or this "Agreement");
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
has been delivered by the Manufacturer to Lessee and which is the subject of
this Agreement;
WHEREAS, the parties to the Original Participation Agreement entered into
such Original Participation Agreement on the Certificate Closing Date, and
pursuant to Section 1(c) of the Original Participation Agreement, the parties
thereto contemplated amending and restating such Original Participation
Agreement by entering into this Agreement;
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"), on the Certificate Closing Date, three
separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") were
<PAGE>
created to facilitate certain of the transactions contemplated hereby and by the
Original Participation Agreement, 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 were 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, on the Certificate Closing Date, (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 entered into
the Intercreditor Agreement, dated as of September 25, 1997 (the "Intercreditor
Agreement");
WHEREAS, the Secured Certificates are being 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 and by
the Original Participation Agreement, Lessee and the Guarantor 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, on the Certificate Closing Date, the Initial Owner Participant
entered into a Trust Agreement [NW 1997 L], dated as of September 25, 1997 (said
Trust Agreement, prior to being amended and restated in its entirety as of the
date hereof, being herein called the "Original Trust Agreement"), with the Owner
Trustee, pursuant to which Original Trust Agreement the Owner Trustee agreed,
among other things, to hold the Trust Estate defined in Section 1.01 thereof for
the use and benefit of the Initial Owner Participant;
WHEREAS, immediately prior to the execution and delivery of this Agreement,
the Initial Owner Participant and the Owner Participant entered into an
Assignment and Assumption Agreement [NW 1997 L], dated as of the date hereof
(the "Assignment and Assumption Agreement"), pursuant to which the Initial Owner
Participant transferred its Beneficial Interest and certain other rights to the
Owner Participant;
WHEREAS, concurrently with the execution and delivery of this Agreement, to
reflect the transactions contemplated by the Assignment and Assumption, the
Owner Participant and the Owner Trustee are amending and restating the Original
Trust Agreement in its entirety by entering into an Amended and Restated Trust
Agreement [NW 1997 L], dated as of the date hereof (said Amended and Restated
Trust Agreement [NW 1997 L], 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
2
<PAGE>
Supplement referred to below), 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, on the Certificate Closing Date, the Indenture Trustee and the
Owner Trustee entered into a Trust Indenture and Security Agreement [NW 1997 L]
dated as of September 25, 1997 (said Trust Indenture and Security Agreement,
prior to being amended as of the date hereof, being herein called the "Original
Trust Indenture") pursuant to which the Owner Trustee issued secured
certificates substantially in the form set forth in Section 2.01 thereof in
three series, which Secured Certificates were 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 Owner Trustee and the Indenture Trustee are entering into the First
Amendment to Trust Indenture and Security Agreement [NW 1997 L], dated as of the
date hereof (the Original Trust Indenture, as so amended by said First Amendment
to Trust Indenture and Security Agreement [NW 1997 L] and as the same may be
amended or supplemented from time to time, being herein called the "Trust
Indenture"), pursuant to which certain provisions of the Original Trust
Indenture are being amended to reflect the transactions contemplated by this
Agreement;
WHEREAS, on the Certificate Closing Date, the Guarantor entered into the
Guarantee [NW 1997 L] dated as of September 25, 1997, pursuant to which the
Guarantor guaranteed certain obligations of Lessee under the Operative
Documents as defined in the Original Participation Agreement (the "Original
Guarantee");
WHEREAS, the parties hereto wish to have the Original Guarantee amended
and restated in its entirety, so that the Guarantor is entering into an
Amended and Restated Guarantee [NW 1997 L] dated as of the date hereof,
pursuant to which the Guarantor agrees to guarantee the obligations of Lessee
under the Operative Documents (the "Guarantee");
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 L], 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 L] (herein called the "Consent and Agreement"), substantially in
the form attached to the Purchase Agreement Assignment (herein called the
"Consent and Agreement");
(iii) the Owner Trustee will execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust
Indenture (the "Trust
3
<PAGE>
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 L], 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;
and
(v) the Owner Participant and Lessee will enter into a Tax Indemnity
Agreement [NW 1997 L], dated as of the date hereof (the "Tax Indemnity
Agreement");
WHEREAS, on the Delivery Date, pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment and the Bill 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;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby amend and restate the Original
Participation Agreement in its entirety and agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft.
