<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 30, 1997
NORTHWEST AIRLINES CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-23642
(Commission File Number)
95-420587
(IRS Employer Identification No.)
2700 Lone Oak Parkway, Eagan Minnesota 55121
(Address of Principal Executive Offices) (Zip Code)
(612) 726-2111
(Registrants' Telephone Number, Including Area Code)
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Item 7. Exhibits
Filed herewith as exhibits to the Registration Statement on Form
S-3 (File No. 333-13307) and the Registration Statement on Form S-3 (File No.
333-28649) are the trust agreement, trust indenture and security agreement,
lease agreement, guarantee, purchase assignment agreement and consent and
agreement relating to the sale/leaseback by Northwest Airlines, Inc.
("Northwest") and Northwest Airlines Corporation ("NWA Corp." and, with
Northwest, the "Registrants") of four British Aerospace AVRO RJ85 Aircraft (the
"New RJ85's") on December 30, 1998, February 4, 1998 and March 18, 1998, 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 (the
"1997-1 PTC's"), which closed on September 25, 1997. Pursuant to Instruction 2
to Item 601 of Regulation S-K, Exhibit 99(c) contains a list of documents
relating to the sale/leaseback of a New RJ85 (referred to therein under the
designation "[NW 1997 G]"), which documents are substantially identical to those
relating to another New RJ85 (referred to under the designation "[NW 1997 H]")
filed herewith as Exhibits 4(b)(1), 4(b)(2), 4(b)(3), 4(b)(4) and 4(b)(5) and
sets forth the material details by which such documents differ from the
corresponding documents listed as Exhibits 4(b)(1), 4(b)(2), 4(b)(3), 4(b)(4)
and 4(b)(5).
The following exhibits are filed as part of this Report.
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4(a)(1) Amended and Restated Trust Agreement [NW 1997 H], dated as of
December 29, 1997, between First American National Bank, as Owner
Participant, and First Security Bank, National Association, as Owner
Trustee.
4(a)(2) Trust Indenture and Security Agreement [NW 1997 H], dated as of
September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as expressly
stated therein but solely as Owner Trustee, and State Street Bank
and Trust Company, not in its individual capacity except as expressly
stated therein but solely as Indenture Trustee.
4(a)(3) First Amendment, dated as of December 29, 1997, to Trust Indenture
and Security Agreement [NW 1997 H] dated as of September 25, 1997,
between First Security Bank, National Association, not in its
individual capacity except as expressly stated therein but solely
as Owner Trustee, and State Street Bank and Trust Company, not in
its individual capacity except as expressly stated therein but
solely as Indenture Trustee.
4(a)(4) Lease Agreement [NW 1997 H], dated as of December 29, 1997, between
First Security Bank, National Association, not in its individual
capacity except as expressly provided therein but solely as Lessor,
and Northwest Airlines, Inc., as Lessee.
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2
<TABLE>
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<S> <C>
4(a)(5) Guarantee [NW 1997 H], dated as of December 29, 1997, from Northwest
Airlines Corporation.
4(a)(6) Purchase Agreement Assignment [NW 1997 H], dated as of December 29,
1997, between Northwest Airlines, Inc., Assignor, and First Security
Bank, National Association, Assignee.
4(a)(7) Consent and Agreement [NW 1997 H], dated as of December 29, 1997,
from Aero International (Regional), acting as agent for and on behalf
of British Aerospace (Operations) Limited.
4(b)(1) Amended and Restated Trust Agreement [NW 1997 I], dated as of
February 3, 1988, between First American National Bank, as Owner
Participant, and First Security Bank, National Association, as Owner
Trustee.
4(b)(2) Trust Indenture and Security Agreement [NW 1997 I], dated as of
September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as expressly
stated therein but solely as Owner Trustee, and State Street Bank
and Trust Company, not in its individual capacity except as expressly
stated therein but solely as Indenture Trustee.
4(b)(3) First Amendment, dated as of February 3, 1998, to Trust Indenture and
Security Agreement [NW 1997 I], dated as of September 25, 1997,
between First Security Bank, National Association, not in its
individual capacity except as expressly stated therein but solely
as Owner Trustee, and State Street Bank and Trust Company, not in
its individual capacity except as expressly stated therein but solely
as Indenture Trustee.
4(b)(4) Lease Agreement [NW 1997 I], dated as of February 3, 1998, between
First Security Bank, National Association, not in its individual
capacity except as expressly provided therein but solely as Lessor,
and Northwest Airlines, Inc., as Lessee.
4(b)(5) Amended and Restated Guarantee [NW 1997 I], dated as of February 3,
1998, from Northwest Airlines Corporation.
4(b)(6) Purchase Agreement Assignment [NW 1997 I], dated as of February 3,
1998, between Northwest Airlines, Inc., Assignor, and First Security
Bank, National Association, Assignee.
4(b)(7) Consent and Agreement [NW 1997 I], dated as of February 3, 1998,
from Aero International (Regional), acting as agent for and on behalf
of British Aerospace (Operations) Limited.
4(c)(1) Amended and Restated Trust Agreement [NW 1997 J], dated as of March
18, 1988, between National City Leasing Corporation, as Owner
Participant, and First Security Bank, National Association, as Owner
Trustee.
4(c)(2) Trust Indenture and Security Agreement [NW 1997 J], dated as of
September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as expressly
stated therein but solely as Owner Trustee, and State Street Bank and Trust
Company, not in its individual capacity except as expressly
stated therein but solely as Indenture Trustee.
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3
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4(c)(3) First Amendment, dated as of March 18, 1998, to Trust Indenture and
Security Agreement [NW 1997 J], dated as of September 25, 1997,
between First Security Bank, National Association, not in its
individual capacity except as expressly stated therein but solely
as Owner Trustee, and State Street Bank and Trust Company, not in
its individual capacity except as expressly stated therein but solely
as Indenture Trustee.
4(c)(4) Lease Agreement [NW 1997 J], dated as of March 18, 1998, between
First Security Bank, National Association, not in its individual
capacity except as expressly provided therein but solely as Lessor,
and Northwest Airlines, Inc., as Lessee.
4(c)(5) Amended and Restated Guarantee [NW 1997 J], dated as of March 18,
1998, from Northwest Airlines Corporation.
4(c)(6) Purchase Agreement Assignment [NW 1997 J], dated as of March 18,
1998, between Northwest Airlines, Inc., Assignor, and First Security
Bank, National Association, Assignee.
4(c)(7) Consent and Agreement [NW 1997 J], dated as of March 18, 1998, from
Aero International (Regional), acting as agent for and on behalf of
British Aerospace (Operations) Limited.
4(c)(8) Owner Participant Guaranty [NW 1997 J], dated March 18, 1998, from
National City Bank of Kentucky, as Owner Participant Guarantor.
99(a) Amended and Restated Participation Agreement [NW 1997 H], dated as of
December 29, 1997, among Northwest Airlines, Inc., as Lessee,
Northwest Airlines Corporation as Guarantor, First American
National Bank, 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) Amended and Restated Participation Agreement [NW 1997 I], dated as of
February 3, 1998, among Northwest Airlines, Inc., as Lessee,
Northwest Airlines Corporation as Guarantor, First American
National Bank, 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,
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4
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Street Bank and Trust Company of Connecticut, National Association,
as Subordination Agent, and State Street Bank and Trust Company, in
its individual capacity and as Indenture Trustee.
99(c) Amended and Restated Participation Agreement [NW 1997 J], dated as of
March 18, 1998, among Northwest Airlines, Inc., as Lessee,
Northwest Airlines Corporation as Guarantor, National City
Leasing Corporation, as Owner Participant, State Street
Bank and Trust Company, as Pass Through Trustee, 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(d) Schedule I
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
NORTHWEST AIRLINES CORPORATION
Dated: April 3, 1998 By: /s/ DOUGLAS M. STEENLAND
--------------------------
Name: Douglas M. Steenland
Title: Senior Vice President,
Counsel and Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Description
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4(a)(1) Amended and Restated Trust Agreement [NW 1997 H], dated as of
December 29, 1997, between First American National Bank, as
Owner Participant, and First Security Bank, National
Association, as Owner Trustee.
4(a)(2) Trust Indenture and Security Agreement [NW 1997 H], dated as
of September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as
expressly stated therein but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual
capacity except as expressly stated therein but solely as
Indenture Trustee.
4(a)(3) First Amendment, dated as of December 29, 1997, to Trust
Indenture and Security Agreement [NW 1997 H] dated as of
September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as
expressly stated therein but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual
capacity except as expressly stated therein but solely as
Indenture Trustee.
4(a)(4) Lease Agreement [NW 1997 H], dated as of December 29, 1997,
between First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but
solely as Lessor, and Northwest Airlines, Inc., as Lessee.
4(a)(5) Guarantee [NW 1997 H], dated as of December 29, 1997, from
Northwest Airlines Corporation.
4(a)(6) Purchase Agreement Assignment [NW 1997 H], dated as of
December 29, 1997, between Northwest Airlines, Inc., Assignor,
and First Security Bank, National Association, Assignee.
4(a)(7) Consent and Agreement [NW 1997 H], dated as of December 29,
1997, from Aero International (Regional), acting as agent for
and on behalf of British Aerospace (Operations) Limited.
4(b)(1) Amended and Restated Trust Agreement [NW 1997 I], dated as of
February 3, 1988, between First American National Bank, as
Owner Participant, and First Security Bank, National
Association, as Owner Trustee.
4(b)(2) Trust Indenture and Security Agreement [NW 1997 I], dated as
of September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as
expressly stated therein but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual
capacity except as expressly stated therein but solely as
Indenture Trustee.
4(b)(3) First Amendment, dated as of February 3, 1998, to Trust
Indenture and Security Agreement [NW 1997 I], dated as of
September 25, 1997, between
</TABLE>
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2
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<S> <C>
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(b)(4) Lease Agreement [NW 1997 I], dated as of February 3, 1998,
between First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but
solely as Lessor, and Northwest Airlines, Inc., as Lessee.
4(b)(5) Amended and Restated Guarantee [NW 1997 I], dated as of
February 3, 1998, from Northwest Airlines Corporation.
4(b)(6) Purchase Agreement Assignment [NW 1997 I], dated as of
February 3, 1998, between Northwest Airlines, Inc., Assignor,
and First Security Bank, National Association, Assignee.
4(b)(7) Consent and Agreement [NW 1997 I], dated as of February 3,
1998, from Aero International (Regional), acting as agent for
and on behalf of British Aerospace (Operations) Limited.
4(c)(1) Amended and Restated Trust Agreement [NW 1997 J], dated as of
March 18, 1988, between National City Leasing Corporation, as
Owner Participant, and First Security Bank, National
Association, as Owner Trustee.
4(c)(2) Trust Indenture and Security Agreement [NW 1997 J], dated as
of September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as
expressly stated therein but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual
capacity except as expressly stated therein but solely as
Indenture Trustee.
4(c)(3) First Amendment, dated as of March 18, 1998, to Trust
Indenture and Security Agreement [NW 1997 J], dated as of
September 25, 1997, between First Security Bank, National
Association, not in its individual capacity except as
expressly stated therein but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual
capacity except as expressly stated therein but solely as
Indenture Trustee.
4(c)(4) Lease Agreement [NW 1997 J], dated as of March 18, 1998,
between First Security Bank, National Association, not in its
individual capacity except as expressly provided therein but
solely as Lessor, and Northwest Airlines, Inc., as Lessee.
4(c)(5) Amended and Restated Guarantee [NW 1997 J], dated as of March
18, 1998, from Northwest Airlines Corporation.
4(c)(6) Purchase Agreement Assignment [NW 1997 J], dated as of March
18, 1998, between Northwest Airlines, Inc., Assignor, and
First Security Bank, National Association, Assignee.
4(c)(7) Consent and Agreement [NW 1997 J], dated as of March 18, 1998,
from Aero International (Regional), acting as agent for and on
behalf of British Aerospace (Operations) Limited.
</TABLE>
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3
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4(c)(8) Owner Participant Guaranty [NW 1997 J], dated March 18, 1998,
from National City Bank of Kentucky, as Owner Participant
Guarantor.
99(a) Amended and Restated Participation Agreement [NW 1997 H],
dated as of December 29, 1997, among Northwest Airlines, Inc.,
as Lessee, Northwest Airlines Corporation, as Guarantor,
First American National Bank, 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) Amended and Restated Participation Agreement [NW 1997 I],
dated as of February 3, 1998, among Northwest Airlines, Inc.,
as Lessee, Northwest Airlines Corporation, as Guarantor, First
American National Bank, 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(c) Amended and Restated Participation Agreement [NW 1997 J],
dated as of March 18, 1998, among Northwest Airlines, Inc., as
Lessee, Northwest Airlines Corporation, as Guarantor,
National City Leasing Corporation, as Owner Participant,
State Street Bank and Trust Company, as Pass Through Trustee,
First Security Bank, National Association, not in its
individual capacity except as expressly provided
therein but solely as Owner Trustee, 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(d) Schedule I
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AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 H]
Dated as of December 29, 1997
between
NATIONAL CITY LEASING CORPORATION,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
================================================================================
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 H]
This AMENDED AND RESTATED TRUST AGREEMENT [NW 1997 H] dated as of
December 29, 1997 between NATIONAL CITY LEASING CORPORATION, a Kentucky
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 H], 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:
<PAGE>
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1997 H], 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.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
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"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. ss.
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. ss. 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 conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
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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
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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.
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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.
NATIONAL CITY LEASING CORPORATION
BY: /s/ Donald J. Zeillmann
--------------------------
Title: Vice President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY /s/ Greg A. Hawley
--------------------------
Title: Vice President
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
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
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SECURED CERTIFICATES COVERING
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION MARK N508XJ
LEASED BY NORTHWEST AIRLINES, INC.
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<PAGE>
TABLE OF CONTENTS
Page
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GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................6
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates..................................6
SECTION 2.02. Issuance and Terms of Secured Certificates...................12
SECTION 2.03. Payments from Trust Indenture Estate Only....................14
SECTION 2.04. Method of Payment............................................16
SECTION 2.05. Application of Payments......................................18
SECTION 2.06. Termination of Interest in Trust Indenture Estate............19
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates .19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates ...20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation................21
SECTION 2.10. Mandatory Redemptions of Secured Certificates................21
SECTION 2.11. Voluntary Redemptions of Secured Certificates................22
SECTION 2.12. Redemptions; Notice of Redemption............................22
SECTION 2.13. Assumption of Secured Certificates by Lessee.................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
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
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
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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
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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
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 H], 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;
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(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,
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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
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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 H] 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 N508XJ.
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 H], 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 H], 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) [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 in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
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IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By
-----------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By
-----------------------------------
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Payment Date Percentage of
Principal Amount
to be Paid
-------------------------- --------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates. The
Secured Certificates shall be dated the date of issuance thereof, shall be
issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto. On the date hereof, each Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith. The
Secured Certificates shall be issued in registered form only. The Secured
Certificates shall be issued in denominations of $1,000 and integral multiples
thereof, except that one Secured Certificate of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1998, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made
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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 released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be
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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. Subordination. (a) The Owner Trustee and, by
acceptance of its Secured Certificates of any Series, each Certificate Holder of
such Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Certificate Holder of such
Series, including any payment or distribution of cash, property or securities
after the commencement of a proceeding of the type referred to in Section
4.02(g) hereof, except as expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
SECTION 2.16. 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 H] 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 MakeWhole 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 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
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any part of the Mortgaged Property shall be entitled to exercise all the rights
and powers of the Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc. The Owner Trustee irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Certificate Holders to Receive Payment.
Notwithstanding any other provision of this Trust Indenture, the right of any
Certificate Holder to receive payment of principal of, and premium, if any, and
interest on a Secured Certificate on or after the respective due dates expressed
in such Secured Certificate, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the terms hereof,
shall not be impaired or affected without the consent of such Certificate
Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Indenture Trustee
shall have Actual Knowledge of an Event of Default or of a Default arising from
a failure to pay Rent, the Indenture Trustee shall give prompt written notice
thereof to the Owner Trustee, the Owner Participant, Lessee, and each
Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and
5.03 hereof, the Indenture Trustee shall take such action, or refrain from
taking such action, with respect to such Event of Default or Default (including
with respect to the exercise of any rights or remedies hereunder) as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture
Trustee shall not have received instructions as above provided within 20 days
after mailing notice of such Event of Default to the Certificate Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to
the preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Certificate Holders. If the
Indenture Trustee shall at any time declare the Lease to be in default pursuant
to Section 15 thereof or shall elect to foreclose or otherwise enforce this
Trust Indenture, the Indenture Trustee shall forthwith notify the Owner
Participant, the Certificate Holders, the Owner Trustee and Lessee. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the
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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
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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
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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
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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.
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SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement. No written request or consent of the
Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to
Section 9.01 hereof shall be required to enable the Owner Trustee to enter into
any Lease Supplement specifically required by the terms of the Lease or to
execute and deliver a Trust Agreement and Indenture Supplement specifically
required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders. No holder of a Secured Certificate shall have legal title
to any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
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
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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
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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
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would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. No Action Contrary to Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Owner Trustee
By: /s/ Greg A. Hawley
-------------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee, Indenture Trustee
By: /s/ Donald E. Smith
-------------------------------------
Name: Donald E. Smith
Title: Vice President
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EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 H]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 H], 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 H] 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 H], dated as of September 25, 1997 (as amended and supplemented to the date
hereof, the "Trust Indenture") between the Owner Trustee and STATE STREET BANK
AND TRUST COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for
the execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
A-2
<PAGE>
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Owner Trustee
By:
-------------------------------------
Name:
Title:
A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,369,450.52 7.068%
Series B......... $3,112,327.96 7.248%
Series C......... $1,967,999.99 7.039%
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-2
<PAGE>
SERIES B
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-3
<PAGE>
SERIES C
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
Schedule I-4
<PAGE>
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1A, dated as
of September 25, 1997.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1B, dated as
of September 25, 1997.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1C, dated as
of September 25, 1997.
Schedule II-1
<PAGE>
ANNEX A [NW 1997 H]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for all purposes of the Operative Documents referred to
below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) and shall be equally applicable to
both the singular and the plural forms of the terms herein defined. In the case
of any conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control the
construction of such Operative Document.
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such person whether through the ownership of voting securities or by contract
or otherwise.
"Aircraft" means the Airframe to be delivered and leased under the
Lease (or any airframe from time to time substituted for such Airframe pursuant
to Section 10(a) of the Lease) together with the four Engines initially leased
under the Lease (or any engine substituted for either of such Engines pursuant
to the terms of the Lease), whether or not any of such initial or substituted
Engines may from time to time be installed on such initial or substituted
Airframe or may be installed on any other airframe or on any other aircraft.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-R585A airframe bearing
manufacturer's serial number E2318 and anticipated to bear FAA registration
number N508XJ, together with four AlliedSignal LF507 type engines.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified in the
initial Lease Supplement, which aircraft shall be leased by Lessor to Lessee
under the Lease and under such Lease Supplement, and any aircraft (except
Engines or engines from time to time installed thereon) which may from time to
time be substituted for such aircraft (except Engines or engines from time to
time installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a) of the Lease; and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft (except
Engines or engines from time to
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<PAGE>
time installed thereon), or (B) so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 8 of the Lease after removal from
such aircraft (except Engines or engines from time to time installed thereon);
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
under the Lease in substitution for the Airframe pursuant to the applicable
provisions of the Lease, the replaced Airframe shall cease to be an Airframe
under the Lease.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 of the Trust Indenture.
"Applicable Rate" means as of any date the weighted average of the
interest rates borne by the Secured Certificates then outstanding and, if no
Secured Certificates shall be outstanding, the Base Rate.
"Assumptions" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "Remaining Weighted Average Life" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such Secured
Certificate, by (ii) the number of days from and including the redemption date
to but excluding the scheduled payment date of such principal installment; by
(b) the then unpaid principal amount of such Secured Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or supersedes
such provisions.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined pursuant
to Section 19 of the Lease.
"Basic Term" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of the Lease.
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<PAGE>
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which Bill of Sale
shall contain, among other things, a statement that such Bill of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"Cash Equivalents" (i) on or prior to the earliest to occur of (i)
the Delivery Date, (ii) the date of assumption by Lessee of the Secured
Certificates and (iii) the date of redemption of the Secured Certificates
pursuant to Section 2.10(c), (d) or (e) of the Trust Indenture, shall mean (a)
direct obligations of the United States or obligations fully guaranteed by the
United States, (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively, or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest rating
assigned by such rating organization, (c) investments in negotiable certificates
of deposit, time deposits, banker's acceptances, commercial paper or other
direct obligations of, or obligations guaranteed by, commercial banks organized
under the laws of the United States or of any political subdivision thereof (or
any U.S. branch of a foreign bank) with issuer ratings of at least B/C by
Thomson Bankwatch, having maturities no later than eight months following the
date of such investment, (d) overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, or (e)
overnight repurchase agreements with respect to the securities described in
clause (a) above entered into with an office of a bank or trust company which is
located in the United States or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million, and (ii) after
the date specified in clause (i) above, shall mean the investments specified in
Section 22(a) of the form of Lease attached as Exhibit C to the Participation
Agreement.
"Certificate Closing" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"Certificate Closing Date" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"Certificate Closing Documents" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
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<PAGE>
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation of
the United States of America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any substantially
similar program.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the deposit account established and
maintained pursuant to Section 2.16 of the Trust Indenture.
"Collateral Account Control Agreement" means the Collateral Account
Control Agreement [NW 1997 H], dated as of September 25, 1997, among State
Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee.
"Commitment" means the amount of the Owner Participant's
participation in Lessor's Cost for the Aircraft required to be made available or
paid as provided in Section 1(d) of the Participation Agreement.
"Consent and Agreement" means the Consent and Agreement [NW 1997 H],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as Exhibit B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with the
applicable provisions thereof.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Contract Rights" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H or
Part J of the Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and Part J of
the Manufacturer
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<PAGE>
Support Agreement in respect of the Aircraft and all claims thereunder and (b)
any and all rights of Lessee to compel performance of the terms of Part H and
Part J of the Manufacturer Support Agreement in support thereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Cut-Off Date" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Portion" means the amount specified as such on Schedule II to
the Participation Agreement.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" (a) for purposes of the Operative Documents other than the
Trust Indenture, means any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) and (b) for purposes of the
Trust Indenture, means any condition or event that with the giving of notice or
the lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events of
Default relating to Excluded Payments).
"Delivery Date" means the date of the initial Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee under the Lease.
"Delivery Date Closing" means the closing of the transactions to be
consummated on the Delivery Closing Date.
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<PAGE>
"Delivery Documents" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"Delivery Notice" means notice of the Aircraft's Delivery Date,
given by the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by Lessee
pursuant to Section 1(e)(iii) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery
Date and ending on the eighth December 31st thereafter, or such earlier date as
the Lease may be terminated in accordance with the provisions thereof.
"Determination Date" means the earlier of (i) the 30th day following
the CutOff Date and (ii) the Prepayment Date.
"Dollars" and "$" means the lawful currency of the United States of
America.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with a corporate
trust department of a depository institution with corporate trust powers
organized under the laws United States or any state thereof or the District of
Columbia, and whose deposits are insured by the Federal Deposit Insurance
Corporation, provided that such institution also has a combined capital and
surplus of at least $100,000,000 and a rating of A or better from the Thomson
Bank Watch.
"Eligible Institution" means a depository institution organized
under the laws of the United States or any one of the states thereof, or the
District of Columbia, or any domestic branch of a foreign bank, which in any
case at all times (a) has either (x) a long-term unsecured debt rating of Aa2 by
Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b)
has either (x) a long-term unsecured debt rating of at least AA by S&P or (y) a
short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of
the Federal Deposit Insurance Corporation.
"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
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<PAGE>
hereunder. The term "Engines" means, as of any date of determination, all
Engines then leased under the Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of the Participation Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes of
the Operative Documents other than the Trust Indenture, means each of the
following events (whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) so long as, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement after the same shall have become due and such failure
shall continue for ten (10) Business Days after Lessee's receipt of
written demand therefor by the party entitled thereto (provided that
any failure of Lessee to pay to Lessor when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an
Event of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall constitute
an Event of Default); or
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof
from the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect in
any material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Owner Trustee or the
Certificate Holders) within thirty (30) days after the receipt by
Lessee of a written notice from the Indenture Trustee advising
Lessee of the existence of such incorrectness.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the loss of
such property or of the
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<PAGE>
use thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by Lessee (or any Sublessee) for any reason whatsoever; (ii) any damage to
such property which results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or compromised total
loss; (iii) the theft or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of, such
property (other than a requisition for use by the United States Government or
any other government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event referred to in
this clause (iii) (other than a requisition of title) shall have resulted in the
loss of possession of such property by Lessee (or any Sublessee) for a period in
excess of 180 consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days from the date
of such requisition of title; (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration or other
governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of 180 consecutive
days, unless Lessee (or any Sublessee), prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such property by
Lessee (or such Sublessee), but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been applicable to the
entire U.S. registered fleet of British Aerospace Avro 146-RJ85A aircraft of
Lessee (or any Sublessee) and Lessee (or a Sublessee), prior to the expiration
of such two-year period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such jurisdiction and
shall be diligently carrying forward, in a manner which does not discriminate
against the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by Lessee (or
such Sublessee), but in any event if such use shall have been prohibited for a
period of three years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, which shall have occurred during the Basic Term (or any Renewal Term)
and shall have continued for thirty (30) days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (v) shall exist if Lessor
shall have furnished to Lessee the written notice specified in Section 10(d) of
the Lease; and (vi) any divestiture of title to or interest in an Engine treated
as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.
"Excess Amount", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in Exhibit B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
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<PAGE>
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 of the Trust Indenture, the amounts
payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of
the Lease plus all reasonable expenses incurred by the Owner Trustee and the
Owner Participant in connection with such assumption, as applicable, (vii) any
payment of the foregoing under the Guarantee, (viii) interest accrued on any of
the above, and (ix) any right to enforce the payment of any amount described in
clauses (i) through (viii) above and the right to declare an Event of Default in
respect of any of the foregoing amounts.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the United
States government succeeding to their functions.
"Foreign Air Carrier" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for the Aircraft, Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those required by, the
Federal Aviation Administration, the Civil Aviation Authority of the United
Kingdom, the Direction Generale de l'Aviation Civile of the French Republic, the
Luftfahrt Bundesamt of the Federal Republic of Germany, the Rijflauchtraatdienst
of the Kingdom of the Netherlands, the Ministry of Transportation of
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<PAGE>
Japan or the Federal Ministry of Transport of Canada (and any agency or
instrumentality of the applicable government succeeding to the functions of any
of the foregoing entities).
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Documents or
relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
"Guarantee" means the Guarantee [NW 1997 H], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable provisions
thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii) the
Owner Participant, (iv) the Trust Estate, (v) the Loan Participants and each
other Certificate Holder, (vi) the Subordination Agent, (vii) the Liquidity
Provider, (viii) the Pass Through Trustees, (ix) each Affiliate of the Persons
described in clauses (i) through (iv), inclusive, (x) each Affiliate of the
Persons described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the Persons
described in clauses (i) through (viii), inclusive, (xii) the successors and
permitted assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Default" means any event or condition that with the
giving of notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related to
Excluded Payments).
"Indenture Event of Default" shall mean an "Event of Default" as
defined in clause (a) of the definition of "Event of Default".
"Indenture Trustee" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as indenture
trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation Agreement and
the Trust Indenture.
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"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 Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the Operative Documents to the
extent such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said Section 7,
or (D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"Initial Owner Participant" means Lessee.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease Agreement", "the Lease Agreement", "the Lease", or "the
Agreement", mean the Lease Agreement [NW 1997 H], substantially in the form of
Exhibit C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the Trust Agreement and the Trust Indenture, including, without limitation,
supplementation thereof by one or more Lease Supplements entered into pursuant
to the applicable provisions thereof.
"Lease Default" shall mean a "Default" as defined in clause (a) of
the definition of "Default".
"Lease Event of Default" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"Lease Period Date" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, to and including the
last such date in the Term.
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"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA Bill of Sale, the Bill of Sale, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Bill of Sale and the Bill of Sale.
"Lessor Liens" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, National
Association, in its individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or First Security Bank, National
Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association, in its
individual capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First Security Bank,
National Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, provided, however, that any Lien which is
attributable solely to First Security Bank, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder shall not
constitute a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) First Security Bank,
National Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner Participant, as
appropriate).
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"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 The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or
claims against any Loan Participant not related to the transactions contemplated
by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to
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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 Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV
to the Participation Agreement.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and its
successors and assigns.
"Manufacturer Delivery" means the date the Aircraft is delivered by
the Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"Manufacturer Documents" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
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"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 of the Trust Indenture.
"Net Economic Return" shall have the meaning ascribed to such term
in paragraph 2 of Exhibit E to the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement, an
acceptance certificate covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement
(insofar as it relates to the Aircraft), the Guarantee, the Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean the corporation to whom on the
Delivery Date (or, if earlier, the Transfer Date) the Initial Owner Participant
shall transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such corporation
transfers all or any portion of its right, title and interest in and to the
Trust Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 8 of the
Participation Agreement.
"Owner Participant Documents" means the Participation Agreement, the
Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor
Owner Trustee in its individual capacity by name in the Operative Documents
shall include such successor Owner Trustee in its individual capacity from and
after such succession.
"Owner Trustee Documents" means the Participation Agreement, the
Trust Agreement, the Trust Supplement covering the Aircraft, the Lease, the
Lease Supplement
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<PAGE>
covering the Aircraft, the Purchase Agreement Assignment, the Residual
Agreement, the Trust Indenture and the Secured Certificates.
"Participants" shall mean and include the Loan Participants, the
Initial Owner Participant and the Owner Participant.
"Participation Agreement" means that certain Participation Agreement
[NW 1997 H], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent, the
Initial Owner Participant and Owner Trustee, as such Participation Agreement may
be amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines, (b) any items leased by Lessee from a third party
(other than Lessor) and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with Section 8
of the Lease after removal therefrom.
"Pass Through Certificates" means the pass through certificates to
be issued by the Pass Through Trustee in connection with the Overall
Transaction.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the three separate pass through trust supplements referred
to on Schedule I to the Participation Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass Through
Trust Agreement, and each other person that may from time to time be acting as
successor trustee under any such Pass Through Trust Agreement.
"Past Due Rate" (A) with respect to the Secured Certificates, means
the rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be paid by the
Indenture Trustee to the Loan Participants, or the holders of any outstanding
Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in
effect from time to time and (ii) with respect to the remaining portion of any
payment of Rent (and the entire amount of any payment of Rent after the
satisfaction and discharge of the Trust Indenture), a rate per annum equal to 1%
over the Base Rate.
"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.
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"Permitted Lien" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"Permitted Sublessee" means any entity domiciled in a country listed
in Exhibit F to the Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Lease" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"Prepayment Date" means June 15, 1998.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to
the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1997 H], dated as of the Delivery Date and substantially in the
form of Exhibit B to the Participation Agreement, between Lessee and Lessor, as
the same may be amended, supplemented or modified from time to time, with a form
of Consent and Agreement to be executed by the Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"Rating Agencies" means collectively, at any time, each nationally
recognized agency which shall have been requested to rate the Pass Through
Certificates and which shall then be rating the Pass Through Certificates. The
initial Rating Agencies shall be S&P and Moody's.
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"Rating Agency Confirmation" means, with respect to any Operative
Document that is to be modified in any material respect on the Delivery Date or
the Transfer Date, if applicable, a written confirmation from each of the Rating
Agencies that the use of such Operative Document with such modifications would
not result in (i) a reduction of the rating for any class of Pass Through
Certificates below the then current rating for such class of Pass Through
Certificates or (ii) a withdrawal or suspension of the rating of any class of
Pass Through Certificates.
"Related Indemnitee Group" means, with respect to any Indemnitee,
any officer, director, servant, employee, agent or Affiliate thereof.
"Renewal Term" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Reoptimization Date" has the meaning set forth in Section 1(c)(ii)
of the Participation Agreement.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means the Residual Value Agreement (N508XJ),
dated as of the Delivery Date, among the Manufacturer, the Owner Participant and
the Owner Trustee.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"S&P" means Standard & Poor's Ratings Group.
"Scheduled Delivery Date" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Secured Certificates" shall mean and include any Secured
Certificates issued under the Trust Indenture, and issued in exchange therefor
or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 of the Trust Indenture.
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"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" shall mean the amount denominated as such
in Exhibit B to the Lease.
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit C to the Lease opposite the Stipulated Loss Value Date with respect to
which the amount is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) of the Lease and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after the last day
of the Basic Term shall be the amount determined as provided in Section 19(a) of
the Lease.
"Sublease" means any sublease permitted by the terms of Section
7(b)(x) of the Lease.
"Sublessee" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the terms
of a Sublease which is then in effect pursuant to Section 7(b)(x) of the Lease.
"Subordination Agent" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
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"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to clause (b) of the
third paragraph of Section 2.02 of the Trust Indenture, (c) Lessor's pro rata
share of all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, and (d)
Lessor's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata share" means as of
any time a fraction, the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in the Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 H], to be dated as of the Delivery Date, between the Owner Participant
and Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use, turnover, value
added, property (tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Basic Term and, if actually entered into, any
Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, means, but subject always
to the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D to the Lease opposite the Termination Date with respect to which the
amount is determined (as such Exhibit D may be adjusted from time to time as
provided in Section 3(d) of the Lease and in Section 7 of the Tax Indemnity
Agreement).
"Transaction Expenses" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection with
the transactions contemplated by the
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Participation Agreement, the other Operative Documents, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
including, without limitation:
(1) the reasonable and actual fees, expenses and disbursements
of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for the Underwriters,
and (D) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements
of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture;
(4) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee and the Subordination Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount previously
agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for Lessee;
(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.
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"Transfer Date" has the meaning specified in Section 1(b) of the
Participation Agreement.
"Triggering Event" has the meaning specified in the Intercreditor
Agreement.
"Trust Agreement" means that certain Trust Agreement [NW 1997 H],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Agreement and Indenture Supplement" or "Trust Supplement"
shall mean a supplement to the Trust Agreement and to the Trust Indenture, in
substantially the form of Exhibit A to the Trust Indenture, which shall
particularly describe the Aircraft, and any Replacement Airframe and Replacement
Engine included in the property of the Owner Trustee covered by the Trust
Agreement. The initial Trust Agreement and Indenture Supplement shall be dated
the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Trust Indenture and Security Agreement [NW 1997 H],
dated as of the Certificate Closing Date, between Lessor and the Indenture
Trustee, as originally executed or as modified, amended or supplemented in
accordance with its terms, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, excluding Excluded Payments.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the underwriters
named therein.
"United States" or "U.S." means the United States of America.
"U.S. Air Carrier" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to Part
121 of the regulations under the Federal 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
-23-
<PAGE>
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.
-24-
<PAGE>
================================================================================
FIRST AMENDMENT
TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
Dated as of
December 29, 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 N508XJ
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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
-i-
<PAGE>
FIRST AMENDMENT TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 H]
This FIRST AMENDMENT TO TRUST INDENTURE AND SECURITY AGREEMENT [NW
1997 H], dated as of December 29, 1997 (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 H], 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 H], dated as of December 29,
1997, 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 H]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 H], 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 H] dated as of December 29, 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 H], dated as of September 25, 1997 (as amended and supplemented to the date
hereof, the "Trust Indenture") between the Owner Trustee and STATE STREET BANK
AND TRUST COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for
the execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
- ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
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.
A-2
<PAGE>
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
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:
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,369,450.52 7.068%
Series B......... $3,112,327.96 7.248%
Series C......... $1,967,999.99 7.039%
A-4
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N508XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
A-2
<PAGE>
SERIES B
Aircraft: N508XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
A-3
<PAGE>
SERIES C
Aircraft: N508XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------
A-4
<PAGE>
ANNEX A [NW 1997 H]
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
Schedule I-1
<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 H], dated as of December 29, 1997, 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.
Schedule I-2
<PAGE>
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which Bill of Sale
shall contain, among other things, a statement that such Bill of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"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.
Schedule I-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 H], 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 H], dated as of December 29, 1997, 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
Schedule I-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, 2004, 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
Schedule I-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,
Schedule I-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
Schedule I-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 H], dated as of
December 29, 1997, 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.
Schedule I-8
<PAGE>
"Guarantee" means that certain Amended and Restated Guarantee [NW
1997 H], dated as of December 29, 1997, 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
Schedule I-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 H], dated as of December 29, 1997,
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 January 2, 1998 and each January 2 and
July 2 thereafter, to and including the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
Schedule I-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.
Schedule I-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.
Schedule I-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 Owner Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 H], 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 H], 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 H], 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
Schedule I-13
<PAGE>
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 H], 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 Participant Guarantor" means the entity executing the Owner
Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner Participant
Guaranty [NW 1997 H], dated as of December 29, 1997, made by the Owner
Participant Guarantor in favor of Lessee, Lessor, the Purchasers, the
Subordination Agent and the Indenture Trustee, as such Owner Participant
Guaranty may be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
"Owner Trustee" means the entity executing the 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.
Schedule I-14
<PAGE>
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 H], dated as of December 29, 1997, 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.
"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.
Schedule I-15
<PAGE>
"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.
"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 H], dated as of December 29, 1997, 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.
Schedule I-16
<PAGE>
"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.
"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 (N508XJ), dated as
of December 29, 1997, 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
Schedule I-17
<PAGE>
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.
"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
Schedule I-18
<PAGE>
connection with the transactions contemplated by the Intercreditor Agreement. As
used herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 H], dated as of December 29, 1997, 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
Schedule I-19
<PAGE>
& 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 and the
Owner Participant Guarantor, 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 H], dated as of December 29, 1997, 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.
Schedule I-20
<PAGE>
"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.
"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.
Schedule I-21
<PAGE>
================================================================================
LEASE AGREEMENT
[NW 1997 H]
Dated as of
December 29, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its Individual Capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
AND
NORTHWEST AIRLINES, INC.,
Lessee
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
As set forth in Section 20 hereof, Lessor has assigned to the Indenture Trustee
(as defined herein) certain of its right, title and interest in and to this
Lease. To the extent, if any, that this Lease constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease may be created through the
transfer or possession of any counterpart other than the original executed
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee on the signature page thereof.
<PAGE>
TABLE OF CONTENTS TO LEASE AGREEMENT
Page
----
SECTION 1. Definitions..................................................... 1
SECTION 2. Acceptance and Lease............................................ 18
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....................................... 24
(c) Fuel; Manuals............................................... 24
(d) Storage Upon Return......................................... 24
SECTION 6. Liens........................................................... 25
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia..............................................25
(a) Registration and Maintenance................................ 25
(b) Possession and Subleases.................................... 27
(c) Insignia.................................................... 31
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]..................................... 34
(c) Optional Sale of the Aircraft............................... 34
(d) Termination as to Engines................................... 36
(i)
<PAGE>
Page
----
SECTION 10. Loss, Destruction, Requisition, etc............................. 36
(a) Event of Loss with Respect to the Aircraft.................. 36
(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.....40
(e) Requisition for Use of an Engine by the United States
Government or the Government of Registry of the Aircraft.....41
(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............ 43
(c) Reports, etc................................................ 45
(d) Self-Insurance.............................................. 46
(e) Additional Insurance by Lessor and Lessee................... 46
(f) Indemnification by Government in Lieu of Insurance.......... 47
(g) Application of Payments During Existence of an Event of
Default......................................................47
SECTION 12. Inspection...................................................... 47
SECTION 13. Assignment...................................................... 48
SECTION 14. Events of Default............................................... 48
SECTION 15. Remedies........................................................ 50
SECTION 16. Lessee's Cooperation Concerning Certain Matters................. 54
SECTION 17. Notices......................................................... 55
SECTION 18. No Set-Off, Counterclaim, etc................................... 55
SECTION 19. Renewal Options; Purchase Options; Valuation.................... 56
(a) Renewal Options............................................. 56
(b) Purchase Options............................................ 57
(c) Valuation................................................... 57
(d) Special Purchase Option..................................... 59
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates.....................................................59
SECTION 21. Lessor's Right to Perform for Lessee............................ 60
SECTION 22. Investment of Security Funds; Liability of Lessor Limited....... 60
(a) Investment of Security Funds................................ 60
(b) Liability of Lessor Limited................................. 61
(ii)
<PAGE>
Page
----
SECTION 23. Service of Process.............................................. 61
SECTION 24. Miscellaneous................................................... 61
SECTION 25. Successor Trustee............................................... 61
SECTION 26. Covenant of Quiet Enjoyment..................................... 62
(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 H]
This LEASE AGREEMENT [NW 1997 H], dated as of December 29, 1997,
between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"Lessor"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("Lessee");
W I T N E S S E T H:
SECTION 1. Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this Lease
Agreement [NW 1997 H] 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
(5)
<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 (N508XJ), dated December 2, 1997, 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 H], 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 January 2, 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
-2-
<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 H], 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 H], 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, 2004, 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 January 2, 2013 (or, if January 2, 2013 is
not a Business Day, the Business Day immediately succeeding January
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
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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 H],
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 H], dated as of the date hereof, made by the Guarantor, as
such Guarantee
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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.
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"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 H] as originally executed
or as modified, amended or supplemented pursuant to the applicable
provisions hereof and in accordance with the Trust Agreement and the
Trust Indenture, including, without limitation, supplementation
hereof by one or more Lease Supplements entered into pursuant to the
applicable provisions hereof.
"Lease Period" means each of the consecutive periods
throughout the Basic Term and any Renewal Term ending on a Lease
Period Date, the first such period commencing on and including the
Delivery Date.
"Lease Period Date" means January 2, 1998 and each succeeding
January 2 and July 2, to and including the last such date in the
Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A hereto, to be entered into between Lessor and
Lessee on the Delivery Date for the purpose of leasing the Aircraft
under and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with the
terms hereof.
"Lessee Documents" means the Participation Agreement, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement (insofar as it relates to the Aircraft), the FAA Bill of
Sale, the Bill of Sale, the Purchase Agreement Assignment, 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 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
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<PAGE>
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.
"Majority in Interest of Certificate Holders" has the meaning
set forth in the Trust Indenture.
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<PAGE>
"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 Owner Participant Guaranty, the Purchase Agreement
Assignment and the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 H],
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 H], 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 H], dated as of the Certificate Closing Date, between the
Initial Owner
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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 H], 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 Participant Guarantor" means the entity executing the
Owner Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner
Participant Guaranty [NW 1997 H], dated as of December 29, 1997,
made by the Owner Participant Guarantor in favor of Lessee, Lessor,
the Purchasers, the Subordination Agent and the Indenture Trustee,
as such Owner Participant Guaranty may be amended or supplemented
from time to time pursuant to the applicable provisions thereof.
"Owner Trustee" means the entity executing the 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.
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<PAGE>
"Participants" means and includes the Loan Participants and
the Owner Participant.
"Participation Agreement" means that certain Amended and
Restated Participation Agreement [NW 1997 H], dated as of the date
hereof, among Lessee, the Guarantor, the Purchasers, the Indenture
Trustee, the Subordination Agent, the Owner Participant and Owner
Trustee, as such Participation Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions
thereof, 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.
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<PAGE>
"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.
"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 H], 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 (N508XJ),
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 January 2, 2017, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit C hereto
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<PAGE>
opposite the Stipulated Loss Value Date with respect to which the
amount is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) hereof and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after
January 2, 2017 shall be the amount determined as provided in
Section 19(a) hereof.
"Stipulated Loss Value Date" means the 2nd calendar day of
each calendar month during the Basic Term and any Renewal Term.
"Sublease" means any sublease permitted by the terms of
Section 7(b)(x) hereof.
"Sublessee" means any Person for so long, but only so long, as
such Person is in possession of the Airframe and/or any Engine
pursuant to the terms of a Sublease which is then in effect pursuant
to Section 7(b)(x) hereof.
"Subordination Agent" means State Street Bank and Trust
Company of Connecticut, National Association, a national banking
association, as subordination agent under the Intercreditor
Agreement, or any successor thereto.
"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
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Subordination Agent in connection with the transactions contemplated
by the Intercreditor Agreement. As used herein, "Lessor's pro rata
share" means as of any time a fraction, the numerator of which is
the principal balance then outstanding of Secured Certificates and
the denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, (ii) the
respective Affiliates, successors and permitted assigns of each of
the entities described in the preceding clause (i), and (iii) the
Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1997 H], 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 January 2, 2017, means, but subject
always to the provisions of Section 3(d)(v) hereof, the amount
determined by multiplying Lessor's Cost for the Aircraft by the
percentage specified in Exhibit D hereto opposite the Termination
Date with respect to which the amount is determined (as such Exhibit
D may be adjusted from time to time as provided in Section 3(d)
hereof and in Section 7 of the Tax Indemnity Agreement).
"Transaction Expenses" means: all of the reasonable
out-of-pocket costs, fees and expenses incurred by the Owner
Trustee, the 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
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Agreement (except, in each case, as otherwise provided therein)
including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements of (A) Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee and the Indenture
Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for
the Underwriters, and (D) Crowe & Dunlevy, P.C., special
counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual
disbursements of the Indenture Trustee under the Trust
Indenture;
(4) the initial fees and expenses of the Liquidity
Provider, the Pass Through Trustee and the Subordination
Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals
of the Aircraft;
(7) the reasonable fees, expenses and disbursements of
Thelen, Marrin, Johnson & Bridges LLP, special counsel to the
Owner Participant and the Owner Participant Guarantor, 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.
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<PAGE>
"Trust Agreement" means that certain Amended and Restated
Trust Agreement [NW 1997 H], dated as of the date hereof, between
the Owner Participant and First Security Bank, National Association,
in its individual capacity, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
thereof, including, without limitation, supplementation thereof by
one or more Trust Supplements entered into pursuant to the
applicable provisions thereof, 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)
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shall be maintained by Lessee (or any Sublessee) in accordance with
its normal maintenance practices.
SECTION 2. Acceptance and Lease. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 5(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in 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 January 2, 2017, or such earlier date
as this Lease may be terminated in accordance with the provisions hereof.
(b) [Intentionally Omitted].
(c) Basic Rent. Lessee shall pay Basic Rent with respect to each
Lease Period during the Basic Term on each Lease Period Date during the Basic
Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in Exhibit
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the 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 December 30, 1997, (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are
determined to be other than 2.0772% 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 April 30, 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
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consistent with clause (1) hereof. In such recalculation there will
be no change in the amortization of the Secured Certificates.
(ii) (A) In the event of a refinancing as contemplated by
Section 17 of the Participation Agreement, then the Basic Rent
percentages set forth in Exhibit B, 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
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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 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 ss.ss. 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
H (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
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been fully discharged, Lessor hereby irrevocably directs and Lessee agrees,
that, unless the Indenture Trustee shall otherwise direct, all Rent payable to
Lessor and assigned to the Indenture Trustee pursuant to the Trust Indenture
shall be paid prior to 10:30 A.M., New York time on the due date thereof in
funds of the type specified in this Section 3(f) directly to the Indenture
Trustee at its account at State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW 1997
H (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
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received whatever title to the Aircraft was conveyed to it by Lessee, (ii)
represents and warrants that on the Delivery Date the Aircraft shall be free of
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to it, (iii)
covenants that it will not, through its own actions or inactions, interfere in
Lessee's quiet enjoyment of the Aircraft during the Term, (iv) agrees that it
will not directly or indirectly create, incur, assume or suffer to exist any
Lessor Lien attributable to it on or with respect to the Airframe or any Engine
or any portion of the Trust Estate and (v) represents and warrants that it is a
Citizen of the United States without making use of a voting trust, voting powers
agreement or similar arrangement, and agrees that if at any time it shall cease
to be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the Federal
Aviation Act as in effect at such time or, if it is not necessary, if and so
long as the Owner Trustee's citizenship would have any material adverse effect
on the Loan Participants, the Owner Participant or Lessee), effective upon the
appointment of a successor Owner Trustee in accordance with Section 9.01 of the
Trust Agreement. None of the provisions of this Lease shall be deemed to amend,
modify or otherwise affect the representations, warranties or other obligations
(express or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared 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
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LF507 type engines or four engines of the same or another manufacturer of not
less than equivalent utility, value and remaining useful life, and suitable for
installation and use on the Airframe without impairing the value, utility or
remaining useful life of the Aircraft; provided that all engines shall be of the
same make and model) duly installed thereon. Also, at the time of such return,
such Airframe and Engines or engines (i) shall be certified (or, if not then
registered under the Federal Aviation Act, shall be eligible for certification)
as an airworthy aircraft by the Federal Aviation Administration, (ii) shall be
free and clear of all Liens (other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens)) 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 January 2, 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 condition 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.
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<PAGE>
(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
to Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
title) bill of sale with respect to each such engine, in form and substance
satisfactory to Lessor (together with an opinion of counsel to the effect that
such full warranty bill of sale has been duly authorized and delivered and is
enforceable in accordance with its terms and that such engines are free and
clear of Liens other than Lessor Liens (including for this purpose Liens which
would be Lessor Liens but for the proviso in the definition of Lessor Liens)),
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
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as herein provided, the Lien of the Trust Indenture, and any other rights
existing pursuant to the Operative Documents, (ii) the rights of others under
agreements or arrangements to the extent permitted by the terms of Sections 7(b)
and 8(b) hereof, (iii) Lessor Liens (including for this purpose Liens which
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
Loan Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any 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
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hereunder) under the Federal Aviation Act, except when all British Aerospace
Avro 146- RJ85A aircraft powered by engines of the same type as those with which
the Airframe shall be equipped at the time of such grounding and registered in
the United States have been grounded by the FAA (although such certification
need actually be maintained only during such periods as the Aircraft is
registered in the United States), or the applicable laws of any other
jurisdiction in which the Aircraft may then be registered from time to time in
accordance with Section 8(f) of the Participation Agreement, 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.
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(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(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;
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(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and (y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine to
the Civil Reserve Air Fleet Program in any contract year and provide
Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States Air
Force to whom notice must be given pursuant to Section 15 hereof,
and (B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any agency
or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be
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given prior to entering into such Wet Lease, if practicable, but in
any event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by Lessor,
which approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any such
case, the Sublessee under such sublease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B)
in the event that 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
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permitted by this paragraph (b) shall be expressly subject and subordinate to,
all the terms of this Lease and to the Lien of the Trust Indenture, including,
without limitation, the covenants contained in Section 7(a) hereof and Lessor's
rights to repossession pursuant to Section 15 hereof and to avoid such Sublease
upon such repossession, and Lessee shall remain primarily liable hereunder for
the performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided herein,
the terms of any such Sublease shall not permit any Sublessee to take any action
not permitted to be taken by Lessee in this Lease with respect to the Aircraft.