(a) Participations Prior to the Delivery Date. Subject to the terms and
conditions of the Original Participation Agreement, the Pass Through Trustee for
each Pass Through Trust agreed to finance, in part, the Owner Trustee's payment
of Lessor's Cost for the Aircraft by paying to the Indenture Trustee on behalf
of the Owner Trustee on the Certificate Closing Date the aggregate purchase
price of the Secured Certificates being issued to such Pass Through Trustee as
set forth on Schedule II of the Original Participation Agreement opposite the
name of such Pass Through Trust. On the Certificate Closing Date, the Indenture
Trustee, on behalf of the Owner Trustee, deposited by wire transfer or
intra-bank transfer, the amounts received by it pursuant to the preceding
sentence, which amounts constitute the Debt Portion set forth on Schedule II
hereto (Schedule II hereto, as it relates to the Pass Through Trustee, being
identical to Schedule II to the Original Participation Agreement) in the
Collateral Account pursuant to the Original Trust Indenture.
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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,
issued, pursuant to Article II of the Original 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 to the Original Participation Agreement 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 the date to be designated
pursuant to Section 2 hereof, but in no event later than May 7, 1998, 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 L, 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) The schedule of principal payments on the Secured Certificates set
forth in Schedule I to the Original Trust Indenture and Schedule I to each
Secured Certificate on the Certificate Closing Date were calculated as of the
Certificate Closing Date based upon a hypothetical owner's economic return and
certain assumptions regarding the Delivery Date, Transaction Expenses, tax law,
Basic Term and certain other items (the "Assumptions"). On the Delivery Date
(the "Reoptimization Date"), the Owner Trustee, as a result of the parties
hereto entering into this Agreement, may elect to amend Schedule I to the
Original Trust Indenture and such Schedules to each Secured Certificate to
reflect the actual Net Economic Return and changes to the Assumptions. 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.
(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 Aircraft as provided
below, (ii) the Owner Participant shall participate in Lessor's Cost of the
Aircraft through an investment in the Trust Estate in the amount set forth
opposite the Owner Participant's name in Schedule II hereto, and (iii) Lessee
shall sell the Aircraft to the
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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.
Upon receipt by Lessee of such payment and the satisfaction of the conditions
set forth in Section 5 hereof, Lessee shall transfer title to and delivery the
Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take
title to and accept delivery of the Aircraft.
(ii) No Obligation to Increase Commitments. (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 3:00 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 3:00 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 the
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 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, May 7,
1998, or (ii) Lessee has notified the Owner Trustee (with a copy to the Owner
Participant) prior to 3:00 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 5:30 p.m. (New York City
time) on May 7, 1998, whereupon the Owner Participant's Commitment hereunder
shall terminate. On such third Business Day (or such earlier date) or May 7,
1998, 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
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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 3:00 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 and interest shall accrue for such additional period.
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) 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 May 7, 1998) for any
reason, 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 date
the Delivery Date is scheduled for the Aircraft, which 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 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 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 5(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 5(a)(v)(8) and 5(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
and
(v) 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. [Intentionally Omitted.]
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
(14), (x), (xxi), (xxii) and (xxiv) shall not be a condition precedent to the
obligations of the Pass Through Trustee, and paragraphs (iv), (vii)(D), (xiv)
and (xxvi) 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 to release the Debt Portion or the Owner Participant to
make its Commitment available in accordance with Section 1 hereof or which
would otherwise have an adverse impact on the Owner Participant's interests
under the Operative Documents.
(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 of the Original Participation Agreement.
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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 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;
(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;
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(11) the Trust Indenture (the Original Trust Indenture, as amended as
of the Delivery Date by the First Amendment to Trust Indenture);
(12) the Consent and Agreement;
(13) the Guarantee;
(14) the Residual Agreement;
(15) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft); and
(16) the Assignment and Assumption Agreement.
All of the foregoing documents, together with the Secured Certificates, are
sometimes referred to herein, collectively, as the "Operative Documents" and,
individually, as an "Operative 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) of the
Original Participation Agreement and Section 7(a)(vi) 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 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
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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 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 bylaws 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) a certificate signed by an authorized officer of Lessee and
the Guarantor, dated the Delivery Date, certifying that each of the
documents referred to in Section 4(a)(iii) of the Original
Participation Agreement 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;
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(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 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) the Original Trust Indenture 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) the Original Trust Indenture, the Original Trust Agreement
and the Secured Certificates 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.
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(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, the
Residual 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;
(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 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
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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) The Owner Participant shall have received an opinion, in form and
substance satisfactory to the Owner Participant, from BK Associates, Inc.,
independent aircraft appraisers, or such other recognized aircraft
appraiser agreed upon by the Owner Participant and Lessee.
(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
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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 Thelen, Marrin,
Johnson & Bridges LLP, 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 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 $21,100,000.
(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
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prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxi) The Owner Participant shall have received from Thelen, Marrin,
Johnson & Bridges LLP, special tax counsel to the Owner Participant, an
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 Code 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.
(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.
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(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, in connection with the execution and
delivery of this Agreement, 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 Trust Agreement, the
Trust Indenture, the Guarantee, this Agreement and the Lease do not vary
the Mandatory Economic Terms and contain the Mandatory Document Terms and
(ii) any substantive modification of such documents from the Original Trust
Agreement, the Original Trust Indenture, the Original Guarantee and the
Original Participation Agreement as in effect on the Certificate Closing
Date and any change in the Lease from the form set forth on Exhibit C to
the Original Participation Agreement 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 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.
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(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.
(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 Code, 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 has not been the subject of
an adjustment to Basic Rent, Stipulated Loss Value and Termination
Value percentages and the Special Purchase Price pursuant to Section
3(d)(i)(C) of the Lease or 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.
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(x) No adjustment to Basic Rent shall have been proposed or made
pursuant to Section 3(d) of the Lease as a result of a change in tax
law if such adjustment would result in an increase in the Net Present
Value of Rents of more than one hundred basis points.
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 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 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
Agreement, 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
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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 bylaws 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, 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) 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
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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 (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) except for (A) the registration of the Aircraft pursuant to
the Federal Aviation Act, (B) the filing of the Trust Agreement
with the FAA, (C) 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, (D) 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 opinions furnished pursuant to Section 5(a)(xi)
hereof, and (E) 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;
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(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;
(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 U of the Board of Governors of the
Federal Reserve System; and
(xiii) 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. Exhibit R, which is a complete statement
of the provisions of Section 7(b), is incorporated herein in its entirety as if
fully set forth herein.
(c) General Indemnity. Exhibit S, which is a complete statement of
the provisions of Section 7(c), is incorporated herein in its entirety as if
fully set forth herein.
(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.
The Owner Participant agrees, solely for the benefit of Lessee and the Loan
Participants, that if during such time as the Aircraft is registered in the
United States (or if Lessee desires to register the Aircraft in the United
States)
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(i) it shall not be, or believes itself likely not 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 (A) effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft
(or, if Lessee desires to register the Aircraft in the United States, to permit
the United States registration of the Aircraft) or (B) transfer all of its
right, title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and any proceeds therefrom in accordance with Section 8(n) hereof
(substituting a 5 day prior written notice for the 30 day prior written notice
provided therein). It is agreed that the Owner Participant shall be liable to
pay on request to Lessee, any Sublessee or 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 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,
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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, as long as no Event of Default or a
Default of the type referred to in Section 14(a), 14(b) or 14(e) of the Lease
shall have occurred and be continuing, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner 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
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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, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom and (b) the Owner Participant shall have received assurances
satisfactory to it that such change will not result in the imposition of, or
increase the amount of, any Tax on the Owner Participant or the Owner Trustee
for which Lessee is not required to indemnify under the Operative Documents or
has not entered into a binding agreement to indemnify in a manner satisfactory
in form and substance to the Owner Participant. Lessee shall pay all costs,
expenses, fees, recording and registration taxes, including the reasonable fees
and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
(g) The Owner Participant represents and warrants to Lessee, the
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 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
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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 bylaws 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 Assignment and Assumption
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; and 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; and
(vi) on the Delivery Date, the Trust Estate 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 the Owner
Participant.