No pooling agreement, sublease or other relinquishment of possession of the
Airframe or any Engine or Wet Lease shall in any way discharge or diminish any
of Lessee's obligations to Lessor hereunder or constitute a waiver of Lessor's
rights or remedies hereunder. Any sublease permitted under this Section 7(b)
shall expressly prohibit any further sub-sublease by the Sublessee. Lessor
agrees, for the benefit of Lessee (and any Sublessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine (other than an
Engine) owned by Lessee (or any Sublessee), any lessor of any engine (other than
an Engine) leased to Lessee (or any Sublessee) and any conditional vendor 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
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and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost and
expense, replace such Parts as promptly as practicable. All replacement Parts
shall be free and clear of all Liens (except for Permitted Liens and pooling
arrangements to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Parts replaced assuming such replaced Parts
were in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in paragraph (c) of this Section 8, all Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until 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
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thereupon vest in Lessee (or, if a Sublease is then in effect, any Sublessee),
free and clear of all rights of Lessor, and shall no longer be deemed a Part
hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) 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,
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without further act, vest in Lessor. Notwithstanding the foregoing sentence,
Lessee (or any Sublessee) may remove or suffer to be removed any Additional
Part, provided that such Additional Part (i) is in addition to, and not in
replacement of or substitution for, any Part originally incorporated or
installed in or attached to the Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or substitution for, any such
Part, (ii) is not required to be incorporated or installed in or attached or
added to the Airframe or any Engine pursuant to the terms of Section 7 hereof or
the first sentence of this paragraph (c) and (iii) can be removed from the
Airframe or such Engine without diminishing or impairing the value, utility or
remaining useful life which the Airframe or such Engine would have had at the
time of removal had such alteration, modification or addition not occurred,
assuming that such Airframe or Engine was in the condition and repair required
to be maintained by the terms hereof. Upon the removal by Lessee (or Sublessee)
of any Part as provided above, title thereto shall, without further act, vest in
Lessee (or any Sublessee, as the case may be) and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed. Any Part not
removed by Lessee (or any Sublessee) as above provided prior to the return of
the Airframe or Engine to Lessor hereunder shall remain the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on
any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(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
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of the party or parties (who shall not be Lessee or any Affiliate of Lessee or
any Person with whom Lessee or any such Affiliate has an arrangement or
understanding regarding the future use of the Aircraft by Lessee or any such
Affiliate but who may be the Owner Participant, any Affiliate thereof or any
Person contacted by the Owner Participant) submitting such bid. After Lessee
shall have certified to Lessor all bids received, the Owner Participant, any
Affiliate thereof or any Person contacted by the Owner Participant may submit a
further bid or bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date). Subject to the
next succeeding sentence, on or before the Termination Date, subject to the
release of all mortgage and security interests with respect to the Aircraft
under the Trust Indenture: (1) Lessee shall deliver the Aircraft, or cause the
Aircraft to be delivered, to the bidder(s), if any, which shall have submitted
the highest 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,
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due on the Secured Certificates. Upon receipt of notice of such an election by
Lessor and the accompanying undertaking by the Owner Participant, Lessee shall
cease its efforts to obtain bids as provided above and shall reject all bids
theretofore or thereafter received. On the Termination Date, Lessor shall
(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
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forthwith (and in any event, within fifteen (15) days after such occurrence)
give Lessor written notice of such Event of Loss, and within forty-five (45)
days after such Event of Loss Lessee shall give Lessor written notice of its
election to perform one of the following options (it being agreed that if Lessee
shall not have given such notice of election within such period, Lessee shall be
deemed to have elected the option set forth in clause (i) below). Lessee may
elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) an earlier Business Day irrevocably specified fifteen
(15) days in advance by notice from Lessee to Lessor and the
Indenture Trustee (the "Loss Payment Date"), Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in Section
3(f) hereof, an amount equal to the Stipulated Loss Value of the
Aircraft corresponding to the Stipulated Loss Value Date occurring
on or immediately following the Loss Payment Date; provided,
however, that if a Lease Period Date shall occur 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 an amount
equal to the Basic Rent that would have been due on (but only to the
extent payable in arrears as indicated on Exhibit B) or prior to
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
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
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(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 with respect to the substitute aircraft, provided
that such opinion need not be delivered to the
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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
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subject to such Event of Loss, and such Engine shall thereupon cease to be the
Engine leased hereunder. For all purposes hereof, each such replacement engine
shall, after such conveyance, be deemed part of the property leased hereunder,
and shall be deemed an "Engine". No Event of Loss with respect to an Engine
under the circumstances contemplated by the terms of this paragraph (b) shall
result in any reduction in Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine or engines then installed thereon), (A)
unless the same are replaced pursuant to the last paragraph of
Section 10(a), after reimbursement of Lessor (as provided in Section
7.01 of the Trust Agreement) for reasonable costs and expenses, so
much of such payments remaining as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a),
shall be applied in reduction of Lessee's obligation to pay
Stipulated Loss Value, if not already paid by Lessee, or, if already
paid by Lessee, shall be applied to reimburse Lessee for its payment
of Stipulated Loss Value, and following the foregoing application,
the balance, if any, of such payments will be paid over to, or
retained by Lessee, provided that Lessor shall be entitled to so
much of the excess, if any, of such payment over the 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
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Lessee's obligations under this Lease Agreement with respect to the Aircraft
shall continue to the same extent as if such requisition had not occurred,
provided that if such Airframe and Engines or engines installed thereon are not
returned by such government prior to the end of the Term, Lessee shall be
obligated to return the Airframe and such Engines or engines to Lessor pursuant
to, and in all other respects in compliance with the provisions of, Section 5
promptly on the date of such return by such government. If, in the event of any
such requisition, Lessee shall fail to return the Aircraft on or before the
thirtieth day beyond the end of the Term, such failure shall constitute an Event
of Loss which shall be deemed to have occurred on the last day of the Term and
in such event Lessee shall make the payment contemplated by Section 10(a)(i) in
respect of such Event of Loss; provided, however, that Lessor may notify Lessee
in writing on or before the twentieth day prior to the last day of the Term
that, in the event Lessee shall fail by reason of such requisition to return the
Airframe and such Engines or engines on or before the thirtieth day beyond the
end of the Term, such failure shall not be deemed an Event of Loss. Upon the
giving of such notice and such failure to return by the thirtieth day beyond the
end of the Term, Lessee shall be relieved of all of its obligations pursuant to
the provisions of Section 5 (including Exhibits G and H) but not under any other
Section, except that if any engine not owned by Lessor shall then be installed
on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
furnished, to Lessor a full warranty (as to title) bill of sale with respect to
each such engine, in form and substance reasonably satisfactory to Lessor
(together with an opinion of counsel to the effect that such full warranty bill
of sale has been duly authorized and delivered and is enforceable in accordance
with its terms and that such engines are free and clear of Liens other than
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Loan Participant Liens and
Indenture Trustee Liens), against receipt from Lessor of a bill of sale
evidencing the transfer, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens which would be Lessor Liens
but for the proviso in the definition of Lessor Liens), by Lessor to Lessee or
its designee of all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft but not then installed on the Airframe. All
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines during the Term shall be paid over to, or
retained by, Lessee (or, if directed by Lessee, any Sublessee); and all payments
received by Lessor or Lessee from such government for the use of such Airframe
and Engines or engines after the end of the Term shall be paid over to, or
retained by, Lessor unless Lessee shall have exercised its purchase option
hereunder, in which case such payments shall be made to Lessee.
(e) Requisition for Use of an Engine by the United States Government
or the Government of Registry of the Aircraft. In the event of the requisition
for use of an Engine by the United States Government or any other government of
registry of the Aircraft or any agency or instrumentality of any thereof (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to, or retained by, Lessee.
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(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Event of Default, such amount shall be
paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. Insurance. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i) aircraft
public liability (including, without limitation, passenger legal liability) (and
including aircraft war risk and hijacking insurance, if and to the extent the
same is maintained by Lessee (or, if a Sublease is then in effect, if and to the
extent maintained by Sublessee) with respect to other aircraft owned or leased,
and operated by Lessee (or such Sublessee) on the same routes) insurance and
property damage insurance (exclusive of manufacturer's product liability
insurance) with respect to the Aircraft, in an amount not less than the greater
of (x) the amount of public liability and property damage insurance from time to
time applicable to aircraft owned or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) of the same type as the Aircraft and (y) such
amount per occurrence as may have been agreed to on the Delivery Date by the
Owner Participant 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 1998, on or before April 30 of each year
during the Term, Lessee will deliver to Lessor and the Indenture Trustee a
certificate of Lessee, signed by the President, a Vice President or the Chief
Financial Officer of Lessee to the effect that the signer is familiar with or
has reviewed the relevant terms of this Lease and the signer does not have
actual knowledge of the existence, as of the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default. Lessee
agrees that if the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Treasurer or an Assistant Treasurer of Lessee has actual
knowledge of the existence of a Default, then Lessee shall promptly give to
Lessor, the Owner Participant and the Indenture Trustee notice thereof and such
other information relating thereto as Lessor, the Owner Participant or the
Indenture Trustee may reasonably request. Lessee agrees that if an officer of
Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee may reasonably
request. Lessee will deliver to Lessor, the Owner Participant and the Indenture
Trustee (i) within sixty (60) days after the end of each of the first three
quarterly periods of each fiscal year of the Guarantor, the publicly filed Form
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 PresidentFinance 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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<PAGE>
(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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<PAGE>
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. Upon
payment to Lessor in immediately available funds of the full amount of the
purchase price and payment of any other amounts then due hereunder (including
all Rent and all costs or expenses of the Owner Participant in connection with
such purchase), Lessor will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens), all of Lessor's right, title and interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred sixty-five
(365) days prior to the date on which Lessee may purchase the Aircraft pursuant
to Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1) or
Section 19(a)(2) hereof, Lessee may deliver to Lessor a revocable notice of its
intent to exercise its renewal option or purchase option. For all purposes of
this Section 19, including the appraisal referred to in this Section 19(c), in
determining "fair market rental value" or "fair market sales value", the
Aircraft shall be valued (i) as if in the condition and otherwise in compliance
with the terms of Section 5 upon a return of the Aircraft to the United States
and as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the basis
of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding the purchase and renewal options of the lessee provided
in this Lease, and (iii) in the case of such valuation for determining "fair
market rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred seventy
(270) days prior to the end of the Basic Term or the Renewal Term in question,
then the question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after
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<PAGE>
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 outstanding after such
payment, exercise such rights as it has to cause the Aircraft to be released
from the Lien of the Trust Indenture.
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in
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<PAGE>
the Aircraft in favor of the Indenture Trustee, subject to the reservations and
conditions therein set forth. To the extent, if any, that this Lease, the Lease
Supplements and any amendments to this Lease constitute chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in this Lease, the Lease Supplements and any
amendments to this Lease may be created through the transfer or possession of
any counterpart other than the original counterpart, which shall be identified
as the counterpart containing the receipt therefor executed by the Indenture
Trustee on the signature page thereof. Lessee hereby accepts and consents to the
assignment of all Lessor's right, title and interest in and to this Lease
pursuant to the terms of the Trust Indenture. Subject to Section 3(f) hereof,
Lessee agrees to pay directly to the Indenture Trustee (or, after receipt by
Lessee of notice from the Indenture Trustee of the discharge of the Trust
Indenture, to Lessor), all amounts of Rent due or to become due hereunder and
assigned to the Indenture Trustee and Lessee agrees that the Indenture Trustee's
right to such payments hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, the
circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an Event of
Default hereunder) Lessor may itself make such payment or perform or comply with
such agreement but shall not be obligated hereunder to do so, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. Investment of Security Funds; Liability of Lessor
Limited. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("Moody's") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company
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<PAGE>
of a bank, trust company or national banking association described in (ii) and
commercial paper of any corporation or finance company incorporated or doing
business under the laws of the United States of America or any state thereof
having a rating assigned to such commercial paper of A1 by S&P or P1 by Moody's
and having a final maturity of ninety (90) days or less from the date of
purchase thereof; provided, however, that the aggregate amount at any one time
so invested in certificates of deposit issued by any one bank shall not be in
excess of 5% of such bank's capital and surplus. There shall be promptly
remitted to Lessee or its order (but no more frequently than monthly) any gain
(including interest received) realized as a result of any such investment (net
of any fees, commissions and other expenses, if any, incurred in connection with
such investment) unless an Event of Default shall have occurred and be
continuing. Lessee shall be responsible for any net loss realized as a result of
any such investment and shall reimburse Lessor (or the Indenture Trustee, as the
case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not 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
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<PAGE>
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.
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<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Lessor
BY: /s/ Greg A. Hawley
----------------------------------------
Title: Vice President
NORTHWEST AIRLINES, INC.,
Lessee
BY: s/ Mark D. Powers
----------------------------------------
Title: Vice President -
Finance & Assistant Treasurer
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of _________________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY: /s/ Donald E. Smith
----------------------------------------
Title: Vice President
- Signature Page -
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1997 H]
LEASE SUPPLEMENT No.
[NW 1997 H]
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 H],
dated as of December 29, 1997, between NATIONAL CITY LEASING CORPORATION, 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 H], dated as of December 29, 1997, relating to one British
Aerospace Avro 146-RJ85A aircraft (herein called the "Lease," and the defined
terms therein being hereinafter used with the same meanings). The Lease provides
for the execution and delivery from time to time of Lease Supplements for the
purpose of leasing the Airframe and Engines under the Lease as and when
delivered by Lessor to Lessee in accordance with the terms thereof.
(1)The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
(2)The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated _______________, 19__ to the Lease
Agreement, has been recorded by the Federal Aviation Administration on
________________, 19__, as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease the following
described British Aerospace Avro 146-RJ85A aircraft (the "Aircraft"), which
Aircraft as of the date hereof consists of the following components:
(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 January 2, 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
----------------------------------------
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
----------------------------------------
Title:
- ----------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1997 H]
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent:
Basic Rent 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)
------------ ---------------------- ------------------- --------------
<PAGE>
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 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)
------------ ---------------------- ------------------- --------------
EXHIBIT B - PAGE 2
<PAGE>
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft: $____________
Special Purchase Price: _____% of Lessor's Cost on January 2, 2013.
EXHIBIT B - PAGE 3
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1997 H]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW 1997 H]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------- -----------
<PAGE>
EXHIBIT E
to
Lease Agreement
[NW 1997 H]
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 January 2, 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 H]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
- ----------
* So long as on the date of entering into the proposed sublease such country and
the United States have diplomatic relations at least as good as those in effect
on the Delivery Date.
<PAGE>
EXHIBIT G
to
Lease Agreement
[NW 1997 H]
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 H]
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 H], dated as of December 29, 1997, as amended from time to
time (the "Lease"), between First Security Bank, National Association, not in
its individual capacity but solely as Owner Trustee, and Northwest Airlines,
Inc. In addition, the following capitalized terms shall have the respective
meanings set forth below:
"Aircraft Documentation" means all logs, manuals, certificates, data
and inspection, modification, repair, and overhaul records which are required to
be maintained with respect to the Aircraft under the Maintenance Program or by
the Relevant Aviation Authority.
"APU" means the Sundstrand Model APIC 10000 auxiliary power unit
originally installed on the Aircraft on the Delivery Date or any auxiliary power
unit of a comparable or improved model substituted for such originally installed
auxiliary power unit.
"BFE" means the equipment described in Annex II to the Residual
Agreement, or any equivalent replacement equipment that may from time to time be
substituted for any such BFE.
"Country of Registration" means the country in which the Aircraft is
registered on the date the Aircraft is returned under the Lease at the
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 HalfLife 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>
================================================================================
AMENDED AND RESTATED
GUARANTEE
[NW 1997 H]
Dated as of December 29, 1997
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee..............................................................2
2. No Implied Third Party Beneficiaries...................................4
3. Waiver; No Set-off; Reinstatement; Subrogation.........................4
4. Amendments, Etc........................................................5
5. Payments...............................................................5
6. Assignment of Guarantee................................................5
7. Jurisdictional Matters.................................................5
8. Integration; Counterparts; Successors and Assigns; Headings............6
9. Notices................................................................6
10. No Waivers.............................................................6
11. Survival...............................................................6
12. Severability...........................................................6
13. Governing Law..........................................................7
14. Enforcement Expenses...................................................7
15. Termination............................................................7
16. No Guarantee of Secured Certificates...................................7
<PAGE>
GUARANTEE
[NW 1997 H]
This AMENDED AND RESTATED GUARANTEE [NW 1997 H], dated as of
December 29, 1997 (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
H], 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 H], 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 H], 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
H], 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
H], 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
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<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
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<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
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<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
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<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.
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<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, Jr.
----------------------------------------
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 H]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
National City Leasing Corporation, Owner Participant
<PAGE>
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 H]
Dated as of December 29, 1997
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
---------------
One British Aerospace Avro 146-RJ85A Aircraft
U.S. Registration No. N508XJ
Manufacturer's Serial No. E2318
================================================================================
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 H]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 H], dated as of December
29, 1997 between NORTHWEST AIRLINES, INC., a Minnesota corporation ("Assignor"),
and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee ("Assignee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has
agreed to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement
[NW 1997 H], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "Lease"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) Notwithstanding the foregoing, if and so long as (A) the
Aircraft shall be subject to the Lease and (B) the Manufacturer shall not have
received notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
<PAGE>
the Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "Manufacturer Payment"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to
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<PAGE>
Assignee in accordance with the terms of the Lease, be returned to Assignor
promptly after all Events of Default under the Lease have been cured or waived.
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 13850 McLearen Road,
Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703) 736-4255) and
three Business Days shall have elapsed from the date of actual receipt by the
Manufacturer and, in acting in accordance with the terms and conditions of the
Purchase Agreement and this Assignment, the Manufacturer may rely conclusively
upon any such notice.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding: (i)
Assignor shall at all times remain liable to the Manufacturer under the Purchase
Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or
- 3 -
<PAGE>
(ii) modify in any respect the Manufacturer's contract rights thereunder, except
as provided in the Consent and Agreement attached hereto.
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, for its
own willful misconduct or grossly negligent conduct for which it would otherwise
be liable; and provided, further, that nothing contained in this Section 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
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<PAGE>
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. Unless the context otherwise require, the following
terms shall have the following meanings for all purposes of this Assignment and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Aircraft" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"Contract Rights" means all of Assignor's right, title and
interest in and to Part H and Part J of the Manufacturer Support
Agreement, as and to the extent that the same relate to the
warranties with respect to the Aircraft, including, without
limitation, (a) all claims for damages in respect of the Aircraft
arising as a result of any default by the Manufacturer under Part H
or Part J of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity
provisions in Part H and Part J of the Manufacturer Support
Agreement in respect of the Aircraft and all claims thereunder and
(b) any and all rights of Assignor to compel performance of the
terms of Part H and Part J of the Manufacturer Support Agreement in
support thereof.
"Engine" means each of the four AlliedSignal LF507 type
engines listed by manufacturer's serial number in the Lease
Supplement.
"Lease" means the Lease Agreement [NW 1997 H], dated as of
December 29, 1997, between Assignor and Assignee.
"Lease Supplement" means a Lease Supplement substantially in
the form of Exhibit A to the Lease, entered into between Assignor
and Assignee on the date the Aircraft is leased by Assignee to
Assignor and accepted by Assignor under the Lease.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales,
and its successors and assigns.
"Manufacturer Support Agreement" means the Manufacturer
Support Agreement, dated February 5, 1997, between the Manufacturer
and Assignor.
- 5 -
<PAGE>
"Operative Documents" shall have the meaning specified in the
Lease.
"Participation Agreement" shall have the meaning specified in
the Lease.
"Purchase Agreement" means the Sale and Purchase Agreement,
dated as of February 5, 1997, between the Manufacturer and Assignor
relating to the purchase by Assignor of the Aircraft (including the
Manufacturer Support Agreement), as originally executed or as
modified, amended or supplemented in accordance with the terms
thereof, but only insofar as the foregoing relates to the Aircraft.
"Sublessee" shall have the meaning specified in the Lease,
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By: /s/ Mark D. Powers
------------------------------------------
Title: Vice President-Finance & Assistant
Treasurer
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By: /s/ Greg A. Hawley
------------------------------------------
Title: Vice President
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ Donald E, Smith
------------------------------------------
Title: Vice President
<PAGE>
Exhibit 4(a)(7)
CONSENT AND AGREEMENT
[NW 1997 H]
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 H] dated as of
December 29, 1997 between Northwest Airlines, Inc. (the "Assignor"), and First
Security Bank, National Association, not in its individual capacity but solely
as Owner Trustee (the "Assignee") (herein called the "Purchase Agreement
Assignment," the defined terms therein or by reference therein being hereinafter
used with the same meaning) and hereby confirms to the Assignor and the
Assignee, and agrees, that: (i) all representations, warranties, indemnities and
agreements of the Manufacturer under the Purchase Agreement with respect to the
Contract Rights, to the extent assigned by the Assignor to the Assignee, shall
inure to the benefit of the Assignee to the same extent as if originally named
the "Buyer" therein, subject to the terms and conditions of the Purchase
Agreement Assignment; (ii) the Assignee shall not be liable for any of the
obligations or duties of the Assignor under the Purchase Agreement, nor shall
the Purchase Agreement Assignment give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Manufacturer, except for the
Assignee's agreement in the Purchase Agreement Assignment to the effect that in
exercising any rights under the Purchase Agreement or in making any claim with
respect to the Contract Rights, the terms and conditions of the Purchase
Agreement relating to the Aircraft shall apply to, and be binding upon, the
Assignee to the same extent as the Assignor, and with respect to such agreement
the Manufacturer agrees that, anything contained in the Purchase Agreement and
the Purchase Agreement Assignment to the contrary notwithstanding, so long as
the Manufacturer shall not have received written notice that an Event of Default
has occurred and is continuing, the Assignee shall not have any responsibility
to the Manufacturer for failure to comply with any of the terms of the Purchase
Agreement with respect to the Contract Rights as and to the extent the same
relate to the Aircraft while under lease to the Assignor; provided that no
person other than the Manufacturer shall have any rights against the Assignee
with respect to the undertaking and agreement set forth in this clause (ii);
(iii) the Manufacturer acknowledges the lease of the Aircraft by the Assignee to
the Assignor under the Lease and acknowledges advance notice of the Purchase
Agreement Assignment pursuant to Clause 24.1 of the Purchase Agreement; and (iv)
so long as the Aircraft is subject to the Lease, the Manufacturer will continue
to pay to the Assignor all payments which the Manufacturer may be required to
make in respect of the Aircraft under the Purchase Agreement unless and until
the Manufacturer shall have received written notice from the Indenture Trustee
or the Assignee by facsimile addressed to Aero International (Regional), 1,
Allee Pierre Nadot, 31712 Blagnac Cedex, France, Attn: SVP Commercial (telecopy
011 33 5 6221 6321) with a copy to Aero International (Regional) Marketing Inc.,
13850 McLearen Road, Herndon, Virginia 22071, Attn.: Contracts Director
(telecopy (703) 736-4255) and three Business Days shall have elapsed from the
date of actual receipt by the Manufacturer, that an Event of Default under the
Lease has occurred and is continuing,
<PAGE>
whereupon the Manufacturer will not be required to make further inquiry into the
content of such notice and thereafter (until the Manufacturer shall have
received notice in writing from the Assignee or the Indenture Trustee sent or
addressed as aforesaid that no Event of Default under the Lease exists or that
such Event of Default under the Lease has been cured or waived) Manufacturer
shall make any and all payments which it may be required to make in respect of
the Aircraft under the Purchase Agreement (to the extent that the right to
receive such payments has been assigned under the Purchase Agreement Assignment)
directly to the Indenture Trustee at the account of the Indenture Trustee at
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, ABA No. 011-00-0028, Account No. 9903-943-0 Northwest/NW 1997 H,
Attention: Corporate Trust Department, Reference: Northwest/NW 1997 H, 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 H.
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 December 29, 1997
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British Aerospace
(Operations) Limited
By /s/ Alain Brodin
------------------------------------------
Title: Senior Vice President Commercial
- 3 -
<PAGE>
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 I]
Dated as of February 3, 1998
between
FIRST AMERICAN NATIONAL BANK,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
================================================================================
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 I]
This AMENDED AND RESTATED TRUST AGREEMENT [NW 1997 I] dated as of
February 3, 1998 between FIRST AMERICAN NATIONAL BANK, a national banking
association (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 I], 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:
<PAGE>
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1997 I], 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.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
-2-
<PAGE>
"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.
-3-
<PAGE>
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
-4-
<PAGE>
(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. ss.
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;
-5-
<PAGE>
(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
-6-
<PAGE>
(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.
-7-
<PAGE>
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.
-8-
<PAGE>
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. ss. 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 conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
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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
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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.
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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.
FIRST AMERICAN NATIONAL BANK
BY /s/ Evelyn D. Tade
---------------------------------
Title: Senior Vice President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY /s/ Greg A. Hawley
---------------------------------
Title: Vice President
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================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 I]
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 N509XJ
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
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<PAGE>
TABLE OF CONTENTS
Page
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GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................6
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates..................................6
SECTION 2.02. Issuance and Terms of Secured Certificates...................12
SECTION 2.03. Payments from Trust Indenture Estate Only....................14
SECTION 2.04. Method of Payment............................................16
SECTION 2.05. Application of Payments......................................18
SECTION 2.06. Termination of Interest in Trust Indenture Estate............19
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates..19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates....20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation................21
SECTION 2.10. Mandatory Redemptions of Secured Certificates................21
SECTION 2.11. Voluntary Redemptions of Secured Certificates................22
SECTION 2.12. Redemptions; Notice of Redemption............................22
SECTION 2.13. Assumption of Secured Certificates by Lessee.................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
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
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
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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
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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
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 I]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 I], 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;
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(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,
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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
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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 I] 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 N509XJ.
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 I], 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 I], 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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<PAGE>
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] [Series A and Series B Secured Certificates]1, 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.
* * *
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* To be inserted for each Secured Certificate other than any Series A Secured
Certificate.
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By
---------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By
---------------------------------
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Payment Date Percentage of
Principal Amount
to be Paid
-------------------------- --------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates. The
Secured Certificates shall be dated the date of issuance thereof, shall be
issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto. On the date hereof, each Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith. The
Secured Certificates shall be issued in registered form only. The Secured
Certificates shall be issued in denominations of $1,000 and integral multiples
thereof, except that one Secured Certificate of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1998, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made
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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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<PAGE>
(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 released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be
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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. Subordination. (a) The Owner Trustee and, by
acceptance of its Secured Certificates of any Series, each Certificate Holder of
such Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Certificate Holder of such
Series, including any payment or distribution of cash, property or securities
after the commencement of a proceeding of the type referred to in Section
4.02(g) hereof, except as expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
SECTION 2.16. 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 I] 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 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
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any part of the Mortgaged Property shall be entitled to exercise all the rights
and powers of the Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc. The Owner Trustee irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Certificate Holders to Receive Payment.
Notwithstanding any other provision of this Trust Indenture, the right of any
Certificate Holder to receive payment of principal of, and premium, if any, and
interest on a Secured Certificate on or after the respective due dates expressed
in such Secured Certificate, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the terms hereof,
shall not be impaired or affected without the consent of such Certificate
Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Indenture Trustee
shall have Actual Knowledge of an Event of Default or of a Default arising from
a failure to pay Rent, the Indenture Trustee shall give prompt written notice
thereof to the Owner Trustee, the Owner Participant, Lessee, and each
Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and
5.03 hereof, the Indenture Trustee shall take such action, or refrain from
taking such action, with respect to such Event of Default or Default (including
with respect to the exercise of any rights or remedies hereunder) as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture
Trustee shall not have received instructions as above provided within 20 days
after mailing notice of such Event of Default to the Certificate Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to
the preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Certificate Holders. If the
Indenture Trustee shall at any time declare the Lease to be in default pursuant
to Section 15 thereof or shall elect to foreclose or otherwise enforce this
Trust Indenture, the Indenture Trustee shall forthwith notify the Owner
Participant, the Certificate Holders, the Owner Trustee and Lessee. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the
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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
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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
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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
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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.
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<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
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<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
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<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
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<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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By: /s/ Greg A. Hawley
-----------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee, Indenture Trustee
By: /s/ Donald E. Smith
-----------------------------------
Name: Donald E. Smith
Title: Vice President
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<PAGE>
EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 I]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 I], 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 I] 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 I],
dated as of September 25, 1997 (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner Trustee and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
--------------- --------- ---------------- ------------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
A-2
<PAGE>
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
experessly provided herein, but solely as
Owner Trustee, Owner Trustee
By:
Name:
Title:
A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
------------------ ---------------
Series A......... $10,560,952.07 7.068%
Series B......... $3,538,462.47 7.248%
Series C......... $1,980,000.00 7.039%
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-2
<PAGE>
SERIES B
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-3
<PAGE>
SERIES C
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-4
<PAGE>
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1A, dated as
of September 25, 1997.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1B, dated as
of September 25, 1997.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1C, dated as
of September 25, 1997.