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(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
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 issued to it pursuant to the Trust Indenture was 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
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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).
(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, or
had on the respective dates of execution thereof, 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
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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 bylaws 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's 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 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 sales, use, value added or similar tax
imposed on, or indemnified by, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any sales, use, value added or similar tax
imposed on, or indemnified by, 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
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institution or corporation furnishes to the Owner Trustee, the Indenture Trustee
and Lessee a guaranty with respect to the Transferee's obligations, in the case
of the Owner Trustee, under the Trust Agreement and, in the case of the
Indenture Trustee and Lessee, the Transferee'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, or (C) any Affiliate of the Owner Participant if the transferring Owner
Participant remains liable for the obligations of the Transferee under the
Operative Documents; 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
representations and warranties equivalent to those made by the Owner Participant
thereunder and the representations required by Section 8(q) below, (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 sales, use, value added or
similar tax resulting from such transfer, (R) the transferor Owner Participant
pays all of the reasonable 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, released and discharged
of all obligations of the transferor Owner Participant under the Owner
Participant Documents arising after the date of
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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.
(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
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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, accounting and financial
advisors, 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 or Transferees under Section 8(n)
above who agree to hold such information confidential.
(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 U 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 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:
<PAGE>
(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, or had on the respective dates of execution thereof
(assuming the authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and to the extent
expressly provided herein or therein, in its individual capacity, the
corporate power and authority to execute and deliver and to carry out
the terms of this Agreement, the 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
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
Original Trust Agreement by the Initial Owner Participant, the Owner
Trustee has duly authorized, and on the Certificate Closing Date duly
issued, executed and delivered to the Indenture Trustee for
authentication, the Secured Certificates pursuant to the terms and
provisions of the Original Participation Agreement and of the Original
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
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any indebtedness or obligations of it, or (B) violates or will violate
its articles of association or bylaws, 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;
(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;
(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,
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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.
(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
reasonable 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
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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 and liabilities 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 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
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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 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
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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, or had on the respective dates of execution
thereof, 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 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 bylaws 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
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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
by the Original Participation Agreement, 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.
(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:
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(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, or had on
the respective dates of execution thereof, 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 bylaws 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
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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.
(dd) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of
Basic Rent, Stipulated Loss Value percentages, Termination Value percentages
and the Special Purchase Price, 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.
(ee) The Owner Participant hereby agrees with Lessee that it will
pay, or cause to be paid, all costs and expenses that are for the account of
the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. In
addition, in furtherance of the provisions of the last sentence of the first
paragraph of Section 5(a) of the Lease, the Owner Participant authorizes
Lessee, with the participation of the Owner Trustee, to negotiate the
Half-Life Adjustment under the Residual Agreement or any Successor Residual
Agreement and any amount to be deducted from the Agreed Residual Value (as
such term is used in the Residual Agreement or any comparable term is used in
any Successor Residual Agreement) directly with the Manufacturer or any
Person who is the counterparty to any Successor Residual Agreement.
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
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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 (so long as the Lease remains in effect) and the Indenture
Trustee (so long as the Lien of the Trust Indenture remains in effect or
there are any Secured Certificates outstanding). 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
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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 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.
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(c) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and to the non-exclusive jurisdiction
of the Supreme Court of the State of New York, New York County, for the
purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Agreement, the Lease,
the Tax Indemnity Agreement or any other Operative Document or the subject
matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts. Lessee hereby generally
consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden
Lane, New York, New York 10038, Attention: Managing Attorney, or such office
of Lessee in New York City as from time to time may be designated by Lessee
in writing to the Owner Participant, the Owner Trustee and the Indenture
Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes
for which it is indemnified pursuant to Section 7(b) hereof and if, as a
consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is
then located, the situs of the trust may be moved with the written consent of
the Owner Participant (which consent shall not be unreasonably withheld) and
the Owner Participant will take, at Lessee's expense, whatever action may be
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 each such term is 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
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(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 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.
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 release of the Debt Portion 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
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ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when
made in such capacity) contained in this Agreement and any agreement referred
to herein other than the Trust Agreement, unless expressly otherwise stated,
are made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except
for any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however,
that this Section 15(d) shall not be construed to prohibit any action or
proceeding against any party hereto for its own willful misconduct or grossly
negligent conduct for which it would otherwise be liable; and provided,
further, that nothing contained in this Section 15(d) shall be construed to
limit the exercise and enforcement in accordance with the terms of this
Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 15(d) shall survive the
termination of this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. Section 1110 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 June 30, 1998). In the event that the transactions contemplated
hereunder close on or prior to May 7, 1998, the Owner Participant agrees to
transfer to the Owner Trustee promptly but in any event no later than July
15, 1998 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
2.085% 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 2.085% of
Lessor's Cost.
(b) Payment of Other Expenses. In the event that the leasing
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
satisfy on or prior to May 7, 1998 any of
46
<PAGE>
the conditions to closing specified in Section 5 which are required to be
satisfied by the Owner Participant on or prior to the Delivery Date, 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. In the event that the leasing transaction contemplated by
this Participation Agreement fails to close for any other reason Lessee will
be responsible for such fees and expenses.
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 two 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; provided further that no such refinancing shall subject
the Owner Participant to any unindemnified adverse tax consequences unless
Lessee agrees to indemnify the Owner Participant for such unindemnified
adverse tax consequences.
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) the principal amount
of debt to be issued by the Owner Trustee on the Refinancing Date and (B) the
proposed revised schedules of Basic Rent percentages, debt amortization,
Initial Installment, Remaining Installments, Stipulated Loss Value
percentages and Termination Value percentages (calculated in accordance with
Section 3(d) of the Lease). Within fourteen days of its receipt of the
Refinancing Certificate, Lessee may demand a verification pursuant to Exhibit
E to the Lease of the information set forth in the Refinancing Certificate.
Upon the acceptance by Lessee of the accuracy of the information set forth in
the Refinancing Certificate (or the determination pursuant to such
verification procedures), as to the principal amount of debt to be issued by
the Owner Trustee on the Refinancing Date and the revised Basic Rent
percentages, debt amortization, Initial Installment, Remaining Installments,
Stipulated Loss Value percentages and Termination Value percentages (such
information, whether as set forth or as so determined, the "Refinancing
Information") the appropriate parties will take the actions specified in
paragraphs (2) through (5) below;
47
<PAGE>
(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 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") provided that the maturity of the
New Debt shall not extend beyond January 2, 2016 and the weighted average
life of the New Debt as of the Refinancing Date shall not exceed by more than
six (6) months the weighted average life of the Secured Certificates as of
the Refinancing Date;
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the
period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated
Loss Value and Termination Value from and after the Refinancing Date shall be
as provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses (other
than those of Lessee) of the first refinancing (including, but not limited
to, the fees, expenses and disbursements of counsel and any placement or
underwriting fees) and such expenses shall be treated as Transaction Expenses
(subject to a cap of 5% of the principal amount of the Secured Certificates
which are being refinanced) and, unless otherwise agreed by the Owner
Participant, Lessee shall pay all other expenses of the first refinancing and
all of the expenses of the second refinancing; and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the
Lease or such assumptions are the subject of the recalculations being
conducted by the Owner Participant), and (B) minimizes the Net Present Value
of Rents to Lessee to the extent possible consistent with clause (A). All
adjustments to Basic Rent shall 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.
48
<PAGE>
(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 Delivery Date, 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 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 this Section 18(b) in a non-interest
bearing account for payment to Certificate Holders on the first 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) [Intentionally Omitted.]