Schedule II-1
<PAGE>
ANNEX A [NW 1997 I]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for all purposes of the Operative Documents referred to
below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) and shall be equally applicable to
both the singular and the plural forms of the terms herein defined. In the case
of any conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control the
construction of such Operative Document.
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such person whether through the ownership of voting securities or by contract
or otherwise.
"Aircraft" means the Airframe to be delivered and leased under the
Lease (or any airframe from time to time substituted for such Airframe pursuant
to Section 10(a) of the Lease) together with the four Engines initially leased
under the Lease (or any engine substituted for either of such Engines pursuant
to the terms of the Lease), whether or not any of such initial or substituted
Engines may from time to time be installed on such initial or substituted
Airframe or may be installed on any other airframe or on any other aircraft.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-RJ85A airframe bearing
manufacturer's serial number E2321 and anticipated to bear FAA registration
number N509XJ, together with four AlliedSignal LF507 type engines.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified in the
initial Lease Supplement, which aircraft shall be leased by Lessor to Lessee
under the Lease and under such Lease Supplement, and any aircraft (except
Engines or engines from time to time installed thereon) which may from time to
time be substituted for such aircraft (except Engines or engines from time to
time installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a) of the Lease; and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft (except
Engines or engines from time to
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<PAGE>
time installed thereon), or (B) so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 8 of the Lease after removal from
such aircraft (except Engines or engines from time to time installed thereon);
provided, however, that at such time as an aircraft (except Engines or engines
from time to time installed thereon) shall be deemed part of the property leased
under the Lease in substitution for the Airframe pursuant to the applicable
provisions of the Lease, the replaced Airframe shall cease to be an Airframe
under the Lease.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 of the Trust Indenture.
"Applicable Rate" means as of any date the weighted average of the
interest rates borne by the Secured Certificates then outstanding and, if no
Secured Certificates shall be outstanding, the Base Rate.
"Assumptions" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "Remaining Weighted Average Life" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such Secured
Certificate, by (ii) the number of days from and including the redemption date
to but excluding the scheduled payment date of such principal installment; by
(b) the then unpaid principal amount of such Secured Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or supersedes
such provisions.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined pursuant
to Section 19 of the Lease.
"Basic Term" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of the Lease.
-3-
<PAGE>
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which Bill of Sale
shall contain, among other things, a statement that such Bill of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"Cash Equivalents" (i) on or prior to the earliest to occur of (i)
the Delivery Date, (ii) the date of assumption by Lessee of the Secured
Certificates and (iii) the date of redemption of the Secured Certificates
pursuant to Section 2.10(c), (d) or (e) of the Trust Indenture, shall mean (a)
direct obligations of the United States or obligations fully guaranteed by the
United States, (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively, or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest rating
assigned by such rating organization, (c) investments in negotiable certificates
of deposit, time deposits, banker's acceptances, commercial paper or other
direct obligations of, or obligations guaranteed by, commercial banks organized
under the laws of the United States or of any political subdivision thereof (or
any U.S. branch of a foreign bank) with issuer ratings of at least B/C by
Thomson Bankwatch, having maturities no later than eight months following the
date of such investment, (d) overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, or (e)
overnight repurchase agreements with respect to the securities described in
clause (a) above entered into with an office of a bank or trust company which is
located in the United States or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million, and (ii) after
the date specified in clause (i) above, shall mean the investments specified in
Section 22(a) of the form of Lease attached as Exhibit C to the Participation
Agreement.
"Certificate Closing" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"Certificate Closing Date" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"Certificate Closing Documents" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
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"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation of
the United States of America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any substantially
similar program.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the deposit account established and
maintained pursuant to Section 2.16 of the Trust Indenture.
"Collateral Account Control Agreement" means the Collateral Account
Control Agreement [NW 1997 I], dated as of September 25, 1997, among State
Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee.
"Commitment" means the amount of the Owner Participant's
participation in Lessor's Cost for the Aircraft required to be made available or
paid as provided in Section 1(d) of the Participation Agreement.
"Consent and Agreement" means the Consent and Agreement [NW 1997 I],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as Exhibit B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with the
applicable provisions thereof.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Contract Rights" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H or
Part J of the Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and Part J of
the Manufacturer
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Support Agreement in respect of the Aircraft and all claims thereunder and (b)
any and all rights of Lessee to compel performance of the terms of Part H and
Part J of the Manufacturer Support Agreement in support thereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Cut-Off Date" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Portion" means the amount specified as such on Schedule II to
the Participation Agreement.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" (a) for purposes of the Operative Documents other than the
Trust Indenture, means any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) and (b) for purposes of the
Trust Indenture, means any condition or event that with the giving of notice or
the lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events of
Default relating to Excluded Payments). "Delivery Date" means the date of the
initial Lease Supplement for the Aircraft, which date shall be the date the
Aircraft is leased by Lessor to Lessee and accepted by Lessee under the Lease.
"Delivery Date Closing" means the closing of the transactions to be
consummated on the Delivery Closing Date.
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"Delivery Documents" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"Delivery Notice" means notice of the Aircraft's Delivery Date,
given by the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by Lessee
pursuant to Section 1(e)(iii) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery
Date and ending on the eighth December 31st thereafter, or such earlier date as
the Lease may be terminated in accordance with the provisions thereof.
"Determination Date" means the earlier of (i) the 30th day following
the CutOff Date and (ii) the Prepayment Date.
"Dollars" and "$" means the lawful currency of the United States of
America.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with a corporate
trust department of a depository institution with corporate trust powers
organized under the laws United States or any state thereof or the District of
Columbia, and whose deposits are insured by the Federal Deposit Insurance
Corporation, provided that such institution also has a combined capital and
surplus of at least $100,000,000 and a rating of A or better from the Thomson
Bank Watch.
"Eligible Institution" means a depository institution organized
under the laws of the United States or any one of the states thereof, or the
District of Columbia, or any domestic branch of a foreign bank, which in any
case at all times (a) has either (x) a long-term unsecured debt rating of Aa2 by
Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b)
has either (x) a long-term unsecured debt rating of at least AA by S&P or (y) a
short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of
the Federal Deposit Insurance Corporation.
"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
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hereunder. The term "Engines" means, as of any date of determination, all
Engines then leased under the Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of the Participation Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes of
the Operative Documents other than the Trust Indenture, means each of the
following events (whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) so long as, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement after the same shall have become due and such failure
shall continue for ten (10) Business Days after Lessee's receipt of
written demand therefor by the party entitled thereto (provided that
any failure of Lessee to pay to Lessor when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an
Event of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall constitute
an Event of Default); or
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof
from the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect in
any material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Owner Trustee or the
Certificate Holders) within thirty (30) days after the receipt by
Lessee of a written notice from the Indenture Trustee advising
Lessee of the existence of such incorrectness.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the loss of
such property or of the
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use thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by Lessee (or any Sublessee) for any reason whatsoever; (ii) any damage to
such property which results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or compromised total
loss; (iii) the theft or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of, such
property (other than a requisition for use by the United States Government or
any other government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event referred to in
this clause (iii) (other than a requisition of title) shall have resulted in the
loss of possession of such property by Lessee (or any Sublessee) for a period in
excess of 180 consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days from the date
of such requisition of title; (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration or other
governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of 180 consecutive
days, unless Lessee (or any Sublessee), prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such property by
Lessee (or such Sublessee), but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been applicable to the
entire U.S. registered fleet of British Aerospace Avro 146-RJ85A aircraft of
Lessee (or any Sublessee) and Lessee (or a Sublessee), prior to the expiration
of such two-year period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such jurisdiction and
shall be diligently carrying forward, in a manner which does not discriminate
against the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by Lessee (or
such Sublessee), but in any event if such use shall have been prohibited for a
period of three years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, which shall have occurred during the Basic Term (or any Renewal Term)
and shall have continued for thirty (30) days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (v) shall exist if Lessor
shall have furnished to Lessee the written notice specified in Section 10(d) of
the Lease; and (vi) any divestiture of title to or interest in an Engine treated
as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.
"Excess Amount", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in Exhibit B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
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"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 of the Trust Indenture, the amounts
payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of
the Lease plus all reasonable expenses incurred by the Owner Trustee and the
Owner Participant in connection with such assumption, as applicable, (vii) any
payment of the foregoing under the Guarantee, (viii) interest accrued on any of
the above, and (ix) any right to enforce the payment of any amount described in
clauses (i) through (viii) above and the right to declare an Event of Default in
respect of any of the foregoing amounts.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the United
States government succeeding to their functions.
"Foreign Air Carrier" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for the Aircraft, Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those required by, the
Federal Aviation Administration, the Civil Aviation Authority of the United
Kingdom, the Direction Generale de l'Aviation Civile of the French Republic, the
Luftfahrt Bundesamt of the Federal Republic of Germany, the Rijflauchtraatdienst
of the Kingdom of the Netherlands, the Ministry of Transportation of
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Japan or the Federal Ministry of Transport of Canada (and any agency or
instrumentality of the applicable government succeeding to the functions of any
of the foregoing entities).
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Documents or
relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
"Guarantee" means the Guarantee [NW 1997 I], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable provisions
thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii) the
Owner Participant, (iv) the Trust Estate, (v) the Loan Participants and each
other Certificate Holder, (vi) the Subordination Agent, (vii) the Liquidity
Provider, (viii) the Pass Through Trustees, (ix) each Affiliate of the Persons
described in clauses (i) through (iv), inclusive, (x) each Affiliate of the
Persons described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the Persons
described in clauses (i) through (viii), inclusive, (xii) the successors and
permitted assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Default" means any event or condition that with the
giving of notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related to
Excluded Payments).
"Indenture Event of Default" shall mean an "Event of Default" as
defined in clause (a) of the definition of "Event of Default".
"Indenture Trustee" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as indenture
trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation Agreement and
the Trust Indenture.
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"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 Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the Operative Documents to the
extent such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said Section 7,
or (D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"Initial Owner Participant" means Lessee.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease Agreement", "the Lease Agreement", "the Lease", or "the
Agreement", mean the Lease Agreement [NW 1997 I], substantially in the form of
Exhibit C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the Trust Agreement and the Trust Indenture, including, without limitation,
supplementation thereof by one or more Lease Supplements entered into pursuant
to the applicable provisions thereof.
"Lease Default" shall mean a "Default" as defined in clause (a) of
the definition of "Default".
"Lease Event of Default" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"Lease Period Date" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, to and including the
last such date in the Term.
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"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA Bill of Sale, the Bill of Sale, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Bill of Sale and the Bill of Sale.
"Lessor Liens" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, National
Association, in its individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or First Security Bank, National
Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association, in its
individual capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First Security Bank,
National Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, provided, however, that any Lien which is
attributable solely to First Security Bank, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder shall not
constitute a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) First Security Bank,
National Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner Participant, as
appropriate).
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"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 The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or
claims against any Loan Participant not related to the transactions contemplated
by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to
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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 Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV
to the Participation Agreement.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and its
successors and assigns.
"Manufacturer Delivery" means the date the Aircraft is delivered by
the Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"Manufacturer Documents" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
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<PAGE>
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 of the Trust Indenture.
"Net Economic Return" shall have the meaning ascribed to such term
in paragraph 2 of Exhibit E to the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement, an
acceptance certificate covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement
(insofar as it relates to the Aircraft), the Guarantee, the Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean the corporation to whom on the
Delivery Date (or, if earlier, the Transfer Date) the Initial Owner Participant
shall transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such corporation
transfers all or any portion of its right, title and interest in and to the
Trust Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 8 of the
Participation Agreement.
"Owner Participant Documents" means the Participation Agreement, the
Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor
Owner Trustee in its individual capacity by name in the Operative Documents
shall include such successor Owner Trustee in its individual capacity from and
after such succession.
"Owner Trustee Documents" means the Participation Agreement, the
Trust Agreement, the Trust Supplement covering the Aircraft, the Lease, the
Lease Supplement
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<PAGE>
covering the Aircraft, the Purchase Agreement Assignment, the Residual
Agreement, the Trust Indenture and the Secured Certificates.
"Participants" shall mean and include the Loan Participants, the
Initial Owner Participant and the Owner Participant.
"Participation Agreement" means that certain Participation Agreement
[NW 1997 I], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent, the
Initial Owner Participant and Owner Trustee, as such Participation Agreement may
be amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines, (b) any items leased by Lessee from a third party
(other than Lessor) and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with Section 8
of the Lease after removal therefrom.
"Pass Through Certificates" means the pass through certificates to
be issued by the Pass Through Trustee in connection with the Overall
Transaction.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the three separate pass through trust supplements referred
to on Schedule I to the Participation Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass Through
Trust Agreement, and each other person that may from time to time be acting as
successor trustee under any such Pass Through Trust Agreement.
"Past Due Rate" (A) with respect to the Secured Certificates, means
the rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be paid by the
Indenture Trustee to the Loan Participants, or the holders of any outstanding
Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in
effect from time to time and (ii) with respect to the remaining portion of any
payment of Rent (and the entire amount of any payment of Rent after the
satisfaction and discharge of the Trust Indenture), a rate per annum equal to 1%
over the Base Rate.
"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.
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"Permitted Lien" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"Permitted Sublessee" means any entity domiciled in a country listed
in Exhibit F to the Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Lease" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"Prepayment Date" means June 15, 1998.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to
the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1997 I], dated as of the Delivery Date and substantially in the
form of Exhibit B to the Participation Agreement, between Lessee and Lessor, as
the same may be amended, supplemented or modified from time to time, with a form
of Consent and Agreement to be executed by the Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"Rating Agencies" means collectively, at any time, each nationally
recognized agency which shall have been requested to rate the Pass Through
Certificates and which shall then be rating the Pass Through Certificates. The
initial Rating Agencies shall be S&P and Moody's.
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<PAGE>
"Rating Agency Confirmation" means, with respect to any Operative
Document that is to be modified in any material respect on the Delivery Date or
the Transfer Date, if applicable, a written confirmation from each of the Rating
Agencies that the use of such Operative Document with such modifications would
not result in (i) a reduction of the rating for any class of Pass Through
Certificates below the then current rating for such class of Pass Through
Certificates or (ii) a withdrawal or suspension of the rating of any class of
Pass Through Certificates.
"Related Indemnitee Group" means, with respect to any Indemnitee,
any officer, director, servant, employee, agent or Affiliate thereof.
"Renewal Term" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Reoptimization Date" has the meaning set forth in Section 1(c)(ii)
of the Participation Agreement.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means the Residual Value Agreement (N509XJ),
dated as of the Delivery Date, among the Manufacturer, the Owner Participant and
the Owner Trustee.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"S&P" means Standard & Poor's Ratings Group.
"Scheduled Delivery Date" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Secured Certificates" shall mean and include any Secured
Certificates issued under the Trust Indenture, and issued in exchange therefor
or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 of the Trust Indenture.
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<PAGE>
"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" shall mean the amount denominated as such
in Exhibit B to the Lease.
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit C to the Lease opposite the Stipulated Loss Value Date with respect to
which the amount is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) of the Lease and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after the last day
of the Basic Term shall be the amount determined as provided in Section 19(a) of
the Lease.
"Sublease" means any sublease permitted by the terms of Section
7(b)(x) of the Lease.
"Sublessee" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the terms
of a Sublease which is then in effect pursuant to Section 7(b)(x) of the Lease.
"Subordination Agent" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
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<PAGE>
"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to clause (b) of the
third paragraph of Section 2.02 of the Trust Indenture, (c) Lessor's pro rata
share of all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, and (d)
Lessor's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata share" means as of
any time a fraction, the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in the Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 I], to be dated as of the Delivery Date, between the Owner Participant
and Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use, turnover, value
added, property (tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Basic Term and, if actually entered into, any
Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, means, but subject always
to the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D to the Lease opposite the Termination Date with respect to which the
amount is determined (as such Exhibit D may be adjusted from time to time as
provided in Section 3(d) of the Lease and in Section 7 of the Tax Indemnity
Agreement).
"Transaction Expenses" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection with
the transactions contemplated by the
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Participation Agreement, the other Operative Documents, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
including, without limitation:
(1) the reasonable and actual fees, expenses and disbursements
of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for the Underwriters,
and (D) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements
of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture;
(4) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee and the Subordination Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount previously
agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for Lessee;
(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.
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<PAGE>
"Transfer Date" has the meaning specified in Section 1(b) of the
Participation Agreement.
"Triggering Event" has the meaning specified in the Intercreditor
Agreement.
"Trust Agreement" means that certain Trust Agreement [NW 1997 I],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Agreement and Indenture Supplement" or "Trust Supplement"
shall mean a supplement to the Trust Agreement and to the Trust Indenture, in
substantially the form of Exhibit A to the Trust Indenture, which shall
particularly describe the Aircraft, and any Replacement Airframe and Replacement
Engine included in the property of the Owner Trustee covered by the Trust
Agreement. The initial Trust Agreement and Indenture Supplement shall be dated
the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Trust Indenture and Security Agreement [NW 1997 I],
dated as of the Certificate Closing Date, between Lessor and the Indenture
Trustee, as originally executed or as modified, amended or supplemented in
accordance with its terms, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, excluding Excluded Payments.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the underwriters
named therein.
"United States" or "U.S." means the United States of America.
"U.S. Air Carrier" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to Part
121 of the regulations under the Federal 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
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<PAGE>
would be required under the Federal Aviation Act or, if the Aircraft is not
registered in the United States, all certificates and licenses required by the
laws of the jurisdiction of registry, for the performance by such employees of
similar functions within the United States of America or such other jurisdiction
of registry (it is understood that cabin attendants need not be regular
employees of Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee
(or any Sublessee) in accordance with its normal maintenance practices.
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================================================================================
FIRST AMENDMENT
TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 I]
Dated as of
February 3, 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 N509XJ
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
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
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<PAGE>
FIRST AMENDMENT TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 I]
This FIRST AMENDMENT TO TRUST INDENTURE AND SECURITY AGREEMENT [NW
1997 I], dated as of February 3, 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 I], 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 I], dated as of
February 3, 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".
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<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.
-3-
<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 I]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 I], 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 I] dated as of February 3, 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 I],
dated as of September 25, 1997 (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner Trustee and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
--------------- -------- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
- ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
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.
A-2
<PAGE>
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By:
--------------------------------
Name:
Title:
A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,560,952.07 7.068%
Series B......... $3,538,462.47 7.248%
Series C......... $1,980,000.00 7.039%
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N509XJ
Percentage of Principal
Payment Date Amount to be Paid
----------- -----------------------
Schedule I-2
<PAGE>
SERIES B
Aircraft: N509XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-3
<PAGE>
SERIES C
Aircraft: N509XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-4
<PAGE>
ANNEX A [NW 1997 I]
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
Schedule I-5
<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 I], dated as of February 3, 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.
Schedule I-6
<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.
Schedule I-7
<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 I], 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 I], dated as of February 3, 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
Schedule I-8
<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
Schedule I-9
<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,
Schedule I-10
<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
Schedule I-11
<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 I], dated as of
February 3, 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.
Schedule I-12
<PAGE>
"Guarantee" means that certain Amended and Restated Guarantee [NW
1997 I], dated as of February 3, 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
Schedule I-13
<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 Installment" has the meaning set forth in Section 19(d) of
the Lease.
"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 I], dated as of February 3, 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, January 29, 2017, and each
succeeding July 29 and January 29, 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.
Schedule I-14
<PAGE>
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA Bill of Sale, the Bill of Sale, the Purchase
Agreement Assignment, 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.
Schedule I-15
<PAGE>
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Secured
Certificate and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Secured Certificate and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Secured Certificate,
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"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.
Schedule I-16
<PAGE>
"Make-Whole Termination Date" with respect to the Series A Secured
Certificates, means July 2, 2010; with respect to the Series B Secured
Certificates, means July 2, 2008; and with respect to the Series C Secured
Certificates, means October 2, 2003.
"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 I], 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 I], 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.
Schedule I-17
<PAGE>
"Original Trust Agreement" means that certain Trust Agreement [NW
1997 I], 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 I], 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 I], dated as of February 3, 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
Schedule I-18
<PAGE>
supplemented from time to time pursuant to the 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
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.
Schedule I-19
<PAGE>
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"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 I], dated as of February 3, 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.
"Remaining Installments" has the meaning set forth in Section 19(d)
of the Lease.
Schedule I-20
<PAGE>
"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.
"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 (N509XJ), dated as
of February 3, 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."
Schedule I-21
<PAGE>
"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.
"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
Schedule I-22
<PAGE>
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 I], dated as of February 3, 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;
Schedule I-23
<PAGE>
(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 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 I], dated as of February 3, 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
Schedule I-24
<PAGE>
Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement. The initial Trust Agreement and
Indenture Supplement shall be dated the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the 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.
Schedule I-25
<PAGE>
================================================================================
LEASE AGREEMENT
[NW 1997 I]
Dated as of
February 3, 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
----
SECTION 1. Definitions ................................................ 1
SECTION 2. Acceptance and Lease ....................................... 18
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 .................................. 24
(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 ............................... 27
(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
(i)
<PAGE>
Page
----
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 ................................................ 47
SECTION 12. Inspection ................................................. 47
SECTION 13. Assignment ................................................. 48
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 .. 60
(a) Investment of Security Funds ........................... 60
(b) Liability of Lessor Limited ............................ 60
(ii)
<PAGE>
Page
----
SECTION 23. Service of Process ......................................... 60
SECTION 24. Miscellaneous .............................................. 61
SECTION 25. Successor Trustee .......................................... 61
SECTION 26. Covenant of Quiet Enjoyment ................................ 61
(iii)
<PAGE>
EXHIBITS
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Lessor's Cost, Special Purchase Price, Initial
Installment and Remaining Installments 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 I]
This LEASE AGREEMENT [NW 1997 I], dated as of February 3, 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 I] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this
definition, "control" (including "controlled by" and "under common
control with") shall mean the power, directly or indirectly, to
direct or cause the direction of the management and policies of such
person whether through the ownership of voting securities or by
contract or otherwise.
"Aircraft" means the Airframe to be delivered and leased
hereunder (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) hereof) together with the four
Engines initially leased hereunder (or any engine substituted for
either of such Engines pursuant to the terms hereof), whether or not
any of such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A
aircraft (except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which aircraft
shall be leased by Lessor to Lessee hereunder and under such Lease
Supplement, and any aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted
for such aircraft (except Engines or engines from time to time
installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a); and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed thereon), or
(B) so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 after removal from such
aircraft (except Engines or engines from time to time installed
thereon);
<PAGE>
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 (N509XJ), dated January 29, 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 I], 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 January 29, 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
-2-
<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 I], 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 I], 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 January 2, 2012 (or, if January 2, 2012 is
not a Business Day, the Business Day immediately succeeding January
2, 2012).
"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 I],
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 I], 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 Installment" has the meaning set forth in Section
19(d) hereof.
"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 I] 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, each succeeding
January 2 and July 2 to and including January 2, 2017, January 29,
2017, and each succeeding July 29 and January 29, 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 its individual capacity, with respect to Taxes or Expenses
against which Lessee is not required to indemnify
-8-
<PAGE>
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.
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"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 I],
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 I], 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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"Original Trust Agreement" means that certain Trust Agreement
[NW 1997 I], 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 I], 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 I], 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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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 I], 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.
"Remaining Installments" has the meaning set forth in Section
19(d) hereof.
"Renewal Term" means any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 hereof.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Residual Agreement" means that certain Agreement (N509XJ),
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 hereto.
"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including January 29, 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 January 29,
2017 shall be the amount determined as provided in Section 19(a)
hereof.
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"Stipulated Loss Value Date" means the 2nd calendar day of
each calendar month during the Basic Term and the 29th calendar day
(except for the month of February in a non-leap year, which shall be
the 28th 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.
and otherwise acceptable under the Owner Participant's then
applicable credit standards, 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), provided that such calculation shall be performed by
utilizing the highest federal corporate income tax rate as in effect
at such time.
"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
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Intercreditor Agreement. As used herein, "Lessor's pro rata share"
means as of any time a fraction, the numerator of which is the
principal balance then outstanding of Secured Certificates and the
denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, (ii) the
respective Affiliates, successors and permitted assigns of each of
the entities described in the preceding clause (i), and (iii) the
Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1997 I], 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 January 29, 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:
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(1) the reasonable and actual fees, expenses and
disbursements of (A) Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee and the Indenture
Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for
the Underwriters, and (D) Crowe & Dunlevy, P.C., special
counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual
disbursements of the Indenture Trustee under the Trust
Indenture;
(4) the initial fees and expenses of the Liquidity
Provider, the Pass Through Trustee and the Subordination
Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals
of the Aircraft;
(7) the reasonable fees, expenses and disbursements of
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 I], dated as of the date hereof, between
the Owner
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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 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.
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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 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 January 29, 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 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 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 February 4, 1998, (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are
determined to be other than 2.1399% of Lessor's Cost, or (C) there
is a change in tax law (including the issuance of proposed
regulations) after November 21, 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,
the Special Purchase Price, the Initial Installment and the
Remaining Installments shall be recalculated by the Owner
Participant, on or prior to May 31, 1998, using the same methods and
assumptions used to calculate original Basic Rent, Stipulated Loss
Value and Termination Value percentages, the Special Purchase Price,
the Initial Installment and the Remaining Installments in order to:
(1) maintain the Owner Participant's Net Economic Return and (2)
minimize the Net Present Value of Rents to Lessee to the extent
possible consistent with clause (1) hereof. In such recalculation
there will be no change in the amortization of the Secured
Certificates.
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(ii) In the event of a refinancing as contemplated by Section
17 of the Participation Agreement, then the Basic Rent percentages
set forth in Exhibit B, the Stipulated Loss Value percentages set
forth in Exhibit C, the Termination Value percentages set forth in
Exhibit D, the Special Purchase Price, the Initial Installment and
the Remaining Installments 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,
the Special Purchase Price, the Initial Installment and the
Remaining Installments 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, the
Special Purchase Price, the Initial Installment and the Remaining
Installments on the Delivery Date, in order to (1) maintain the
Owner Participant's Net Economic Return and (2) to the extent
possible consistent with clause (1) hereof, minimize the Net Present
Value of Rents to Lessee.