(d) [Intentionally Omitted.]
(e) [Intentionally Omitted.]
(f) On the Delivery Date immediately upon transfer of title to the
Aircraft to the Owner Trustee, 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 L, 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
49
<PAGE>
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 Delivery Date, and (B) the Owner Trustee shall be treated as
the borrower with respect to the Secured Certificates on and after the
Delivery Date.
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/ Joseph E. Francht, Jr.
--------------------------------
Name: Joseph E. Francht, Jr.
Title: Senior Vice President - Finance and
Treasurer
Address: U.S. Mail
---------
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
-----------------
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President - Finance and
Treasurer
Telecopy No.: (612) 726-0665
- Signature Page -
<PAGE>
SUMITOMO BANK CAPITAL MARKETS,
INC.,
Owner Participant
By: /s/ Toshiyuki Kashima
-----------------------------
Name: Toshiyuki Kashima
Title: President
Address: 277 Park Avenue
New York, New York 10172
Attn:
Telecopy No.: (212) 224-4079
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
<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
<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: Sumitomo Bank Capital Markets, Inc.
277 Park Avenue
New York, NY 10172
Attn: Vice President
Telecopy No.: (212) 224-4079
Payments made to the Owner Participant as provided
in Section 3.06 of the Trust Indenture shall be
made to:
Chase Manhattan Bank
ABA No. 021000021
Credit to: Sumitomo Bank Capital Markets, Inc.
Acct. No. 544778005
Ref: Northwest Airlines N512XJ
<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 L
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 L
Loan Participant: State Street Bank and Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
SCHEDULE I - PAGE 2
<PAGE>
Subordination Agent: State Street Bank and Trust Company
of Connecticut, National Association
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
SCHEDULE I - PAGE 3
<PAGE>
SCHEDULE II
Commitments
-----------
<TABLE>
<CAPTION>
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------- --------------
<S> <C> <C>
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due
January 2, 2016 $10,568,876.29
1997-1B 7.248% Series B Secured Certificates due
January 2, 2013 $3,393,846.48
1997-1C 7.039% Series C Secured Certificates due
January 2, 2007 $1,990,500.02
Debt Portion $15,953,222.79
</TABLE>
<TABLE>
<CAPTION>
Owner Participant Equity Investment
- ----------------- -----------------
<S> <C>
Sumitomo Bank Capital Markets, Inc. $5,146,777.21
</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>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
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 L]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings 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. References to any agreement are
deemed to include such agreement as amended, modified or supplemented from
time to time.
"Acceptance Certificate" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"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.
"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
<PAGE>
Engines or engines from time to time installed thereon); provided, however,
that at such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased under the
Lease in substitution for the Airframe pursuant to the applicable provisions
of the Lease, the replaced Airframe shall cease to be an Airframe under the
Lease.
"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.
"Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement [NW 1997 L], dated as of May 1, 1998, between the
Initial Owner Participant and the Owner Participant, as such Assignment and
Assumption Agreement may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.
"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" has the meaning specified in 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.
ANNEX A-2
<PAGE>
"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.
"Cash Equivalents" (i) on or prior to the Delivery Date, 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 Delivery Date,
shall mean the investments specified in Section 22(a) of the Lease.
"Certificate Closing Date" means September 25, 1997.
"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.
ANNEX A-3
<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" 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 Original Trust Indenture.
"Collateral Account Control Agreement" means that certain Collateral
Account Control Agreement [NW 1997 L], 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 that certain Consent and Agreement
[NW 1997 L], dated as of May 1, 1998, 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
ANNEX A-4
<PAGE>
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 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 a Lease Default 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 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) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery Date
and ending on December 31, 2005, or such earlier date as the Lease may be
terminated in accordance with the provisions thereof.
"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
ANNEX A-5
<PAGE>
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.
"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 a Lease
Event of Default.
"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, if earlier, until the end of the Term, or, in the case
of a requisition of title, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of title or, if
earlier, at the end of the Term; (iv) as a result of any law, rule,
ANNEX A-6
<PAGE>
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), provided, further that, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss if such use
shall have been prohibited for a period of three consecutive 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.
"Excess Amount" shall have the meaning specified in Section 2.03(b) of
the Trust Indenture.
"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
ANNEX A-7
<PAGE>
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.
"First Amendment to Trust Indenture" means that certain First Amendment
to Trust Indenture and Security Agreement [NW 1997 L], dated as of May 1,
1998, between Lessor and the Indenture Trustee, amending the Original Trust
Indenture.
"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).
"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.
ANNEX A-8
<PAGE>
"Guarantee" means that certain Amended and Restated Guarantee [NW 1997 L],
dated as of May 1, 1998, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof, which Guarantee amended and restated in its entirety the
Original Guarantee.
"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) inclusive, (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) inclusive.
"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.
"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
ANNEX A-9
<PAGE>
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 Northwest Airlines, Inc., a Minnesota
corporation.
"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 L], dated as of May 1, 1998, 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 any event which with the giving of notice or
the lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lease Period Date" means July 2, 1998 and each succeeding January 2 and
July 2 to and including January 2, 2017, [April 27, 2017], and each
succeeding [October 27] and [April 27], 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.
ANNEX A-10
<PAGE>
"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, the Assignment and Assumption Agreement and
the Tax Indemnity Agreement.
"Lessee Person" means Lessee, any sublessee, or any other user or Person
in possession of the Aircraft, any Engine, or any Part, and any Affiliate of
any of the foregoing, but shall not include the Owner Participant, the Owner
Trustee or any of their successors or assigns or any other Person claiming
from or through the Owner Participant or the Owner Trustee (except pursuant
to the Lease).
"Lessor Liens" has the meaning specified in the Lease.
"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.
"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) of the
Lease.
"Losses" has the meaning specified in Section 18 of the Participation
Agreement.
ANNEX A-11
<PAGE>
"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.
"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 Original Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV to
the Original Participation Agreement.
ANNEX A-12
<PAGE>
"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 was 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 that certain Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"Moody's" means Moody's Investors Service, Inc.
"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.
"Net Present Value of Rents" shall have the meaning ascribed to such
term in the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement,
the Acceptance Certificate, 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 Assignment
and Assumption Agreement, the Purchase Agreement Assignment and the Consent
and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 L], dated as
of the Certificate Closing Date, made by the Guarantor, as such Guarantee may
have been amended or supplemented from time to time pursuant to the
applicable provisions thereof prior to the Delivery Date.
"Original Participation Agreement" means that certain Participation
Agreement [NW 1997 L], 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 was amended or supplemented from time to time prior
to the Delivery Date pursuant to the applicable provisions thereof.
"Original Trust Agreement" means that certain Trust Agreement [NW 1997 L],
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
ANNEX A-13
<PAGE>
or as modified, amended or supplemented prior to the Delivery Date pursuant
to the applicable provisions thereof.
"Original Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1997 L], 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 but prior to
being amended by the First Amendment to Trust Indenture.
"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 executing the
Participation Agreement as the Owner Participant, and thereafter any Person
to which such corporation transfers all 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, the Assignment and Assumption Agreement, the Residual
Agreement and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Original 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 and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 L], dated as of May 1, 1998, among Lessee,
the Guarantor, the Owner Participant, the Purchasers, the Indenture Trustee,
the Subordination Agent and the Owner Trustee, as such Participation
Agreement may be amended or supplemented from time to time pursuant to the
applicable provisions thereof, which Participation Agreement amended and
restated in its entirety the Original Participation Agreement.
ANNEX A-14
<PAGE>
"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.
"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.
ANNEX A-15
<PAGE>
"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 that certain 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 that certain Purchase Agreement
Assignment [NW 1997 L], dated as of May 1, 1998, 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, 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 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" has the meaning specified in the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
ANNEX A-16
<PAGE>
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means that certain Agreement (N512XJ), dated as of
May 1, 1998, 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."