(iii) [Intentionally Omitted].
(iv) Any recalculation of Basic Rent, Stipulated Loss Value
and Termination Value percentages, Special Purchase Price, Initial
Installment and Remaining Installments pursuant to this Section 3(d)
shall be determined by the Owner Participant and shall be subject to
the verification procedures set forth in Exhibit E hereto. Such
recalculated Basic Rent, Stipulated Loss Value and Termination Value
percentages, Special Purchase Price, Initial Installment and
Remaining Installments shall be set forth in a Lease Supplement or
an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this
Lease to the contrary notwithstanding, each installment of 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
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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 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 ss.ss. 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
I (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
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been fully discharged, Lessor hereby irrevocably directs and Lessee agrees,
that, unless the Indenture Trustee shall otherwise direct, all Rent payable to
Lessor and assigned to the Indenture Trustee pursuant to the Trust Indenture
shall be paid prior to 10:30 A.M., New York time on the due date thereof in
funds of the type specified in this Section 3(f) directly to the Indenture
Trustee at its account at State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW 1997
I (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
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received whatever title to the Aircraft was conveyed to it by Lessee, (ii)
represents and warrants that on the Delivery Date the Aircraft shall be free of
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to it, (iii)
covenants that it will not, through its own actions or inactions, interfere in
Lessee's quiet enjoyment of the Aircraft during the Term, (iv) agrees that it
will not directly or indirectly create, incur, assume or suffer to exist any
Lessor Lien attributable to it on or with respect to the Airframe or any Engine
or any portion of the Trust Estate and (v) represents and warrants that it is a
Citizen of the United States without making use of a voting trust, voting powers
agreement or similar arrangement, and agrees that if at any time it shall cease
to be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the Federal
Aviation Act as in effect at such time or, if it is not necessary, if and so
long as the Owner Trustee's citizenship would have any material adverse effect
on the Loan Participants, the Owner Participant or Lessee), effective upon the
appointment of a successor Owner Trustee in accordance with Section 9.01 of the
Trust Agreement. None of the provisions of this Lease shall be deemed to amend,
modify or otherwise affect the representations, warranties or other obligations
(express or implied) of the Manufacturer, any subcontractor or supplier of the
Manufacturer with respect to the Airframe, the Engines or any Parts, or to
release the Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared 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
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LF507 type engines or four engines of the same or another manufacturer of not
less than equivalent utility, value and remaining useful life, and suitable for
installation and use on the Airframe without impairing the value, utility or
remaining useful life of the Aircraft; provided that all engines shall be of the
same make and model) duly installed thereon. Also, at the time of such return,
such Airframe and Engines or engines (i) shall be certified (or, if not then
registered under the Federal Aviation Act, shall be eligible for certification)
as an airworthy aircraft by the Federal Aviation Administration, (ii) shall be
free and clear of all Liens (other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens)) 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 January 29, 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 condition 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.
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(b) Return of the Engines. In the event that any engine not owned by
Lessor shall be delivered with the returned Airframe as set forth in paragraph
(a) of this Section 5, Lessee, concurrently with such delivery, will, at no cost
to Lessor, furnish, or cause to be furnished, to Lessor a full warranty (as to
title) bill of sale with respect to each such engine, in form and substance
satisfactory to Lessor (together with an opinion of counsel to the effect that
such full warranty bill of sale has been duly authorized and delivered and is
enforceable in accordance with its terms and that such engines are free and
clear of Liens other than Lessor Liens (including for this purpose Liens which
would be Lessor Liens but for the proviso in the definition of Lessor Liens)),
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
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as herein provided, the Lien of the Trust Indenture, and any other rights
existing pursuant to the Operative Documents, (ii) the rights of others under
agreements or arrangements to the extent permitted by the terms of Sections 7(b)
and 8(b) hereof, (iii) Lessor Liens (including for this purpose Liens which
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
Loan Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of
Lessee (or any Sublessee) either not yet due or being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein, or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of Lessee's (or, if a Sublease is then in effect, Sublessee's) business
(including those arising under maintenance agreements entered into in the
ordinary course of business) securing obligations that are not overdue for a
period of more than sixty (60) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any
judgment or award against Lessee (or any Sublessee), unless the judgment secured
shall not, within sixty (60) days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within sixty (60) days after the expiration
of such stay, (vii) any other Lien with respect to which Lessee (or any
Sublessee) shall have provided a bond, cash collateral or other security
adequate in the reasonable opinion of Lessor, and (viii) Liens approved in
writing by Lessor. Lessee will promptly, at its own expense, take (or cause to
be taken) such actions as may be necessary duly to discharge any such Lien not
excepted above if the same shall arise at any time.
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia. (a)(I) Registration and Maintenance. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) forthwith upon
the delivery thereof hereunder, cause the Aircraft to be duly registered in the
name of Lessor, and, subject to the second paragraph of this Section 7(a) and
Section 8(f) of the Participation Agreement, to remain duly registered in the
name of Lessor under the Federal Aviation Act, provided that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and shall cause the
Trust Indenture to be duly recorded and maintained of record as a first mortgage
on the Aircraft; (ii) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) the Aircraft so as to keep the
Aircraft in as good an operating condition as 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-
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RJ85A aircraft powered by engines of the same type as those with which the
Airframe shall be equipped at the time of such grounding and registered in the
United States have been grounded by the FAA (although such certification need
actually be maintained only during such periods as the Aircraft is registered in
the United States), or the applicable laws of any other jurisdiction in which
the Aircraft may then be registered from time to time in accordance with Section
8(f) of the Participation Agreement, 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.
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(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(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;
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(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and (y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine to
the Civil Reserve Air Fleet Program in any contract year and provide
Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States Air
Force to whom notice must be given pursuant to Section 15 hereof,
and (B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any agency
or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be
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given prior to entering into such Wet Lease, if practicable, but in
any event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier or (2) 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
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this Lease and to the Lien of the Trust Indenture, including, without
limitation, the covenants contained in Section 7(a) hereof and Lessor's rights
to repossession pursuant to Section 15 hereof and to avoid such Sublease upon
such repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Sublease or transfer had not occurred, and, except as otherwise provided herein,
the terms of any such Sublease shall not permit any Sublessee to take any action
not permitted to be taken by Lessee in this Lease with respect to the Aircraft.
No pooling agreement, sublease or other relinquishment of possession of the
Airframe or any Engine or Wet Lease shall in any way discharge or diminish any
of Lessee's obligations to Lessor hereunder or constitute a waiver of Lessor's
rights or remedies hereunder. Any sublease permitted under this Section 7(b)
shall expressly prohibit any further sub-sublease by the Sublessee. Lessor
agrees, for the benefit of Lessee (and any Sublessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine (other than an
Engine) owned by Lessee (or any Sublessee), any lessor of any engine (other than
an Engine) leased to Lessee (or any Sublessee) and any conditional vendor 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
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and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost and
expense, replace such Parts as promptly as practicable. All replacement Parts
shall be free and clear of all Liens (except for Permitted Liens and pooling
arrangements to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Parts replaced assuming such replaced Parts
were in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in paragraph (c) of this Section 8, all Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until 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
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thereupon vest in Lessee (or, if a Sublease is then in effect, any Sublessee),
free and clear of all rights of Lessor, and shall no longer be deemed a Part
hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) 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 the Owner Participant or, so long as
any Secured Certificates are outstanding, the Indenture Trustee. In addition,
Lessee (or any Sublessee), at its own expense, may from time to time add further
parts or accessories and make such alterations and modifications in and
additions to the Airframe or any Engine as Lessee (or any Sublessee) may deem
desirable in the proper conduct of its business, including, without limitation,
removal of Parts which Lessee (or any Sublessee) has determined in its
reasonable judgment to be obsolete or no longer suitable or appropriate for use
on the Airframe or such Engine (such parts, "Obsolete Parts"); provided that no
such alteration, modification or addition shall 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
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"Additional Parts") shall, without further act, vest in Lessor. Notwithstanding
the foregoing sentence, Lessee (or any Sublessee) may remove or suffer to be
removed any Additional Part, provided that such Additional Part (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Section 7 hereof or the first sentence of this paragraph (c) and (iii)
can be removed from the Airframe or such Engine without diminishing or impairing
the value, utility or remaining useful life which the Airframe or such Engine
would have had at the time of removal had such alteration, modification or
addition not occurred, assuming that such Airframe or Engine was in the
condition and repair required to be maintained by the terms hereof. Upon the
removal by Lessee (or Sublessee) of any Part as provided above, title thereto
shall, without further act, vest in Lessee (or any Sublessee, as the case may
be) and such Part shall no longer be deemed part of the Airframe or Engine from
which it was removed. Any Part not removed by Lessee (or any Sublessee) as above
provided prior to the return of the Airframe or Engine to Lessor hereunder shall
remain the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on
any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(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
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Date, certify to Lessor in writing the amount and terms of such bid, and the
name and address of the party or parties (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an
arrangement or understanding regarding the future use of the Aircraft by Lessee
or any such Affiliate but who may be the Owner Participant, any Affiliate
thereof or any Person contacted by the Owner Participant) submitting such bid.
After Lessee shall have certified to Lessor all bids received, the Owner
Participant, any Affiliate thereof or any Person contacted by the Owner
Participant may submit a further bid or bids to Lessee not later than five
Business Days prior to the Termination Date proposed by Lessee (unless Lessee
shall have revoked the Termination Notice specifying such proposed Termination
Date). Subject to the next succeeding sentence, on or before the Termination
Date, subject to the release of all mortgage and security interests with respect
to the Aircraft under the Trust Indenture: (1) Lessee shall deliver the
Aircraft, or cause the Aircraft to be delivered, to the bidder(s), if any, which
shall have submitted the highest 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
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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 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
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Airframe or the Airframe and the Engines and/or engines then installed thereon,
Lessee shall forthwith (and in any event, within fifteen (15) days after such
occurrence) give Lessor written notice of such Event of Loss, and within
forty-five (45) days after such Event of Loss Lessee shall give Lessor written
notice of its election to perform one of the following options (it being agreed
that if Lessee shall not have given such notice of election within such period,
Lessee shall be deemed to have elected the option set forth in clause (i)
below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) an earlier Business Day irrevocably specified fifteen
(15) days in advance by notice from Lessee to Lessor and the
Indenture Trustee (the "Loss Payment Date"), Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in Section
3(f) hereof, an amount equal to the Stipulated Loss Value of the
Aircraft corresponding to the Stipulated Loss Value Date occurring
on or immediately following the Loss Payment Date; provided,
however, that if a Lease Period Date shall occur 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 an amount
equal to the Basic Rent that would have been due on (but only to the
extent payable in arrears as indicated on Exhibit B) or prior to
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
such Event of Loss, and furnish to or at the direction of Lessee a bill of sale
in form and
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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 with respect to the substitute aircraft, provided
that such opinion need not be delivered to the
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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 hereunder. For all purposes hereof, each such replacement engine shall,
after such
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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 the same extent as if such requisition had not occurred, provided
that if such Airframe and
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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 1998, on or before April 30 of each year
during the Term, Lessee will deliver to Lessor and the Indenture Trustee a
certificate of Lessee, signed by the President, a Vice President or the Chief
Financial Officer of Lessee to the effect that the signer is familiar with or
has reviewed the relevant terms of this Lease and the signer does not have
actual knowledge of the existence, as of the date of such certificate, of any
condition or event which constitutes a Default or an Event of Default. Lessee
agrees that if the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer, Treasurer or an Assistant Treasurer of Lessee has actual
knowledge of the existence of a Default, then Lessee shall promptly give to
Lessor, the Owner Participant and the Indenture Trustee notice thereof and such
other information relating thereto as Lessor, the Owner Participant or the
Indenture Trustee may reasonably request. Lessee agrees that if an officer of
Lessee has knowledge of the existence of an Event of Default, Lessee shall
promptly give to Lessor and the Indenture Trustee notice thereof and such other
information relating thereto as Lessor or the Indenture Trustee may reasonably
request. Lessee will deliver to Lessor, the Owner Participant and the Indenture
Trustee (i) within sixty (60) days after the end of each of the first three
quarterly periods of each fiscal year of the Guarantor, the publicly filed Form
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. Lessee shall have the right 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") and a one to two
year (at Lessee's option) renewal term (ending on a Lease Period Date) which
shall commence only upon the expiration of the first Fixed Renewal Term (the
"second Fixed Renewal Term") (the first Fixed Renewal Term and the second Fixed
Renewal Term, each a "Fixed Renewal Term") by delivery to Lessor at least ninety
(90) days before the end of the Basic Term or the first Fixed Renewal Term, as
the case may be, a written notice irrevocably electing to renew this Lease for a
Fixed Renewal Term (and, in the case of the notice electing to renew for the
second Fixed Renewal Term, specifying the length of such second Fixed Renewal
Term); provided, however, that in each case, at the time of notice, 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. 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 second Fixed Renewal Term for the Aircraft, Lessee shall have the
right to renew this Lease by delivery to Lessor of a written notice irrevocably
electing to renew this Lease for a renewal term of two years 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").
(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 one hundred
eighty (180) 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.
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.
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(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. Upon
payment to Lessor in immediately available funds of the full amount of the
purchase price and payment of any other amounts then due hereunder (including
all Rent and all costs or expenses of the Owner Participant in connection with
such purchase), Lessor will transfer to Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens), all of Lessor's right, title and interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred sixty-five
(365) days prior to the date on which Lessee may purchase the Aircraft pursuant
to Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1) or
Section 19(a)(2) hereof, Lessee may deliver to Lessor a revocable notice of its
intent to exercise its renewal option or purchase option. For all purposes of
this Section 19, including the appraisal referred to in this Section 19(c), in
determining "fair market rental value" or "fair market sales value", the
Aircraft shall be valued (i) as if in the condition and otherwise in compliance
with the terms of Section 5 upon a return of the Aircraft to the United States
and as if it had been maintained at all times as required in accordance with
Section 7(a)(I) during periods when no Sublease was in effect, (ii) on the basis
of the value which would obtain in an arm's-length transaction between an
informed and willing buyer-user or lessee (other than a lessee or an Affiliate
of a lessee currently in possession or a used equipment scrap dealer) under no
compulsion to buy or lease and an informed and willing seller or lessor
unaffiliated with such buyer-user or lessee and under no compulsion to sell or
lease and disregarding the purchase and renewal options of the lessee provided
in this Lease, and (iii) in the case of such valuation for determining "fair
market rental value", assuming such lessee would have substantially the same
obligations during the Fair Market Renewal Term as provided hereunder including
without limitation the obligations of Lessee to carry and maintain the insurance
required by Section 11 hereof and to make certain payments with reference to
Stipulated Loss Value during the applicable Fair Market Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred seventy
(270) days prior to the end of the Basic Term or the Renewal Term in question,
then the question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, 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
-57-
<PAGE>
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, at Lessee's
option, either (a) the Special Purchase Price, payable on the EBO Date, or (b)
the amount set forth under the heading "Initial Installment" on Exhibit B (the
"Initial Installment") (payable on the EBO Date) plus the Remaining Installments
(payable thereafter). 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 or the Initial
Installment, as the case may be, on the EBO Date Lessee shall pay Lessor a
purchase price equal to (I) (x) in the event Lessee has elected to pay the
Special Purchase Price, the Special Purchase Price or (y) in the event Lessee
has elected to pay the Initial Installment and the Remaining Installments, the
Initial Installment minus in either event (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), and, in the event that Lessee has elected to
pay the Initial Installment and the Remaining Installments, after Lessee shall
have provided Lessor with its undertaking to pay the amounts due on the dates
set forth under the heading "Remaining Installments" on Exhibit B (the
"Remaining Installments"), Lessor will transfer to Lessee, without recourse or
warranty (except as to the absence of Lessor Liens, including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest in and to the Aircraft
and under the Trust Indenture and, unless there shall be any Secured
Certificates outstanding after such payment, exercise such rights as it has to
cause the Aircraft to be released from the Lien of the Trust Indenture;
provided, however, that in the event that Lessee
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<PAGE>
has elected to pay the Initial Installment and the Remaining Installments,
Lessor shall retain a lien on the Aircraft until the Remaining Installments,
together with interest thereon at the Past Due Rate for any period from the date
due to the date paid, are paid in full, which lien (i) such shall be evidenced
by this Lease, which after the date on Lessor shall have transferred title to
the Aircraft to Lessee shall be deemed terminated as a true lease and shall
continue as a lease intended for security, mutatis mutandis, to secure the
payment when due of the Remaining Installments, and (ii) shall be subordinate
only to the lien in favor of the Indenture Trustee in the event that Lessee
shall have elected to assume the Secured Certificates pursuant to Section 2.13
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.
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<PAGE>
SECTION 22. Investment of Security Funds; Liability of Lessor
Limited. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("Moody's") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of A1 by S&P or P1 by Moody's and having a
final maturity of ninety (90) days or less from the date of purchase thereof;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing.
Lessee shall be responsible for any net loss realized as a result of any such
investment and shall reimburse Lessor (or the Indenture Trustee, as the case may
be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the 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.
-60-
<PAGE>
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's (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.
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<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
BY: s/ Greg A. Hawley
------------------------------------
Title: Vice President
NORTHWEST AIRLINES, INC.,
Lessee
BY: s/ Mark D. Powers
------------------------------------
Title: Vice President-Finance & Assistant
Treasurer
- Signature Page -
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1997 I]
LEASE SUPPLEMENT No.
[NW 1997 I]
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 I],
dated as of February 3, 1998, between FIRST AMERICAN NATIONAL BANK, 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 I], dated as of February 3, 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 other Lease Supplements.
(2) This language contained in the original counterpart only.
<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 January 29, 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
-----------------------------------
Title:
(3) Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By
-----------------------------------
Title:
- ----------
(3) This language contained in the original counterpart only.
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1997 I]
BASIC RENT, LESSOR'S COST, SPECIAL PURCHASE PRICE,
INITIAL INSTALLMENT AND REMAINING INSTALLMENTS SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent:
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)
- ------------ ---------------------- --------------------- ----------------
<PAGE>
BASIC RENT, LESSOR'S COST, SPECIAL PURCHASE PRICE,
INITIAL INSTALLMENT AND REMAINING INSTALLMENTS SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent 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)
- ------------ ---------------------- --------------------- ----------------
EXHIBIT B - PAGE 2
<PAGE>
BASIC RENT, LESSOR'S COST, SPECIAL PURCHASE PRICE,
INITIAL INSTALLMENT AND REMAINING INSTALLMENTS SCHEDULE
Lessor's Cost for the Aircraft: $____________
Special Purchase Price: ___% of Lessor's Cost on January 2, 2012.
Initial Installment: _____% of Lessor's Cost on January 2, 2012.
Remaining Installments: Date Amount
---- ------
April 15, 2012 _____% of Lessor's Cost
June 15, 2012 _____% of Lessor's Cost
September 15, 2012 _____% of Lessor's Cost
December 15, 2012 _____% of Lessor's Cost
EXHIBIT B - PAGE 3
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1997 I]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<PAGE>
EXHIBIT C - PAGE 2
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW 1997 I]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------- -----------
<PAGE>
EXHIBIT E
to
Lease Agreement
[NW 1997 I]
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, the Special Purchase Price, the
Initial Installment and the Remaining Installments 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, Special Purchase Price,
Initial Installment and Remaining Installments 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 January 29, 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, the Initial Installment, the
Remaining Installments, Stipulated Loss Value and Termination Value percentages
as of the Delivery Date.
<PAGE>
EXHIBIT F
to
Lease Agreement
[NW 1997 I]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
- ----------
* So long as on the date of entering into the proposed sublease such country and
the United States have diplomatic relations at least as good as those in effect
on the Delivery Date.
<PAGE>
EXHIBIT G
to
Lease Agreement
[NW 1997 I]
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 I]
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 I], dated as of February 3, 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>
================================================================================
AMENDED AND RESTATED
GUARANTEE
[NW 1997 I]
Dated as of February 3, 1998
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee..............................................................2
2. No Implied Third Party Beneficiaries...................................4
3. Waiver; No Set-off; Reinstatement; Subrogation.........................4
4. Amendments, Etc........................................................5
5. Payments...............................................................5
6. Assignment of Guarantee................................................5
7. Jurisdictional Matters.................................................5
8. Integration; Counterparts; Successors and Assigns; Headings............6
9. Notices................................................................6
10. No Waivers.............................................................6
11. Survival...............................................................6
12. Severability...........................................................7
13. Governing Law..........................................................7
14. Enforcement Expenses...................................................7
15. Termination............................................................7
16. No Guarantee of Secured Certificates...................................7
<PAGE>
GUARANTEE
[NW 1997 I]
This AMENDED AND RESTATED GUARANTEE [NW 1997 I], dated as of
February 3, 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 I], 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 I], 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 I], 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
I], 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
I], 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
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<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.
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<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
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:
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 I]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
First American National Bank, Owner Participant
<PAGE>
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 I]
Dated as of February 3, 1998
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
---------------
One British Aerospace Avro 146-RJ85A Aircraft
U.S. Registration No. N509XJ
Manufacturer's Serial No. E2321
================================================================================
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 I]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 I], dated as of February
3, 1998 between NORTHWEST AIRLINES, INC., a Minnesota corporation ("Assignor"),
and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee ("Assignee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has
agreed to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement
[NW 1997 I], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "Lease"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) Notwithstanding the foregoing, if and so long as (A) the
Aircraft shall be subject to the Lease and (B) the Manufacturer shall not have
received notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
<PAGE>
the Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "Manufacturer Payment"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to
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<PAGE>
Assignee in accordance with the terms of the Lease, be returned to Assignor
promptly after all Events of Default under the Lease have been cured or waived.
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 13850 McLearen Road,
Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703) 736-4255) and
three Business Days shall have elapsed from the date of actual receipt by the
Manufacturer and, in acting in accordance with the terms and conditions of the
Purchase Agreement and this Assignment, the Manufacturer may rely conclusively
upon any such notice.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding: (i)
Assignor shall at all times remain liable to the Manufacturer under the Purchase
Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or
- 3 -
<PAGE>
(ii) modify in any respect the Manufacturer's contract rights thereunder, except
as provided in the Consent and Agreement attached hereto.
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, for its
own willful misconduct or grossly negligent conduct for which it would otherwise
be liable; and provided, further, that nothing contained in this Section 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
- 4 -
<PAGE>
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. Unless the context otherwise require, the following
terms shall have the following meanings for all purposes of this Assignment and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Aircraft" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"Contract Rights" means all of Assignor's right, title and
interest in and to Part H and Part J of the Manufacturer Support
Agreement, as and to the extent that the same relate to the
warranties with respect to the Aircraft, including, without
limitation, (a) all claims for damages in respect of the Aircraft
arising as a result of any default by the Manufacturer under Part H
or Part J of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity
provisions in Part H and Part J of the Manufacturer Support
Agreement in respect of the Aircraft and all claims thereunder and
(b) any and all rights of Assignor to compel performance of the
terms of Part H and Part J of the Manufacturer Support Agreement in
support thereof.
"Engine" means each of the four AlliedSignal LF507 type
engines listed by manufacturer's serial number in the Lease
Supplement.
"Lease" means the Lease Agreement [NW 1997 I], dated as of
February 3, 1998, between Assignor and Assignee.
"Lease Supplement" means a Lease Supplement substantially in
the form of Exhibit A to the Lease, entered into between Assignor
and Assignee on the date the Aircraft is leased by Assignee to
Assignor and accepted by Assignor under the Lease.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales,
and its successors and assigns.
"Manufacturer Support Agreement" means the Manufacturer
Support Agreement, dated February 5, 1997, between the Manufacturer
and Assignor.
- 5 -
<PAGE>
"Operative Documents" shall have the meaning specified in the
Lease.
"Participation Agreement" shall have the meaning specified in
the Lease.
"Purchase Agreement" means the Sale and Purchase Agreement,
dated as of February 5, 1997, between the Manufacturer and Assignor
relating to the purchase by Assignor of the Aircraft (including the
Manufacturer Support Agreement), as originally executed or as
modified, amended or supplemented in accordance with the terms
thereof, but only insofar as the foregoing relates to the Aircraft.
"Sublessee" shall have the meaning specified in the Lease,
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
- 6 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By: s/ Mark D. Powers
----------------------------------------
Title: Vice President-Finance & Assistant
Treasurer
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By: s/ Greg A. Hawley
----------------------------------------
Title: Vice President
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By: Donald E. Smith
------------------------
Title: Vice President
<PAGE>
Exhibit 4(b)(7)
CONSENT AND AGREEMENT
[NW 1997 I]
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 I] dated as of
February 3, 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 I, Attention: Corporate Trust Department, Reference:
Northwest/NW 1997 I, 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 I.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a limited company incorporated under the Companies Act of 1985
duly organized and validly existing under the laws of England and Wales, (B) the
execution, delivery and performance of the Purchase Agreement and this Consent
and Agreement have been duly authorized by all necessary corporate action on the
part of the Manufacturer, do not require any approval of the stockholders of the
Manufacturer, trustee or holders of any indebtedness or obligations of the
Manufacturer (other than any such approval or consent as has been obtained) and
neither the execution and delivery of the Purchase Agreement or this Consent and
Agreement by the Manufacturer, nor the performance by the Manufacturer of its
obligations under the Purchase Agreement or the Consent and Agreement
contravenes any law, governmental rule or regulation applicable to the
Manufacturer, and (C) neither the execution and delivery by the Manufacturer of
the Purchase Agreement or the Consent and Agreement, nor the performance by the
Manufacturer of its obligations thereunder, requires the consent or approval of,
or the giving of notice to, or the registration with, or the taking of any other
action in respect of, any federal or state governmental authority in the United
States (other than those which have been obtained).
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<PAGE>
Dated as of February 3, 1998
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British Aerospace
(Operations) Limited
By s/ J. Marsh
----------------------------------------
Title: Senior Vice President Sales and
Marketing
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<PAGE>
Exhibit 4(c)(1)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 J]
Dated as of March 18, 1998
between
NATIONAL CITY LEASING CORPORATION,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
================================================================================
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
[NW 1997 J]
This AMENDED AND RESTATED TRUST AGREEMENT [NW 1997 J] dated as of
March 18, 1998 between NATIONAL CITY LEASING CORPORATION, a Kentucky 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
J], 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:
<PAGE>
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1997 J], 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.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
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<PAGE>
"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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<PAGE>
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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<PAGE>
(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. ss.
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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<PAGE>
(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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<PAGE>
(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.
-7-
<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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. ss. 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 conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
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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
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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.
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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.