"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" means the amount denominated as such in Exhibit
B to the Lease.
ANNEX A-17
<PAGE>
"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.
"Successor Residual Agreement" has the meaning specified in the Lease.
"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.
ANNEX A-18
<PAGE>
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 L], dated as of May 1, 1998, 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 Owner
Participant, 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;
ANNEX A-19
<PAGE>
(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 Thelen,
Marrin, Johnson & Bridges LLP, special counsel to the Owner Participant, such
fees not to exceed the amount previously agreed to by the Owner Participant
and Lessee;
(8) the reasonable 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 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.
"Trust Agreement" means that certain Amended and Restated Trust
Agreement [NW 1997 L], dated as of May 1, 1998, 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, which Trust Agreement amended and restated in
its entirety the Original Trust Agreement and continued the trusts thereby
created.
"Trust Agreement and Indenture Supplement" or "Trust Supplement" means 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.
ANNEX A-20
<PAGE>
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Original Trust Indenture, as originally executed or
as modified, amended or supplemented in accordance with its terms (including,
without limitation, by the First Amendment to Trust Indenture).
"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 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.
ANNEX A-21
<PAGE>
EXHIBIT R
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
Section 7(b) - General Tax Indemnity
[Intentionally Omitted.]
EXHIBIT R-1
<PAGE>
EXHIBIT S
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
Section 7(c) - General Indemnity
[Intentionally Omitted.]
EXHIBIT S-1
<PAGE>
Exhibit 99(b)
SCHEDULE I
The documents listed below under the heading "[NW 1997 L] N512XJ"
(hereinafter referred to as the "L Documents") have been provided in this
filing. The corresponding documents listed below under the headings "[NW 1997 K]
N511XJ" are substantially identical to the L Documents with the following
exceptions: conforming changes have been made to reflect the appropriate deal
designation (i.e., NW 1997 K) and the United States registration number of the
aircraft (i.e., N511XJ), and the tables of Secured Certificates Amortization
attached to Schedule I of each Trust Indenture and Security Agreement may
differ.
[NW 1997 L] N512XJ
1. Amended and Restated Participation Agreement [NW 1997 L], dated as of May
1, 1998, among Northwest Airlines, Inc., Lessee; Northwest Airlines
Corporation, Guarantor; the Owner Participant named therein, 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.
2. Lease Agreement [NW 1997 L], dated as of May 1, 1998, 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.
3. Amended and Restated Guarantee [NW 1997 L], dated as of May 1, 1998, from
Northwest Airlines Corporation.
4. 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.
5. First Amendment to Trust Indenture and Security Agreement [NW 1997 L],
dated as of May 1, 1998, 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.
6. Amended and Restated Trust Agreement [NW 1997 L], dated as of May 1, 1998,
between the Owner Participant, Owner Participant, and First Security Bank,
National Association, Owner Trustee.
<PAGE>
7. Consent and Agreement [NW 1997 L], dated as of May 1, 1998, from Aero
International (Regional), acting as agent for and on behalf of British
Aerospace (Operations) Limited.
[NW 1997 K] N511XJ
1. Amended and Restated Participation Agreement [NW 1997 K], dated as of April
15, 1998, among Northwest Airlines, Inc., Lessee; Northwest Airlines
Corporation, Guarantor; the Owner Participant named therein, 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.
2. Lease Agreement [NW 1997 K], dated as of April 15, 1998, 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.
3. Amended and Restated Guarantee [NW 1997 K], dated as of April 15, 1998,
from Northwest Airlines Corporation.
4. 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.
5. First Amendment to Trust Indenture and Security Agreement [NW 1997 K],
dated as of April 15, 1998, 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.
6. Amended and Restated Trust Agreement [NW 1997 K], dated as of April 15,
1998, between the Owner Participant, Owner Participant, and First Security
Bank, National Association, Owner Trustee.
7. Consent and Agreement [NW 1997 K], dated as of April 15, 1998, from Aero
International (Regional), acting as agent for and on behalf of British
Aerospace (Operations) Limited.