NATIONAL CITY LEASING CORPORATION
BY s/ Donald J. Zeillmann
---------------------------------
Title: Vice President
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY s/ Greg A. Hawley
---------------------------------
Title: Vice President
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Exhibit 4(c)(2)
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 J]
Dated as of September 25, 1997
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated 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 N510XJ
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................................. 6
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates ............................... 6
SECTION 2.02. Issuance and Terms of Secured Certificates ................. 12
SECTION 2.03. Payments from Trust Indenture Estate Only .................. 14
SECTION 2.04. Method of Payment .......................................... 16
SECTION 2.05. Application of Payments .................................... 18
SECTION 2.06. Termination of Interest in Trust Indenture Estate .......... 19
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates ............................................. 19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured
Certificates ............................................. 20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation .............. 21
SECTION 2.10. Mandatory Redemptions of Secured Certificates .............. 21
SECTION 2.11. Voluntary Redemptions of Secured Certificates .............. 22
SECTION 2.12. Redemptions; Notice of Redemption .......................... 22
SECTION 2.13. Assumption of Secured Certificates by Lessee ............... 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
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE
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
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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
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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
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TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 J]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1997 J], 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;
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(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,
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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
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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 J] 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 N510XJ.
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 J], 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 J], 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) [Series A and Series B Secured Certificates](2), and this
- ----------
(1) To be inserted in the case of a Series B 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.](3)**
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 in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Owner Trustee
By
------------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity,
but solely as Indenture Trustee
By
------------------------------------
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
----------------------- -----------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates. The
Secured Certificates shall be dated the date of issuance thereof, shall be
issued in three separate series consisting of Series A, Series B and Series C
and in the maturities and principal amounts and shall bear interest as specified
in Schedule I hereto. On the date hereof, each Secured Certificate shall be
issued to the Pass Through Trustees (or their designee) under the Pass Through
Agreements as set forth in Schedule II hereto in connection therewith. The
Secured Certificates shall be issued in registered form only. The Secured
Certificates shall be issued in denominations of $1,000 and integral multiples
thereof, except that one Secured Certificate of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Secured Certificate shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on January 2, 1998, and on each July 2 and January 2
thereafter until maturity. The Principal Amount of each Secured Certificate
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Principal Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to the Secured Certificates. Notwithstanding the
foregoing, the final payment made under each Secured Certificate shall be in an
amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, such Secured
Certificate. Each Secured Certificate shall bear interest at the Past Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on any part of the Principal Amount, Make-Whole Amount, if any, and to
the extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Secured Certificate becomes due and payable is
not a Business Day then such payment shall not be made on such scheduled date
but shall be made
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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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<PAGE>
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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<PAGE>
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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<PAGE>
(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 released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be
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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. Subordination. (a) The Owner Trustee and, by
acceptance of its Secured Certificates of any Series, each Certificate Holder of
such Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Certificate Holder of such
Series, including any payment or distribution of cash, property or securities
after the commencement of a proceeding of the type referred to in Section
4.02(g) hereof, except as expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
SECTION 2.16. 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 J] 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 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
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any part of the Mortgaged Property shall be entitled to exercise all the rights
and powers of the Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc. The Owner Trustee irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner Trustee in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
Trustee hereby ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law. Nevertheless, if so
requested by the Indenture Trustee or any purchaser, the Owner Trustee shall
ratify and confirm any such sale, assignment, transfer or delivery, by executing
and delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Certificate Holders to Receive Payment.
Notwithstanding any other provision of this Trust Indenture, the right of any
Certificate Holder to receive payment of principal of, and premium, if any, and
interest on a Secured Certificate on or after the respective due dates expressed
in such Secured Certificate, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the terms hereof,
shall not be impaired or affected without the consent of such Certificate
Holder.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Indenture Trustee
shall have Actual Knowledge of an Event of Default or of a Default arising from
a failure to pay Rent, the Indenture Trustee shall give prompt written notice
thereof to the Owner Trustee, the Owner Participant, Lessee, and each
Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and
5.03 hereof, the Indenture Trustee shall take such action, or refrain from
taking such action, with respect to such Event of Default or Default (including
with respect to the exercise of any rights or remedies hereunder) as the
Indenture Trustee shall be instructed in writing by a Majority in Interest of
Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture
Trustee shall not have received instructions as above provided within 20 days
after mailing notice of such Event of Default to the Certificate Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to
the preceding provisions of this Section 5.01, take such action, or refrain from
taking such action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Certificate Holders. If the
Indenture Trustee shall at any time declare the Lease to be in default pursuant
to Section 15 thereof or shall elect to foreclose or otherwise enforce this
Trust Indenture, the Indenture Trustee shall forthwith notify the Owner
Participant, the Certificate Holders, the Owner Trustee and Lessee. For all
purposes of this Trust Indenture, in the absence of Actual Knowledge on the part
of the
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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
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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
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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
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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.
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SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement. No written request or consent of the
Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to
Section 9.01 hereof shall be required to enable the Owner Trustee to enter into
any Lease Supplement specifically required by the terms of the Lease or to
execute and deliver a Trust Agreement and Indenture Supplement specifically
required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders. No holder of a Secured Certificate shall have legal title
to any part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
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
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<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
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<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
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<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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By: s/ Greg A. Hawley
-----------------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee, Indenture Trustee
By: s/ Donald E. Smith
-----------------------------------------
Name: Donald E. Smith
Title: Vice President
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<PAGE>
EXHIBIT A TO
TRUST INDENTURE
AND MORTGAGE
TRUST AGREEMENT AND INDENTURE SUPPLEMENT
[NW 1997 J]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 J], 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 J] 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 J],
dated as of September 25, 1997 (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner Trustee and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
--------------- --------------- --------------- ----------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
A-2
<PAGE>
As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Indenture Trustee, its successors and
assigns, for the security and benefit of the Loan Participants and of the
Certificate Holders, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement [of even date herewith] covering the property described above.
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee, Owner Trustee
By:
-------------------------------------------
Name:
Title:
A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,574,426.83 7.068%
Series B......... $3,474,730.05 7.248%
Series C......... $1,983,999.99 7.039%
Schedule I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-2
<PAGE>
SERIES B
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-3
<PAGE>
SERIES C
Aircraft: N5__XJ
Percentage of Principal
Payment Date Amount to be Paid
------------ -----------------------
Schedule I-4
<PAGE>
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1A, dated as
of September 25, 1997.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1B, dated as
of September 25, 1997.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company, as supplemented by Trust Supplement No. 1997-1C, dated as
of September 25, 1997.
Schedule I-1
<PAGE>
ANNEX A [NW 1997 J]
DEFINITIONS
Unless the context otherwise requires, the following terms shall
have the following meanings for all purposes of the Operative Documents referred
to below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) and shall be equally applicable to
both the singular and the plural forms of the terms herein defined. In the case
of any conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control the
construction of such Operative Document.
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For the purposes of this definition, "control" (including
"controlled by" and "under common control with") shall mean the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such person whether through the ownership of voting securities or by contract
or otherwise.
"Aircraft" means the Airframe to be delivered and leased under the
Lease (or any airframe from time to time substituted for such Airframe pursuant
to Section 10(a) of the Lease) together with the four Engines initially leased
under the Lease (or any engine substituted for either of such Engines pursuant
to the terms of the Lease), whether or not any of such initial or substituted
Engines may from time to time be installed on such initial or substituted
Airframe or may be installed on any other airframe or on any other aircraft.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-RJ85A airframe bearing
manufacturer's serial number E2323 and anticipated to bear FAA registration
number N510XJ, together with four AlliedSignal LF507 type engines.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified in the
initial Lease Supplement, which aircraft shall be leased by Lessor to Lessee
under the Lease and under such Lease Supplement, and any aircraft (except
Engines or engines from time to time installed thereon) which may from time to
time be substituted for such aircraft (except Engines or engines from time to
time installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a) of the Lease; and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft (except
Engines or engines from time to time installed thereon), or (B) so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 8
of the Lease after removal from such aircraft (except Engines or engines from
time to
Schedule II-1
<PAGE>
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.
"Assumptions" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "Remaining Weighted Average Life" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such Secured
Certificate, by (ii) the number of days from and including the redemption date
to but excluding the scheduled payment date of such principal installment; by
(b) the then unpaid principal amount of such Secured Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, or any subsequent legislation that amends, supplements or supersedes
such provisions.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined pursuant
to Section 19 of the Lease.
"Basic Term" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of the Lease.
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<PAGE>
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which Bill of Sale
shall contain, among other things, a statement that such Bill of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"Cash Equivalents" (i) on or prior to the earliest to occur of (i)
the Delivery Date, (ii) the date of assumption by Lessee of the Secured
Certificates and (iii) the date of redemption of the Secured Certificates
pursuant to Section 2.10(c), (d) or (e) of the Trust Indenture, shall mean (a)
direct obligations of the United States or obligations fully guaranteed by the
United States, (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively, or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest rating
assigned by such rating organization, (c) investments in negotiable certificates
of deposit, time deposits, banker's acceptances, commercial paper or other
direct obligations of, or obligations guaranteed by, commercial banks organized
under the laws of the United States or of any political subdivision thereof (or
any U.S. branch of a foreign bank) with issuer ratings of at least B/C by
Thomson Bankwatch, having maturities no later than eight months following the
date of such investment, (d) overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, or (e)
overnight repurchase agreements with respect to the securities described in
clause (a) above entered into with an office of a bank or trust company which is
located in the United States or any bank or trust company which is organized
under the laws of the United States or any state thereof and has capital,
surplus and undivided profits aggregating at least $500 million, and (ii) after
the date specified in clause (i) above, shall mean the investments specified in
Section 22(a) of the form of Lease attached as Exhibit C to the Participation
Agreement.
"Certificate Closing" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"Certificate Closing Date" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"Certificate Closing Documents" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
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<PAGE>
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation of
the United States of America enacted in substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any substantially
similar program.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the deposit account established and
maintained pursuant to Section 2.16 of the Trust Indenture.
"Collateral Account Control Agreement" means the Collateral Account
Control Agreement [NW 1997 J], dated as of September 25, 1997, among State
Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee.
"Commitment" means the amount of the Owner Participant's
participation in Lessor's Cost for the Aircraft required to be made available or
paid as provided in Section 1(d) of the Participation Agreement.
"Consent and Agreement" means the Consent and Agreement [NW 1997 J],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as Exhibit B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with the
applicable provisions thereof.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Contract Rights" means all of Lessee's right, title and interest in
and to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H or
Part J of the Manufacturer Support Agreement, including, without limitation, all
warranty, service life policy and indemnity provisions in Part H and Part J of
the Manufacturer
-4-
<PAGE>
Support Agreement in respect of the Aircraft and all claims thereunder and (b)
any and all rights of Lessee to compel performance of the terms of Part H and
Part J of the Manufacturer Support Agreement in support thereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Cut-Off Date" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Portion" means the amount specified as such on Schedule II to
the Participation Agreement.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" (a) for purposes of the Operative Documents other than the
Trust Indenture, means any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) and (b) for purposes of the
Trust Indenture, means any condition or event that with the giving of notice or
the lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events of
Default relating to Excluded Payments).
"Delivery Date" means the date of the initial Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee under the Lease.
"Delivery Date Closing" means the closing of the transactions to be
consummated on the Delivery Closing Date.
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"Delivery Documents" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"Delivery Notice" means notice of the Aircraft's Delivery Date,
given by the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by Lessee
pursuant to Section 1(e)(iii) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery
Date and ending on the eighth December 31st thereafter, or such earlier date as
the Lease may be terminated in accordance with the provisions thereof.
"Determination Date" means the earlier of (i) the 30th day following
the Cut-Off Date and (ii) the Prepayment Date.
"Dollars" and "$" means the lawful currency of the United States of
America.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with a corporate
trust department of a depository institution with corporate trust powers
organized under the laws United States or any state thereof or the District of
Columbia, and whose deposits are insured by the Federal Deposit Insurance
Corporation, provided that such institution also has a combined capital and
surplus of at least $100,000,000 and a rating of A or better from the Thomson
Bank Watch.
"Eligible Institution" means a depository institution organized
under the laws of the United States or any one of the states thereof, or the
District of Columbia, or any domestic branch of a foreign bank, which in any
case at all times (a) has either (x) a long-term unsecured debt rating of Aa2 by
Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b)
has either (x) a long-term unsecured debt rating of at least AA by S&P or (y) a
short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of
the Federal Deposit Insurance Corporation.
"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
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hereunder. The term "Engines" means, as of any date of determination, all
Engines then leased under the Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of the Participation Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes of
the Operative Documents other than the Trust Indenture, means each of the
following events (whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) so long as, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement after the same shall have become due and such failure
shall continue for ten (10) Business Days after Lessee's receipt of
written demand therefor by the party entitled thereto (provided that
any failure of Lessee to pay to Lessor when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an
Event of Default unless notice is given by the Owner Participant to
Lessee and the Indenture Trustee that such failure shall constitute
an Event of Default); or
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof
from the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect in
any material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Owner Trustee or the
Certificate Holders) within thirty (30) days after the receipt by
Lessee of a written notice from the Indenture Trustee advising
Lessee of the existence of such incorrectness.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the loss of
such property or of the
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use thereof due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by Lessee (or any Sublessee) for any reason whatsoever; (ii) any damage to
such property which results in an insurance settlement with respect to such
property on the basis of a total loss, or a constructive or compromised total
loss; (iii) the theft or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of, such
property (other than a requisition for use by the United States Government or
any other government of registry of the Aircraft, or any agency or
instrumentality of any thereof) which in the case of any event referred to in
this clause (iii) (other than a requisition of title) shall have resulted in the
loss of possession of such property by Lessee (or any Sublessee) for a period in
excess of 180 consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days from the date
of such requisition of title; (iv) as a result of any law, rule, regulation,
order or other action by the Federal Aviation Administration or other
governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of 180 consecutive
days, unless Lessee (or any Sublessee), prior to the expiration of such 180 day
period, shall have undertaken and shall be diligently carrying forward all steps
which are necessary or desirable to permit the normal use of such property by
Lessee (or such Sublessee), but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been applicable to the
entire U.S. registered fleet of British Aerospace Avro 146-RJ85A aircraft of
Lessee (or any Sublessee) and Lessee (or a Sublessee), prior to the expiration
of such two-year period, shall have conformed at least one such aircraft in its
fleet to the requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such jurisdiction and
shall be diligently carrying forward, in a manner which does not discriminate
against the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by Lessee (or
such Sublessee), but in any event if such use shall have been prohibited for a
period of three years or such use shall be prohibited at the expiration of the
Term; (v) the requisition for use by the United States Government or any other
government of registry of the Aircraft or any instrumentality or agency of any
thereof, which shall have occurred during the Basic Term (or any Renewal Term)
and shall have continued for thirty (30) days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (v) shall exist if Lessor
shall have furnished to Lessee the written notice specified in Section 10(d) of
the Lease; and (vi) any divestiture of title to or interest in an Engine treated
as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.
"Excess Amount", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in Exhibit B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
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<PAGE>
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 of the Trust Indenture, the amounts
payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of
the Lease plus all reasonable expenses incurred by the Owner Trustee and the
Owner Participant in connection with such assumption, as applicable, (vii) any
payment of the foregoing under the Guarantee, (viii) interest accrued on any of
the above, and (ix) any right to enforce the payment of any amount described in
clauses (i) through (viii) above and the right to declare an Event of Default in
respect of any of the foregoing amounts.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA Bill of Sale" means a bill of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the United
States government succeeding to their functions.
"Foreign Air Carrier" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for the Aircraft, Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those required by, the
Federal Aviation Administration, the Civil Aviation Authority of the United
Kingdom, the Direction Generale de l'Aviation Civile of the French Republic, the
Luftfahrt Bundesamt of the Federal Republic of Germany, the Rijflauchtraatdienst
of the Kingdom of the Netherlands, the Ministry of Transportation of
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<PAGE>
Japan or the Federal Ministry of Transport of Canada (and any agency or
instrumentality of the applicable government succeeding to the functions of any
of the foregoing entities).
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Documents or
relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
"Guarantee" means the Guarantee [NW 1997 J], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable provisions
thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Indemnitee" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii) the
Owner Participant, (iv) the Trust Estate, (v) the Loan Participants and each
other Certificate Holder, (vi) the Subordination Agent, (vii) the Liquidity
Provider, (viii) the Pass Through Trustees, (ix) each Affiliate of the Persons
described in clauses (i) through (iv), inclusive, (x) each Affiliate of the
Persons described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the Persons
described in clauses (i) through (viii), inclusive, (xii) the successors and
permitted assigns of the Persons described in clauses (i) through (iv),
inclusive, and (xiii) the successors and permitted assigns of the Persons
described in clauses (v), (vi), (vii) and (viii).
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Default" means any event or condition that with the
giving of notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related to
Excluded Payments).
"Indenture Event of Default" shall mean an "Event of Default" as
defined in clause (a) of the definition of "Event of Default".
"Indenture Trustee" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as indenture
trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation Agreement and
the Trust Indenture.
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"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 Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the Operative Documents to the
extent such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said Section 7,
or (D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"Initial Owner Participant" means Lessee.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease Agreement", "the Lease Agreement", "the Lease", or "the
Agreement", mean the Lease Agreement [NW 1997 J], substantially in the form of
Exhibit C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the Trust Agreement and the Trust Indenture, including, without limitation,
supplementation thereof by one or more Lease Supplements entered into pursuant
to the applicable provisions thereof.
"Lease Default" shall mean a "Default" as defined in clause (a) of
the definition of "Default".
"Lease Event of Default" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"Lease Period Date" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, to and including the
last such date in the Term.
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<PAGE>
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA Bill of Sale, the Bill of Sale, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Bill of Sale and the Bill of Sale.
"Lessor Liens" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, National
Association, in its individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or First Security Bank, National
Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association, in its
individual capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First Security Bank,
National Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, provided, however, that any Lien which is
attributable solely to First Security Bank, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder shall not
constitute a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) First Security Bank,
National Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner Participant, as
appropriate).
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"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 The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or
claims against any Loan Participant not related to the transactions contemplated
by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to
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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 Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV
to the Participation Agreement.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and its
successors and assigns.
"Manufacturer Delivery" means the date the Aircraft is delivered by
the Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"Manufacturer Documents" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
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"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 of the Trust Indenture.
"Net Economic Return" shall have the meaning ascribed to such term
in paragraph 2 of Exhibit E to the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement, an
acceptance certificate covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement
(insofar as it relates to the Aircraft), the Guarantee, the Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean the corporation to whom on the
Delivery Date (or, if earlier, the Transfer Date) the Initial Owner Participant
shall transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such corporation
transfers all or any portion of its right, title and interest in and to the
Trust Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 8 of the
Participation Agreement.
"Owner Participant Documents" means the Participation Agreement, the
Trust Agreement, and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor
Owner Trustee in its individual capacity by name in the Operative Documents
shall include such successor Owner Trustee in its individual capacity from and
after such succession.
"Owner Trustee Documents" means the Participation Agreement, the
Trust Agreement, the Trust Supplement covering the Aircraft, the Lease, the
Lease Supplement
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covering the Aircraft, the Purchase Agreement Assignment, the Residual
Agreement, the Trust Indenture and the Secured Certificates.
"Participants" shall mean and include the Loan Participants, the
Initial Owner Participant and the Owner Participant.
"Participation Agreement" means that certain Participation Agreement
[NW 1997 J], dated as of the Certificate Closing Date, among Lessee, the
Guarantor, the Purchasers, the Indenture Trustee, the Subordination Agent, the
Initial Owner Participant and Owner Trustee, as such Participation Agreement may
be amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines, (b) any items leased by Lessee from a third party
(other than Lessor) and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with Section 8
of the Lease after removal therefrom.
"Pass Through Certificates" means the pass through certificates to
be issued by the Pass Through Trustee in connection with the Overall
Transaction.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the three separate pass through trust supplements referred
to on Schedule I to the Participation Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass Through
Trust Agreement, and each other person that may from time to time be acting as
successor trustee under any such Pass Through Trust Agreement.
"Past Due Rate" (A) with respect to the Secured Certificates, means
the rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, means (i) with respect to the portion of any
payment of Rent that may be required by the Trust Indenture to be paid by the
Indenture Trustee to the Loan Participants, or the holders of any outstanding
Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in
effect from time to time and (ii) with respect to the remaining portion of any
payment of Rent (and the entire amount of any payment of Rent after the
satisfaction and discharge of the Trust Indenture), a rate per annum equal to 1%
over the Base Rate.
"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.
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<PAGE>
"Permitted Lien" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"Permitted Sublessee" means any entity domiciled in a country listed
in Exhibit F to the Lease.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Lease" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"Prepayment Date" means June 15, 1998.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"Purchase Agreement" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Lessee relating to the
purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to
the Aircraft.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment [NW 1997 J], dated as of the Delivery Date and substantially in the
form of Exhibit B to the Participation Agreement, between Lessee and Lessor, as
the same may be amended, supplemented or modified from time to time, with a form
of Consent and Agreement to be executed by the Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"Rating Agencies" means collectively, at any time, each nationally
recognized agency which shall have been requested to rate the Pass Through
Certificates and which shall then be rating the Pass Through Certificates. The
initial Rating Agencies shall be S&P and Moody's.
-17-
<PAGE>
"Rating Agency Confirmation" means, with respect to any Operative
Document that is to be modified in any material respect on the Delivery Date or
the Transfer Date, if applicable, a written confirmation from each of the Rating
Agencies that the use of such Operative Document with such modifications would
not result in (i) a reduction of the rating for any class of Pass Through
Certificates below the then current rating for such class of Pass Through
Certificates or (ii) a withdrawal or suspension of the rating of any class of
Pass Through Certificates.
"Related Indemnitee Group" means, with respect to any Indemnitee,
any officer, director, servant, employee, agent or Affiliate thereof.
"Renewal Term" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Reoptimization Date" has the meaning set forth in Section 1(c)(ii)
of the Participation Agreement.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means the Residual Value Agreement (N510XJ),
dated as of the Delivery Date, among the Manufacturer, the Owner Participant and
the Owner Trustee.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"S&P" means Standard & Poor's Ratings Group.
"Scheduled Delivery Date" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Secured Certificates" shall mean and include any Secured
Certificates issued under the Trust Indenture, and issued in exchange therefor
or replacement thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 of the Trust Indenture.
-18-
<PAGE>
"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" shall mean the amount denominated as such
in Exhibit B to the Lease.
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount determined
by multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit C to the Lease opposite the Stipulated Loss Value Date with respect to
which the amount is determined (as such Exhibit C may be adjusted from time to
time as provided in Section 3(d) of the Lease and in Section 7 of the Tax
Indemnity Agreement). "Stipulated Loss Value" as of any date after the last day
of the Basic Term shall be the amount determined as provided in Section 19(a) of
the Lease.
"Sublease" means any sublease permitted by the terms of Section
7(b)(x) of the Lease.
"Sublessee" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the terms
of a Sublease which is then in effect pursuant to Section 7(b)(x) of the Lease.
"Subordination Agent" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor thereto.
-19-
<PAGE>
"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Lessee Document to or on behalf of Lessor or
any other Person, (b) amounts payable by Lessor pursuant to clause (b) of the
third paragraph of Section 2.02 of the Trust Indenture, (c) Lessor's pro rata
share of all compensation and reimbursement of expenses, disbursements and
advances payable by Lessee under the Pass Through Trust Agreements, and (d)
Lessor's pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement. As used herein, "Lessor's pro rata share" means as of
any time a fraction, the numerator of which is the principal balance then
outstanding of Secured Certificates and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in the Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 J], to be dated as of the Delivery Date, between the Owner Participant
and Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Taxes" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use, turnover, value
added, property (tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Basic Term and, if actually entered into, any
Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, means, but subject always
to the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D to the Lease opposite the Termination Date with respect to which the
amount is determined (as such Exhibit D may be adjusted from time to time as
provided in Section 3(d) of the Lease and in Section 7 of the Tax Indemnity
Agreement).
"Transaction Expenses" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Pass Through
Trustee, the Subordination Agent and the Indenture Trustee in connection with
the transactions contemplated by the
-20-
<PAGE>
Participation Agreement, the other Operative Documents, the Pass Through Trust
Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided therein)
including, without limitation:
(1) the reasonable and actual fees, expenses and disbursements
of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for the Underwriters,
and (D) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements
of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of
the Indenture Trustee under the Trust Indenture;
(4) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee and the Subordination Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount previously
agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of Simpson Thacher &
Bartlett and Cadwalader, Wickersham & Taft, special counsel for Lessee;
(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.
-21-
<PAGE>
"Transfer Date" has the meaning specified in Section 1(b) of the
Participation Agreement.
"Triggering Event" has the meaning specified in the Intercreditor
Agreement.
"Trust Agreement" means that certain Trust Agreement [NW 1997 J],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Agreement and Indenture Supplement" or "Trust Supplement"
shall mean a supplement to the Trust Agreement and to the Trust Indenture, in
substantially the form of Exhibit A to the Trust Indenture, which shall
particularly describe the Aircraft, and any Replacement Airframe and Replacement
Engine included in the property of the Owner Trustee covered by the Trust
Agreement. The initial Trust Agreement and Indenture Supplement shall be dated
the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Trust Indenture and Security Agreement [NW 1997 J],
dated as of the Certificate Closing Date, between Lessor and the Indenture
Trustee, as originally executed or as modified, amended or supplemented in
accordance with its terms, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, excluding Excluded Payments.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the underwriters
named therein.
"United States" or "U.S." means the United States of America.
"U.S. Air Carrier" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to Part
121 of the regulations under the Federal 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
-22-
<PAGE>
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.
-23-
<PAGE>
================================================================================
FIRST AMENDMENT
TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 J]
Dated as of
March 18, 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 N510XJ
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
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 ...... 3
SECTION 11. Amendment of Section 3.02 of the Original Trust Indenture ...... 3
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 .................................................. 4
ANNEX A Definitions
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
-i-
<PAGE>
FIRST AMENDMENT TO
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1997 J]
This FIRST AMENDMENT TO TRUST INDENTURE AND SECURITY AGREEMENT [NW
1997 J], dated as of March 18, 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 J], 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 J], dated as of
March 18, 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 J]
This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1997 J], 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 J] dated as of March 18, 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 J],
dated as of September 25, 1997 (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner Trustee and STATE STREET BANK AND TRUST
COMPANY, as Indenture Trustee (the "Indenture Trustee"), provides for the
execution and delivery of a supplement thereto substantially in the form hereof,
which shall particularly describe the Aircraft, and shall specifically mortgage
such Aircraft to the Indenture Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe and Engines
described below, and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together with such
counterpart of the Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
- ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to any of such
engines.
Together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine", whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts).
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.
A-2
<PAGE>
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the equal and
proportionate benefit and security of the Certificate Holders, except as
provided in Section 2.15 and Article III of the Trust Indenture without any
preference, distinction or priority of any one Secured Certificate over any
other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Trust
Indenture.
This Trust Indenture Supplement shall be construed as supplemental
to the Trust Indenture and shall form a part thereof. The Trust Indenture is
each hereby incorporated by reference herein and is hereby ratified, approved
and confirmed.
This Trust Indenture Supplement is being delivered in the State of
New York.
AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
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:
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series A......... $10,574,426.83 7.068%
Series B......... $3,474,730.05 7.248%
Series C......... $1,983,999.99 7.039%
A-4
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N510XJ
Percentage of Principal
Payment Date Amount to be Paid
- ------------ -----------------
A-2
<PAGE>
SERIES B
Aircraft: N510XJ
Percentage of Principal
Payment Date Amount to be Paid
- ------------ -----------------
A-3
<PAGE>
SERIES C
Aircraft: N510XJ
Percentage of Principal
Payment Date Amount to be Paid
- ------------ -----------------
A-4
<PAGE>
ANNEX A [NW 1997 J]
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
Schedule I-1
<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 J], dated as of March 18, 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.
Schedule I-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.
Schedule I-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 J], 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 J], dated as of March 18, 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
Schedule I-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
Schedule I-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,
Schedule I-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
Schedule I-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 J], dated as of
March 18, 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.
Schedule I-8
<PAGE>
"Guarantee" means that certain Amended and Restated Guarantee [NW
1997 J], dated as of March 18, 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
Schedule I-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 J], dated as of March 18, 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, March 11, 2017, and each succeeding
September 11 and March 11, 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.
Schedule I-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.
Schedule I-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.
Schedule I-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 Owner Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 J], 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 J], 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 J], 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
Schedule I-13
<PAGE>
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 J], 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 Participant Guarantor" means the entity executing the Owner
Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner Participant
Guaranty [NW 1997 J], dated as of March 18, 1998, made by the Owner Participant
Guarantor in favor of Lessee, Lessor, the Purchasers, the Subordination Agent
and the Indenture Trustee, as such Owner Participant Guaranty may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.
"Owner Trustee" means the entity executing the 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.
Schedule I-14
<PAGE>
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 J], dated as of March 18, 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.
"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.
Schedule I-15
<PAGE>
"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.
"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 J], dated as of March 18, 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.
Schedule I-16
<PAGE>
"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.
"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 (N510XJ), dated as
of March 18, 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
Schedule I-17
<PAGE>
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.
"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
Schedule I-18
<PAGE>
connection with the transactions contemplated by the Intercreditor Agreement. As
used herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 J], dated as of March 18, 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
Schedule I-19
<PAGE>
& 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 and the
Owner Participant Guarantor, 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 J], dated as of March 18, 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.
Schedule I-20
<PAGE>
"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.
"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.
Schedule I-21
<PAGE>
================================================================================
LEASE AGREEMENT
[NW 1997 J]
Dated as of
March 18, 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
----
SECTION 1. Definitions .................................................... 1
SECTION 2. Acceptance and Lease ........................................... 18
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 ....................................... 21
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 ..................................... 24
(c) Fuel; Manuals ............................................. 24
(d) Storage Upon Return ....................................... 24
SECTION 6. Liens .......................................................... 25
SECTION 7. Registration, Maintenance and Operation;
Possession and Subleases; Insignia ............................. 25
(a) Registration and Maintenance .............................. 25
(b) Possession and Subleases .................................. 27
(c) Insignia .................................................. 31
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] ................................... 34
(c) Optional Sale of the Aircraft ............................. 34
(d) Termination as to Engines ................................. 36
(i)
<PAGE>
Page
----
SECTION 10. Loss, Destruction, Requisition, etc ........................... 36
(a) Event of Loss with Respect to the Aircraft ................ 36
(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 ............................... 40
(e) Requisition for Use of an Engine by the
United States Government or the
Government of Registry of the Aircraft .................... 41
(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 .......... 43
(c) Reports, etc .............................................. 46
(d) Self-Insurance ............................................ 46
(e) Additional Insurance by Lessor and Lessee ................. 47
(f) Indemnification by Government in Lieu of Insurance ........ 47
(g) Application of Payments During Existence of an
Event of Default .......................................... 47
SECTION 12. Inspection .................................................... 47
SECTION 13. Assignment .................................................... 48
SECTION 14. Events of Default ............................................. 48
SECTION 15. Remedies ...................................................... 50
SECTION 16. Lessee's Cooperation Concerning Certain Matters ............... 54
SECTION 17. Notices ....................................................... 55
SECTION 18. No Set-Off, Counterclaim, etc ................................. 55
SECTION 19. Renewal Options; Purchase Options; Valuation .................. 56
(a) Renewal Options ........................................... 56
(b) Purchase Options .......................................... 57
(c) Valuation ................................................. 58
(d) Special Purchase Option ................................... 59
SECTION 20. Security for Lessor's Obligation to Holders of
Secured Certificates .......................................... 59
SECTION 21. Lessor's Right to Perform for Lessee .......................... 60
SECTION 22. Investment of Security Funds; Liability of Lessor Limited ..... 60
(a) Investment of Security Funds .............................. 60
(b) Liability of Lessor Limited ............................... 61
(ii)
<PAGE>
Page
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SECTION 23. Service of Process ............................................ 61
SECTION 24. Miscellaneous ................................................. 61
SECTION 25. Successor Trustee ............................................. 62
SECTION 26. Covenant of Quiet Enjoyment ................................... 62
(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 J]
This LEASE AGREEMENT [NW 1997 J], dated as of March 18, 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 J] 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 (N510XJ), dated March 10, 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 J], 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 March 11, 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 J], 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 J], 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.
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<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
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<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 J],
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 J], dated as of the date hereof, made by the Guarantor, as
such Guarantee
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<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.
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<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 J] 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, March 11,
2017, and each succeeding September 11 and March 11, 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
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<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.
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<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 Owner Participant Guaranty, the Purchase Agreement
Assignment and the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 J],
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 J], 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 J], 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 J], 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 Participant Guarantor" means the entity executing the
Owner Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner
Participant Guaranty [NW 1997 J], dated as of March 18, 1998, made
by the Owner Participant Guarantor in favor of Lessee, Lessor, the
Purchasers, the Subordination Agent and the Indenture Trustee, as
such Owner Participant Guaranty may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Owner Trustee" means the entity executing the 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
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<PAGE>
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 J], dated as of the date
hereof, among Lessee, the Guarantor, the Purchasers, the Indenture
Trustee, the Subordination Agent, the Owner Participant and Owner
Trustee, as such Participation Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions
thereof, 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.
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"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.
"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 J], 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 (N510XJ),
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.
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"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including March 11, 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 March 11, 2017 shall be the amount
determined as provided in Section 19(a) hereof.
"Stipulated Loss Value Date" means the 2nd calendar day of
each calendar month during the Basic Term and the 11th 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
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share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass Through
Trust Agreements, and (d) Lessor's pro rata share of all
compensation and reimbursement of expenses and disbursements payable
to the Subordination Agent under the Intercreditor Agreement except
with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated
by the Intercreditor Agreement. As used herein, "Lessor's pro rata
share" means as of any time a fraction, the numerator of which is
the principal balance then outstanding of Secured Certificates and
the denominator of which is the aggregate principal balance then
outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner
Trustee, in its individual capacity and as trustee under the Trust
Agreement, the Trust Estate, the Indenture Trustee, (ii) the
respective Affiliates, successors and permitted assigns of each of
the entities described in the preceding clause (i), and (iii) the
Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW 1997 J], 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 March 11, 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,
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the Pass Through Trustee, the Subordination Agent and the Indenture
Trustee in connection with the transactions contemplated by the
Participation Agreement, the other Operative Documents, the Pass
Through Trust Agreements, the Intercreditor Agreement, the Liquidity
Facilities and the Underwriting Agreement (except, in each case, as
otherwise provided therein) including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements of (A) Bingham, Dana & Gould LLP, special
counsel for the Pass Through Trustee and the Indenture
Trustee, (B) Ray, Quinney & Nebeker, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for
the Underwriters, and (D) Crowe & Dunlevy, P.C., special
counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual
disbursements of the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual
disbursements of the Indenture Trustee under the Trust
Indenture;
(4) the initial fees and expenses of the Liquidity
Provider, the Pass Through Trustee and the Subordination
Agent;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals
of the Aircraft;
(7) the reasonable fees, expenses and disbursements of
Thelen, Marrin, Johnson & Bridges LLP, special counsel to the
Owner Participant and the Owner Participant Guarantor, 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;
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(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 J], dated as of the date hereof, between
the Owner Participant and First Security Bank, National Association,
in its individual capacity, as originally executed or as modified,
amended or supplemented pursuant to the applicable provisions
thereof, including, without limitation, supplementation thereof by
one or more Trust Supplements entered into pursuant to the
applicable provisions thereof, 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)
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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 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 March 11, 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 March 20, 1998, (B) Transaction Expenses paid by Lessor pursuant
to Section 16(a) of the Participation Agreement are determined to be
other than 2.0900% 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
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percentages set forth in Exhibit D and the Special Purchase Price
shall be recalculated by the Owner Participant, on or prior to June
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 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,
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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 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 ss.ss. 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
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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 J
(or such other account of Lessor in the continental United States as Lessor
shall direct in a notice to Lessee at least 10 Business Days prior to the date
such payment of Rent is due); provided that so long as the Trust Indenture shall
not have been fully discharged, Lessor hereby irrevocably directs and Lessee
agrees, that, unless the Indenture Trustee shall otherwise direct, all Rent
payable to Lessor and assigned to the Indenture Trustee pursuant to the Trust
Indenture shall be paid prior to 10:30 A.M., New York time on the due date
thereof in funds of the type specified in this Section 3(f) directly to the
Indenture Trustee at its account at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9900-314-7, Attention: Corporate Trust Department, Reference: Northwest/NW 1997
J (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,
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AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS
TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE
AIRCRAFT OR ANY PART THEREOF, except that First Security Bank, National
Association, in its individual capacity, (i) represents and warrants that on the
Delivery Date, Lessor shall have received whatever title to the Aircraft was
conveyed to it by Lessee, (ii) represents and warrants that on the Delivery Date
the Aircraft shall be free of Lessor Liens (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens) attributable to it, (iii) covenants that it will not, through its own
actions or inactions, interfere in Lessee's quiet enjoyment of the Aircraft
during the Term, (iv) agrees that it will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Lien attributable to it on or with
respect to the Airframe or any Engine or any portion of the Trust Estate and (v)
represents and warrants that it is a Citizen of the United States without making
use of a voting trust, voting powers agreement or similar arrangement, and
agrees that if at any time it shall cease to be a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants, the
Owner Participant or Lessee), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. None of
the provisions of this Lease shall be deemed to amend, modify or otherwise
affect the representations, warranties or other obligations (express or implied)
of the Manufacturer, any subcontractor or supplier of the Manufacturer with
respect to the Airframe, the Engines or any Parts, or to release the
Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared 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
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then so registered, to be registered under the laws of the United States with
the Federal Aviation Administration in the name of the Lessor or its designee,
provided that Lessee shall be relieved of its obligations under this sentence if
(i) such registration is prohibited by reason of the failure of Lessor or its
designee to be eligible on such date to own an aircraft registered with the
Federal Aviation Administration or (ii) such registration is otherwise
prohibited by applicable law; the Airframe will be fully equipped with the
Engines (or other AlliedSignal LF507 type engines or four engines of the same or
another manufacturer of not less than equivalent utility, value and remaining
useful life, and suitable for installation and use on the Airframe without
impairing the value, utility or remaining useful life of the Aircraft; provided
that all engines shall be of the same make and model) duly installed thereon.
Also, at the time of such return, such Airframe and Engines or engines (i) shall
be certified (or, if not then registered under the Federal Aviation Act, shall
be eligible for certification) as an airworthy aircraft by the Federal Aviation
Administration, (ii) shall be free and clear of all Liens (other than Lessor
Liens (including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens)) 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 March 11,
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
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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
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
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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
(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
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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 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
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in each such case Lessee (or such Sublessee, as the case may be) is taking all
reasonable steps to remedy such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon compliance
with all of the terms of Section 8(f) of the Participation Agreement, shall, at
the request and sole expense of Lessee, cooperate with Lessee to take all
actions required to change the registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(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)
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the rights of third parties under interchange agreements which would
be permitted under clause (i) above, provided that Lessor's title to
such Engine and, if any Secured Certificates shall be outstanding,
the first priority Lien of the Trust Indenture shall not be divested
or impaired as a result thereof and (C) mortgage liens or other
security interests, provided that (as regards this clause (C)) such
mortgage liens or other security interests effectively provide that
such Engine shall not become subject to the lien of such mortgage or
security interest, notwithstanding the installation thereof on such
airframe;
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and (y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(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
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transferring possession of the Airframe or any Engine to the United
States of America or any agency or instrumentality thereof pursuant
to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be given
prior to entering into such Wet Lease, if practicable, but in any
event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by Lessor,
which approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any such
case, the Sublessee under such sublease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B)
in the event that 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
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the Lien of the Trustee Indenture, provided, however, that no
sublease entered into pursuant to this clause (x) shall extend
beyond the expiration of the Basic Term or any Renewal Term then in
effect unless Lessee shall have irrevocably committed to purchase
the Aircraft.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant to
Section 15 hereof and to avoid such Sublease upon such repossession, and Lessee
shall remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such Sublease or transfer had not
occurred, and, except as otherwise provided herein, the terms of any such
Sublease shall not permit any Sublessee to take any action not permitted to be
taken by Lessee in this Lease with respect to the Aircraft. No pooling
agreement, sublease or other relinquishment of possession of the Airframe or any
Engine or Wet Lease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any sublease permitted under this Section 7(b) shall
expressly prohibit any further sub-sublease by the Sublessee. Lessor agrees, for
the benefit of Lessee (and any Sublessee) and for the benefit of any mortgagee
or other holder of a security interest in any engine (other than an Engine)
owned by Lessee (or any Sublessee), any lessor of any engine (other than an
Engine) leased to Lessee (or any Sublessee) and any conditional vendor 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
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expense, in the cockpit of the Airframe adjacent to the airworthiness
certificate therein and on each Engine a nameplate bearing the inscription:
Leased From
First Security Bank, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed 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
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specified above. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided,
without further act (subject only to Permitted Liens and any pooling arrangement
to the extent permitted by paragraph (b) of this Section 8 and except in the
case of replacement property temporarily installed on an emergency basis), (i)
title to such replacement Part shall thereupon vest in Lessor, (ii) such
replacement Part shall become subject to this Lease and be deemed part of the
Airframe or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Airframe or such
Engine, and (iii) title to the replaced Part shall thereupon vest in Lessee (or,
if a Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements) 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
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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
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].
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(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 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
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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 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
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any Engine. In such event, and prior to the date of such termination, Lessee
shall replace such Engine hereunder by complying with the terms of Section 10(b)
to the same extent as if an Event of Loss had occurred with respect to such
Engine, and Lessor shall transfer such right, title and interest as it may have
to the replaced Engine as provided in Section 5(b). No termination of this Lease
with respect to any Engine as contemplated by this Section 9(d) shall result in
any reduction of Basic Rent.
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) an earlier Business Day irrevocably specified fifteen
(15) days in advance by notice from Lessee to Lessor and the
Indenture Trustee (the "Loss Payment Date"), Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in Section
3(f) hereof, an amount equal to the Stipulated Loss Value of the
Aircraft corresponding to the Stipulated Loss Value Date occurring
on or immediately following the Loss Payment Date; provided,
however, that if a Lease Period Date shall occur 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 an amount
equal to the Basic Rent that would have been due on (but only to the
extent payable in arrears as indicated on Exhibit B) or prior to
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
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Supplemental Rent), under the Participation Agreement and under the Tax
Indemnity Agreement, (1) the obligation of Lessee to pay the installments of
Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any
other amount shall cease to accrue, (2) this Lease shall terminate, (3) Lessor
will comply with the terms of the Trust Indenture and transfer to or at the
direction of Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right, title
and interest in and to the Airframe and any Engines subject to such Event of
Loss, as well as any Engines not subject to such Event of Loss, and furnish to
or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Sublessee), evidencing such transfer, and (4)
Lessee will be subrogated to all claims of Lessor, if any, against third
parties, for damage to or loss of the Airframe and any Engines which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft.
In the event Lessee shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or an
airframe or an airframe and one or more engines which, together with the Engines
constituting a part of the Aircraft but not installed thereon at the time of
such Event of Loss constitute the Aircraft) free and clear of all Liens (other
than Permitted Liens) and having a value, utility and remaining useful life
(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
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proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest, if any, in and to the Aircraft or the Airframe and one or more
Engines, as the case may be, with respect to which such Event of Loss occurred
and furnish to or at the direction of Lessee a bill of sale in form and
substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such
transfer, (6) furnish Lessor with an opinion of counsel (which shall be
Cadwalader, Wickersham & Taft and, if not, other counsel chosen by Lessee and
reasonably acceptable to Lessor) reasonably satisfactory to Lessor to the effect
that Lessor and the Indenture Trustee as assignee of Lessor will be entitled to
the benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the
substitute aircraft, provided that such opinion need not be delivered to the
extent that immediately prior to such substitution the benefits of Section 1110
of the U.S. Bankruptcy Code were not, solely
by reason of a change in law or governmental interpretation thereof,
available to Lessor and, so long as any Secured Certificates are outstanding,
the Indenture Trustee as assignee of Lessor's rights under the Lease with
respect to the Aircraft, and (7) Lessee will be subrogated to all claims of
Lessor, if any, against third parties for damage to or loss of the Airframe and
any Engine which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft. For all purposes hereof, the property so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Aircraft", "Airframe" and "Engine", as the
case may be, as defined herein. No Event of Loss with respect to the Airframe or
the Airframe and the Engines or engines then installed thereon for which
substitution has been elected pursuant to Section 10(a)(ii) hereof shall result
in any reduction in Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event, within fifteen days after such occurrence) give
Lessor written notice thereof and shall, within sixty (60) days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
replacement for the Engine with respect to which such Event of Loss occurred,
title to another AlliedSignal LF507 type engine (or engine of the same or
another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; provided that all Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life (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
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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
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
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retained by, Lessee, provided that Lessee shall have fully
performed, or concurrently therewith will perform, the terms of
Section 10(b) with respect to the Event of Loss for which such
payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other government
of registry of the Aircraft or any instrumentality or agency of any thereof,
Lessee shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government prior to the end of the Term, Lessee shall be obligated to
return the Airframe and such Engines or engines to Lessor pursuant to, and in
all other respects in compliance with the provisions of, Section 5 promptly on
the date of such return by such government. If, in the event of any such
requisition, Lessee shall fail to return the Aircraft on or before the thirtieth
day beyond the end of the Term, such failure shall constitute an Event of Loss
which shall be deemed to have occurred on the last day of the Term and in such
event Lessee shall make the payment contemplated by Section 10(a)(i) in respect
of such Event of Loss; provided, however, that Lessor may notify Lessee in
writing on or before the twentieth day prior to the last day of the Term that,
in the event Lessee shall fail by reason of such requisition to return the
Airframe and such Engines or engines on or before the thirtieth day beyond the
end of the Term, such failure shall not be deemed an Event of Loss. Upon the
giving of such notice and such failure to return by the thirtieth day beyond the
end of the Term, Lessee shall be relieved of all of its obligations pursuant to
the provisions of Section 5 (including 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.
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(e) Requisition for Use of an Engine by the United States Government
or the Government of Registry of the Aircraft. In the event of the requisition
for use of an Engine by the United States Government or any other government of
registry of the Aircraft or any agency or instrumentality of any thereof (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Event of Default, such amount shall be
paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. Insurance. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i) aircraft
public liability (including, without limitation, passenger legal liability) (and
including aircraft war risk and hijacking insurance, if and to the extent the
same is maintained by Lessee (or, 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
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Sublease is then in effect, any Sublessee) or any other Person and shall insure
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease)
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if any Sublease is then in effect, any
Sublessee), (C) may provide for self-insurance to the extent permitted by
Section 11(d) and (D) shall provide that if the insurers cancel such insurance
for any reason whatever or if any material change is made in such insurance
which adversely affects the interest of Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), or such insurance shall lapse for
non-payment of premium, such cancellation, lapse or change shall not be
effective as to Lessor, the Indenture Trustee or the Owner Participant (or, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) for thirty (30) days (seven (7) days in the case of war risk and
allied perils coverage) after issuance to Lessor, the Indenture Trustee or the
Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), respectively, of written notice by
such insurers of such cancellation, lapse or change; provided, however, that if
any notice period specified above is not reasonably obtainable, such policies
shall provide for as long a period of prior notice as shall then be reasonably
obtainable. Each liability policy (1) shall be primary without right of
contribution from any other insurance which is carried by Lessor, the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease), (2) shall expressly provide
that all of the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured, and (3) shall waive any right of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of Lessor or the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) to the extent of any moneys due to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that (A) the amounts of coverage shall not be required
to exceed the amounts of public liability and property damage insurance from
time to time applicable to aircraft owned or operated by 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
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by similar components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, by Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) of the same type as the Aircraft; provided that
such insurance shall at all times while the Aircraft is subject to this Lease be
for an amount (subject to self-insurance to the extent permitted by Section
11(d)) not less than the Stipulated Loss Value for the Aircraft. Any policies
carried in accordance with 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
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as sublessor under the Sublease), respectively, of written notice by such
insurers of such cancellation, lapse or change, provided, however, that if any
notice period specified above is not reasonably obtainable, such policies shall
provide for as long a period of prior notice as shall then be reasonably
obtainable, (v) shall provide that in respect of the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) in
such policies the insurance shall not be invalidated by any action or inaction
of Lessee (or, if a Sublease is then in effect, any Sublessee) or any other
Person and shall insure the respective interests of Lessor, the Indenture
Trustee and the Owner Participant (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee (or, if a Sublease is then in effect, any
Sublessee), (vi) shall be primary without any right of contribution from any
other insurance which is carried by Lessor, the Owner Participant or the
Indenture Trustee (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), (vii) shall waive any right of
subrogation of the insurers against Lessor, the Owner Participant and the
Indenture Trustee (and, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), and (viii) shall waive any right of
the insurers to set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor, the Indenture
Trustee, the Owner Participant or Lessee (or any Sublessee) to the extent of any
moneys due to Lessor, the Indenture Trustee or the Owner Participant. In the
case of a loss with respect to an engine (other than an Engine) installed on the
Airframe, Lessor shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of Lessee or any other third party that is
entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), (i) unless such
property is replaced pursuant to the last paragraph of Section
10(a), so much of such payments remaining, after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement) for
reasonable costs and expenses, as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a)
hereof shall be applied in reduction of Lessee's obligation to pay
such Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall 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
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(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so
much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, shall be paid over to, or retained by, Lessee
(or if directed by Lessee, any Sublessee), provided that Lessee
shall have fully performed, or concurrently therewith will fully
perform, the terms of Section 10(b) with respect to the Event of
Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any balance (or if already
paid for by Lessee (or any Sublessee), all such insurance proceeds) remaining
after compliance with such Sections with respect to such loss shall be paid to
Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned 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
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Lessee of which it has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft. To the extent
such agreement is reasonably obtainable, Lessee will also cause such Insurance
Brokers to agree to advise Lessor, the Indenture Trustee and the Owner
Participant in writing at least thirty (30) days (seven (7) days in the case of
war risk and allied perils coverage), prior to the expiration or termination
date of any insurance carried and maintained on the Aircraft pursuant to this
Section 11. In addition, Lessee will also cause such Insurance Brokers to
deliver to Lessor, the Indenture Trustee and the Owner Participant, on or prior
to the date of expiration of any insurance policy referenced in a previously
delivered certificate of insurance, a new certificate of insurance,
substantially in the same form as delivered by Lessee to such parties on the
Delivery Date. In the event that Lessee or any Sublessee shall fail to maintain
or cause to be maintained insurance as herein provided, Lessor or the Indenture
Trustee may at its sole option provide such insurance and, in such event, Lessee
shall, upon demand, reimburse Lessor or the Indenture Trustee, as Supplemental
Rent, for the cost thereof to Lessor or the Indenture Trustee, as the case may
be, without waiver of any other rights Lessor or the Indenture Trustee may have;
provided, however, that no exercise by Lessor or the Indenture Trustee, as the
case may be, of said option shall affect the provisions of this Lease, including
the provisions of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance 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
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insurance against any risk with respect to the Aircraft, indemnification from,
or insurance provided by, the United States Government or any agency or
instrumentality thereof or, upon the written consent of Lessor, other government
of registry of the Aircraft or any agency or instrumentality thereof, against
such risk in an amount which, when added to the amount of insurance against such
risk maintained by Lessee (or any Sublessee) with respect to the Aircraft
(including permitted self-insurance) shall be at least equal to the amount of
insurance against such risk otherwise required by this Section 11.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 11 which is payable to
or retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or any Sublessee) if at the time of such payment or retention an Event
of Default shall have occurred and be continuing, but shall be held by or paid
over to Lessor as security for the obligations of Lessee (or any Sublessee)
under this Lease and, if Lessor declares this Lease to be in default pursuant to
Section 15 hereof, applied against Lessee's obligations hereunder as and when
due. At such time as there shall not be continuing any such Event of Default,
such amount shall be paid to Lessee (or such Sublessee) to the extent not
previously applied in accordance with the preceding sentence.
SECTION 12. Inspection. At all reasonable times and upon at least 15
days' prior written notice to Lessee, Lessor, the Owner Participant or the
Indenture Trustee or their respective authorized representatives may (not more
than once every calendar year (unless an 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
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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 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
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7(a) as it relates to maintenance, service, repair or overhaul or
under Section 8 and, notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within
said thirty day period but is curable with future due diligence,
there shall exist no Event of Default under this Section 14 so long
as Lessee is proceeding with due diligence to cure such failure and
such failure is remedied not later than two hundred seventy (270)
days after receipt by Lessee of such written notice; or
(d) any representation or warranty made by Lessee herein or in
the Participation Agreement or any document or certificate furnished
by Lessee in connection herewith or therewith or pursuant hereto or
thereto (except the representations and warranties set forth in
Section 3 of the Tax Indemnity Agreement and such documents or
certificates as are furnished to the Owner Participant solely in
connection with matters dealt with in the Tax Indemnity Agreement
and for no other purpose and except for representations or
warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement (as defined in the Participation Agreement)
or any document or instrument furnished pursuant to either thereof)
shall prove to have been incorrect in any material respect at the
time made and such incorrectness shall not have been cured (to the
extent of the adverse impact of such incorrectness on the interests
of the Owner Participant, Lessor or the Certificate Holders) within
thirty (30) days after the receipt by Lessee of a written notice
from Lessor or the Indenture Trustee advising Lessee of the
existence of such incorrectness; or
(e) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of Lessee or for all or substantially all of its
property, or seeking the winding-up 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
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(or other similar official) of Lessee or for all or substantially
all of its property, or the making by Lessee of any assignment for
the benefit of creditors, or Lessee shall take any corporate action
to authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance
required to be maintained in accordance with the provisions of
Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an Event of Loss so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. Remedies. Upon the occurrence of any Event of Default
and at any time thereafter so long as the same shall be continuing, Lessor may,
at its option, declare by written notice to Lessee this Lease Agreement to be in
default, 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
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possession or removing whether for the restoration of damage to
property caused by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or private
sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle the Aircraft as Lessor, in its
sole discretion, may determine, all free and clear of any rights of
Lessee, except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph
(a) or paragraph (b) above with respect to the Airframe and/or any
Engine, Lessor, by written notice to Lessee specifying a payment
date which shall be the Lease Period Date not earlier than ten days
from the date of such notice, may demand that Lessee pay to Lessor,
and Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty (in
lieu of the installments of Basic Rent for the Aircraft due for
Lease Periods commencing on or after the Delivery Date or the Lease
Period Date specified as the payment date in such notice), any
unpaid Basic Rent due on Lease Period Dates prior to the payment
date so specified 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
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(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 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
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appointed shall be given within twenty Business Days after the appointment of
such third appraiser. As soon as the third appraiser has delivered his
appraisal, that appraisal shall be compared with the appraisals given by the
other two appraisers. If the determination of one appraiser is more disparate
from the average of all three determinations than each of the other two
determinations, then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average shall be final
and binding upon the parties hereto. If no determination is more disparate from
the average of all three determinations than each of the other determinations,
then such average shall be final and binding upon the parties thereto. The cost
of such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or amendment to be duly
filed and recorded, and maintained of record, in accordance with the applicable
laws of the government of registry of the Aircraft. In addition, Lessee will
promptly and duly execute and deliver to Lessor such further documents and take
such further action as Lessor or 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
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the rights and remedies created or intended to be created in favor of Lessor and
the Indenture Trustee hereunder, including, without limitation, if requested by
Lessor or the Indenture Trustee, at the expense of Lessee, the execution and
delivery of supplements or amendments hereto or to the Trust Indenture, each in
recordable form, subjecting to this Lease and the Trust Indenture, any airframe
or engine substituted for the Airframe or any Engine pursuant to the terms
thereof and the recording or filing of counterparts thereof, in accordance with
the laws of such jurisdictions as Lessor or the Indenture Trustee may from time
to time deem advisable. Lessee agrees to furnish to Lessor and the Indenture
Trustee promptly after execution and delivery of any supplement and amendment
hereto and promptly after the execution and delivery of any supplement and
amendment to the Trust Indenture (except for any such supplement or amendment
which does not require or receive the approval of Lessee pursuant to the
Operative Documents and is not required pursuant to the terms of the Operative
Documents), an opinion of counsel reasonably satisfactory to Lessor and the
Indenture Trustee as to the due recording or filing of such supplement or
amendment. Commencing in 1998, on or before April 30 of each year during the
Term, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
Lessee, signed by the President, a Vice President or the Chief Financial Officer
of Lessee to the effect that the signer is familiar with or has reviewed the
relevant terms of this Lease and the signer does not have actual knowledge of
the existence, as of the date of such certificate, of any condition or event
which constitutes a Default or an Event of Default. Lessee agrees that if the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
Treasurer or an Assistant Treasurer of Lessee has actual knowledge of the
existence of a Default, then Lessee shall promptly give to Lessor, the Owner
Participant and the Indenture Trustee notice thereof and such other information
relating thereto as Lessor, the Owner Participant or the Indenture Trustee may
reasonably request. Lessee agrees that if an officer of Lessee has knowledge of
the existence of an Event of Default, Lessee shall promptly give to Lessor and
the Indenture Trustee notice thereof and such other information relating thereto
as Lessor or the Indenture Trustee may reasonably request. Lessee will deliver
to Lessor, the Owner Participant and the Indenture Trustee (i) within sixty (60)
days after the end of each of the first three quarterly periods of each fiscal
year of the Guarantor, the publicly filed Form 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,
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(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), or to such other address or telecopy number as
Lessor shall from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at such address or telecopy number
as such Loan Participant, the Indenture Trustee or the Owner
Participant shall have furnished by notice to Lessor and to Lessee,
and, until an address is so furnished, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at its
address or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(f). 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
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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).
(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
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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.
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. 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
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prior to the end of the Basic Term or the Renewal Term in question, then the
question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the City
of New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business Days after
the appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) Special Purchase Option. On 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
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Aircraft and under the Trust Indenture and, unless there shall be any Secured
Certificates outstanding after such payment, exercise such rights as it has to
cause the Aircraft to be released from the Lien of the Trust Indenture.
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein set
forth. To the extent, if any, that this Lease, the Lease Supplements and any
amendments to this Lease constitute chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the assignment
of all Lessor's right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. Subject to Section 3(f) hereof, Lessee agrees to
pay directly to the Indenture Trustee (or, after receipt by Lessee of notice
from the Indenture Trustee of the discharge of the Trust Indenture, to Lessor),
all amounts of Rent due or to become due hereunder and assigned to the Indenture
Trustee and Lessee agrees that the Indenture Trustee's right to such payments
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an 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
-59-
<PAGE>
guaranteed by the United States government having a final maturity of ninety
(90) days or less from date of purchase thereof; (ii) certificates of deposit
issued by, bankers' acceptances of, or time deposits with, any bank, trust
company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("Moody's") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state thereof having a rating
assigned to such commercial paper of A1 by S&P or P1 by Moody's and having a
final maturity of ninety (90) days or less from the date of purchase thereof;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of
such bank's capital and surplus. There shall be promptly remitted to Lessee or
its order (but no more frequently than monthly) any gain (including interest
received) realized as a result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing.
Lessee shall be responsible for any net loss realized as a result of any such
investment and shall reimburse Lessor (or the Indenture Trustee, as the case may
be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the 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
-60-
<PAGE>
conveying to Lessee any right, title or interest in the Aircraft except as a
lessee only. Neither Lessee nor any affiliate of Lessee will file any tax
returns in a manner inconsistent with the foregoing fact or with Lessor's
ownership of the Aircraft. The section and paragraph headings in this Lease and
the table of contents are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof and all
references herein to numbered sections, unless otherwise indicated, are to
sections of this Lease. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE. This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's (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/ Rolf S. Andresen
----------------------------------
Title: Vice President and Controller
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the 20th day of March, 1998.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
BY: s/ Donald E. Smith
----------------------------------
Title: Vice President
- Signature Page -
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1997 J]
LEASE SUPPLEMENT No.
[NW 1997 J]
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 J],
dated as of March 18, 1998, between NATIONAL CITY LEASING CORPORATION, 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 J], dated as of March 18, 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 March 11, 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_________________________________
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By_________________________________
Title:
- --------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1997 J]
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent:
Basic Rent Payable
Basic Rent Payable in in Arrears Total Basic Rent
Lease Period Advance (Percentage (Percentage of (Percentage of
Date of Lessor's Cost) Lessor's Cost) Lessor's Cost)
------------ ------------------- -------------- --------------
<PAGE>
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 Payable
Basic Rent Payable in in Arrears Total Basic Rent
Lease Period Advance (Percentage (Percentage of (Percentage of
Date of Lessor's Cost) Lessor's Cost) Lessor's Cost)
------------ ------------------- -------------- --------------
EXHIBIT B - PAGE 2
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1997 J]
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW 1997 J]
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------- ----------
<PAGE>
EXHIBIT E
to
Lease Agreement
[NW 1997 J]
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 March 11, 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 J]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
- ----------
* So long as on the date of entering into the proposed sublease such country and
the United States have diplomatic relations at least as good as those in effect
on the Delivery Date.
<PAGE>
EXHIBIT G
to
Lease Agreement
[NW 1997 J]
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 J]
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 J], dated as of March 18, 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
EXHIBIT H - PAGE 3
<PAGE>
with such MRB limits, an Engine HSI Half-Life Adjustment under
clause (c)(i) shall be made in lieu of meeting such condition,
provided, however, that in no event shall any Engine have less than
one-quarter HSI period remaining in accordance with such MRB limits
or have any defects or discrepancies outside of the limits set forth
in the Maintenance Planning Document.
(ii) Engine life limited parts shall have on average at least
half-life remaining to their respective scheduled replacement in
accordance with the Engine Manufacturer's published life limited
part replacement schedule current on the date the Aircraft is
returned under the Lease, provided that in the event the Engine life
limited parts do not have an average of at least half-life remaining
to their respective scheduled replacement, an Engine life limited
part Half-Life Adjustment under clause (c)(ii) shall be made in lieu
of meeting such condition, provided, however, that in no event shall
any Engine life limited part have less than one-quarter life
remaining to its scheduled replacement in accordance with the Engine
Manufacturer's published life limited part replacement schedule
current on the date the Aircraft is returned under the Lease.
(iii) The APU shall have remaining at least half of any
applicable HSI period remaining on the date the Aircraft is returned
under the Lease in accordance with the then current MRB standards,
provided that in the event the APU does not have at least half of
any applicable HSI period remaining, an APU Half-Life Adjustment
under clause (c)(iii) shall be made in lieu of meeting such
condition.
(iv) The landing gear shall have at least half-life remaining
to the next landing gear overhaul according to MRB requirements
current on the date the Aircraft is returned under the Lease,
provided that in the event the landing gear does not have at 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>
================================================================================
AMENDED AND RESTATED
GUARANTEE
[NW 1997 J]
Dated as of March 18, 1998
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee .............................................................. 2
2. No Implied Third Party Beneficiaries ................................... 4
3. Waiver; No Set-off; Reinstatement; Subrogation ......................... 4
4. Amendments, Etc ........................................................ 5
5. Payments ............................................................... 5
6. Assignment of Guarantee ................................................ 5
7. Jurisdictional Matters ................................................. 5
8. Integration; Counterparts; Successors and Assigns; Headings ............ 6
9. Notices ................................................................ 6
10. No Waivers ............................................................. 6
11. Survival ............................................................... 6
12. Severability ........................................................... 7
13. Governing Law .......................................................... 7
14. Enforcement Expenses ................................................... 7
15. Termination ............................................................ 7
16. No Guarantee of Secured Certificates ................................... 7
<PAGE>
GUARANTEE
[NW 1997 J]
This AMENDED AND RESTATED GUARANTEE [NW 1997 J], dated as of March
18, 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 J], 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 J], 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 J], 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
J], 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
J], 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/ Rolf S. Andresen
-----------------------------------
Name: Rolf S. Andresen
Title:Vice President and Controller
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 J]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
National City Leasing Corporation, Owner Participant
<PAGE>
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 J]
Dated as of March 18, 1998
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
-------------------
One British Aerospace Avro 146-RJ85A Aircraft
U.S. Registration No. N510XJ
Manufacturer's Serial No. E2323
================================================================================
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 J]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 J], dated as of March
18, 1998 between NORTHWEST AIRLINES, INC., a Minnesota corporation ("Assignor"),
and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee ("Assignee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has
agreed to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement
[NW 1997 J], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "Lease"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) Notwithstanding the foregoing, if and so long as (A) the
Aircraft shall be subject to the Lease and (B) the Manufacturer shall not have
received notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
<PAGE>
the Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "Manufacturer Payment"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to
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<PAGE>
Assignee in accordance with the terms of the Lease, be returned to Assignor
promptly after all Events of Default under the Lease have been cured or waived.
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 1, Allee Pierre Nadot, 31712
Blagnac Cedex, France, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 13850 McLearen Road,
Herndon, Virginia 22071, Attn.: Contracts Director (telecopy (703) 736-4255) and
three Business Days shall have elapsed from the date of actual receipt by the
Manufacturer and, in acting in accordance with the terms and conditions of the
Purchase Agreement and this Assignment, the Manufacturer may rely conclusively
upon any such notice.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding: (i)
Assignor shall at all times remain liable to the Manufacturer under the Purchase
Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or
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<PAGE>
(ii) modify in any respect the Manufacturer's contract rights thereunder, except
as provided in the Consent and Agreement attached hereto.
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, for its
own willful misconduct or grossly negligent conduct for which it would otherwise
be liable; and provided, further, that nothing contained in this Section 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
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<PAGE>
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. Unless the context otherwise require, the following
terms shall have the following meanings for all purposes of this Assignment and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"Aircraft" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"Contract Rights" means all of Assignor's right, title and
interest in and to Part H and Part J of the Manufacturer Support
Agreement, as and to the extent that the same relate to the
warranties with respect to the Aircraft, including, without
limitation, (a) all claims for damages in respect of the Aircraft
arising as a result of any default by the Manufacturer under Part H
or Part J of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity
provisions in Part H and Part J of the Manufacturer Support
Agreement in respect of the Aircraft and all claims thereunder and
(b) any and all rights of Assignor to compel performance of the
terms of Part H and Part J of the Manufacturer Support Agreement in
support thereof.
"Engine" means each of the four AlliedSignal LF507 type
engines listed by manufacturer's serial number in the Lease
Supplement.
"Lease" means the Lease Agreement [NW 1997 J], dated as of
March 18, 1998, between Assignor and Assignee.
"Lease Supplement" means a Lease Supplement substantially in
the form of Exhibit A to the Lease, entered into between Assignor
and Assignee on the date the Aircraft is leased by Assignee to
Assignor and accepted by Assignor under the Lease.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales,
and its successors and assigns.
"Manufacturer Support Agreement" means the Manufacturer
Support Agreement, dated February 5, 1997, between the Manufacturer
and Assignor.
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<PAGE>
"Operative Documents" shall have the meaning specified in the
Lease.
"Participation Agreement" shall have the meaning specified in
the Lease.
"Purchase Agreement" means the Sale and Purchase Agreement,
dated as of February 5, 1997, between the Manufacturer and Assignor
relating to the purchase by Assignor of the Aircraft (including the
Manufacturer Support Agreement), as originally executed or as
modified, amended or supplemented in accordance with the terms
thereof, but only insofar as the foregoing relates to the Aircraft.
"Sublessee" shall have the meaning specified in the Lease,
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Purchase Agreement Assignment to be duly executed as of the day and year first
above written.
NORTHWEST AIRLINES, INC.,
as Assignor
By: s/ Rolf S. Andresen
--------------------------------------
Title: Vice President and Controller
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By: s/ Greg A. Hawley
--------------------------------------
Title: Vice President
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By: s/ Donald E. Smith
--------------------------------------
Title: Vice President
<PAGE>
CONSENT AND AGREEMENT
[NW 1997 J]
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 J] dated as of
March 18, 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 J, Attention: Corporate Trust Department, Reference:
Northwest/NW 1997 J, 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 J.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a limited company incorporated under the Companies Act of 1985
duly organized and validly existing under the laws of England and Wales, (B) the
execution, delivery and performance of the Purchase Agreement and this Consent
and Agreement have been duly authorized by all necessary corporate action on the
part of the Manufacturer, do not require any approval of the stockholders of the
Manufacturer, trustee or holders of any indebtedness or obligations of the
Manufacturer (other than any such approval or consent as has been obtained) and
neither the execution and delivery of the Purchase Agreement or this Consent and
Agreement by the Manufacturer, nor the performance by the Manufacturer of its
obligations under the Purchase Agreement or the Consent and Agreement
contravenes any law, governmental rule or regulation applicable to the
Manufacturer, and (C) neither the execution and delivery by the Manufacturer of
the Purchase Agreement or the Consent and Agreement, nor the performance by the
Manufacturer of its obligations thereunder, requires the consent or approval of,
or the giving of notice to, or the registration with, or the taking of any other
action in respect of, any federal or state governmental authority in the United
States (other than those which have been obtained).
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<PAGE>
Dated as of March 18, 1998
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British Aerospace
(Operations) Limited
By s/ Alain Brodin
--------------------------------------------
Title: Senior Vice President Commercial
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<PAGE>
EXHIBIT 4(c)(8)
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OWNER PARTICIPANT GUARANTY
[NW 1997 J]
DATED AS OF MARCH 18, 1998
BY
NATIONAL CITY BANK OF KENTUCKY,
OWNER PARTICIPANT GUARANTOR
____________________________
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
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<PAGE>
OWNER PARTICIPANT GUARANTY
[NW 1997 J]
This OWNER PARTICIPANT GUARANTY [NW 1997 J] dated as of March 18, 1998
(the "GUARANTY") from NATIONAL CITY BANK OF KENTUCKY, a national banking
association (the "OWNER PARTICIPANT GUARANTOR"), to the parties listed in
SCHEDULE A hereto (collectively, together with their successors and assigns, the
"PARTIES" and individually a "PARTY").
In order to induce the Parties to enter into and perform their
respective obligations under that certain Amended and Restated Participation
Agreement [NW 1997 J], dated as of the date hereof, among National City Leasing
Corporation (the "OWNER PARTICIPANT"), a Kentucky corporation, and certain of
the Parties (as the same may hereafter be amended and supplemented, the
"PARTICIPATION AGREEMENT") and the Operative Documents referred to in the
Participation Agreement to which the Parties are parties, the Owner Participant
Guarantor, irrevocably and unconditionally, as primary obligor and not merely as
surety, hereby guarantees the due and punctual payment by the Owner Participant
of any and all sums (including, but not limited to, investment in the Aircraft,
all indemnities and interest) which are or may become due and payable by the
Owner Participant under the Operative Documents and the due, punctual and
faithful performance by the Owner Participant of all other obligations,
covenants, warranties, terms and undertakings of, and conditions pertaining to,
the Owner Participant (including, but not limited to, any indemnification that
may be required of the Owner Participant in connection with any transfer of its
interest in the Trust Estate pursuant to Section 8.01 of the Trust Agreement)
contained in the Operative Documents (such obligations of payment and
performance being sometimes collectively referred to herein as the
"OBLIGATIONS"). The Owner Participant Guarantor hereby covenants that the above
sums will be paid in accordance with the terms and provisions of the Operative
Documents, and further covenants that any and all such other obligations, if not
duly and punctually performed by the Owner Participant, shall be duly and
punctually performed by the Owner Participant Guarantor.
The Owner Participant Guarantor hereby agrees that its obligations
under this Guaranty shall not be affected by any claims or rights of the Owner
Participant Guarantor or the Owner Participant against any Party independent of
or unrelated to the transactions contemplated by any Operative Documents.
The Owner Participant Guarantor hereby irrevocably waives acceptance
of this Guaranty and any demand or notice not provided for in the Operative
Documents, as well as any requirements that any Party to any Operative Document
at any time exhaust any right to take any action against the Owner Participant.
The Owner Participant Guarantor hereby agrees that this Guaranty shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by any Party upon the insolvency, bankruptcy or
reorganization of the Owner Participant, or otherwise, all as though such
payment had not been made.
<PAGE>
The Owner Participant Guarantor represents and warrants as of the
Delivery Date as follows:
(i) the Owner Participant Guarantor owns and holds all of the
issued and outstanding shares of capital stock of the Owner Participant;
(ii) the Owner Participant Guarantor is an association duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full power, authority and legal right
to execute, deliver and perform its obligations under this Guaranty;
(iii) this Guaranty has been duly authorized, executed and
delivered by the Owner Participant Guarantor and constitutes the Owner
Participant Guarantor's legal, valid and binding obligation, enforceable in
accordance with its terms except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) the execution and delivery of, and performance by the
Owner Participant Guarantor of its obligations under, this Guaranty (a) will not
result in a violation of, or be in conflict with, or constitute a default or any
event which would with notice or lapse of time or both become a default under,
any provision of its certificate of incorporation or its by-laws, or any
mortgage, indenture, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement relating to
indebtedness of the Owner Participant Guarantor by which the Owner Participant
Guarantor or its property is bound, or any contract, agreement or other
instrument, a default under which might, individually or together with similar
contracts, agreements or instruments by which the Owner Participant Guarantor or
its property is bound, materially affect the Owner Participant Guarantor's
property or business or affect its ability to perform its obligations under this
Guaranty, (b) will not result in a violation of any statute, rule or regulation
applicable to the Owner Participant Guarantor or its property or by which it or
its property may be bound, (c) will not result in a violation of, or be in
conflict with, or result in a breach of, any term or provision of any judgment,
order, decree or award of any court, arbitrator or governmental or public
instrumentality binding upon it or its property, and (d) do not require the
consent or approval of, the giving of notice to, or the taking of any other
action with respect to, any state or federal agency or authority;
(v) the Owner Participant Guarantor is fully aware of the
terms and conditions of the Operative Documents and has received a complete and
accurate copy of each of them;
(vi) the Owner Participant Guarantor is a Citizen of the
United States without making use of any voting trust, voting powers agreement or
similar arrangement; and
(vii) the tangible net worth of the Owner Participant
Guarantor, exclusive of goodwill, is greater than $75,000,000.
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<PAGE>
The Owner Participant Guarantor hereby irrevocably (i) waives
promptness, diligence, presentment, demand for payment, protest, dishonor and
all notices whatsoever as to the obligations, covenants, warranties, terms or
undertakings of, or conditions pertaining to, the Owner Participant contained in
the Operative Documents, and any other circumstances which might otherwise
constitute a defense available to, or discharge of, the Owner Participant
Guarantor and agrees that it shall not be required to consent to, or receive any
notice of, any amendment or modification of, or waiver, consent or extension
with respect to any Operative Document that may be made or given as provided
therein or otherwise: (ii) waives any right to require, as a condition to the
enforcement of this Guaranty against the Owner Participant Guarantor or
otherwise, that any action or other proceeding be brought against the Owner
Participant or any other Person, that resort be made to any security or that any
other right or remedy be exercised against the Owner Participant or any other
Person; and (iii) waives any right, defense or other benefit the Owner
Participant Guarantor may have with respect to this Guaranty (including, without
limitation, any right to terminate, or to assert any defense to its performance
of, its obligations under this Guaranty) arising under Section 365(c)(2) of the
Bankruptcy Code of the United States, as at any time amended, or under any
successor thereto; PROVIDED THAT, notwithstanding anything contained in this
Guaranty to the contrary, until such time as such condition has been satisfied,
the Owner Participant Guarantor shall not be obligated hereunder to pay or
perform any obligation of payment or performance of the Owner Participant which
is not then due or payable or performable because any specific condition to such
obligation set forth in the Operative Documents has not been satisfied.
The Owner Participant Guarantor agrees that its obligations hereunder
are absolute, primary, unconditional and irrevocable under any and all
circumstances, without regard to bankruptcy or insolvency of the Owner
Participant or the actual or purported rejection by a trustee in bankruptcy for
the Owner Participant of the Participation Agreement or any other Operative
Document or any limitation on any claim in bankruptcy for damages resulting from
the actual or purported termination of any Operative Document or the
genuineness, validity, legality or enforceability of any of the Operative
Documents or any substitution, release or exchange of any other agreement
relating to or any security for any of the obligations contained herein or any
other circumstances which might otherwise constitute a legal or equitable
discharge of such obligations and shall not be subject to any right of set-off
or counterclaim. Nothing contained herein shall affect the right of the Owner
Participant Guarantor to assert any claim it may have against any Party in a
separate action or proceeding. Without limiting the generality of the
foregoing, it is agreed that, except to the extent required by applicable law,
the occurrence of any one or more of the following from time to time or at any
time, with or without notice to the Owner Participant Guarantor, shall not
release, discharge or reduce the liability of the Owner Participant Guarantor
hereunder: (i) any extension of time for the Owner Participant's performance of
or compliance with any of the obligations referred to herein, any waiver of such
performance or compliance, or any failure, omission, or delay of any Party to
enforce, assert, or exercise any right, power, or remedy conferred on it by any
Operative Document, (ii) the occurrence or performance of any of the acts
mentioned in any of the Operative Documents (except for payment in full and
performance in full by the Owner Participant of the Obligations), (iii)
modification or amendment of any of the Operative Documents in any respect, (iv)
the release or exchange in whole or in part of, or other dealing with, any other
agreement relating to the obligations contained herein or any security therefor
or any furnishings or acceptance of any
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<PAGE>
additional security, (v) any assignment, transfer, sublease or other arrangement
by which the Owner Trustee or the Owner Participant transfers or loses control
of the use of the Aircraft or any part thereof, (vi) any determination that the
Lease creates in favor of the Owner Trustee only a security interest under
Article Nine of the Uniform Commercial Code or any successor thereto, or any
other defect in the title, condition, design, operation or fitness for use of,
or damage to or loss or destruction of, the Aircraft or any part thereof whether
or not due to the fault of the Owner Trustee or the Owner Participant, (vii) any
merger or consolidation of the Owner Participant or the Owner Participant
Guarantor into or with any other Person, (viii) any change in the ownership of
any shares of capital stock of the Owner Participant, (ix) any adverse
regulatory change or other governmental action, (x) any legal disability or
incapacity of the Owner Participant, (xi) the entering into any of the Operative
Documents by the Owner Participant being invalid or in excess of the powers of
the Owner Participant or of any Person purporting to act on behalf of the Owner
Participant, (xii) any payment, or security for such payment, or any performance
being invalid for any reason whatsoever (including voidance under any enactment
relating to bankruptcy, insolvency, reorganization, or similar proceedings),
(xiii) any order directing any Person to pay any sum in the bankruptcy,
insolvency, reorganization, or similar proceedings in respect to the Owner
Participant, (xiv) any release, settlement, discharge, or arrangement which may
be given or made on the faith of any payment made by the Owner Participant, (xv)
any other circumstance (including, without limitation, force majeure) which
might otherwise constitute a legal or equitable discharge or defense of the
Owner Participant Guarantor, or (xvi) any single or partial exercise of any
right under this Guaranty.
All payments hereunder shall be made in lawful money of the United
States of America, in Dollars at the required place of payment.
The Owner Participant Guarantor agrees to pay all costs and expenses,
including but not limited to reasonable attorneys' fees and expenses, of any
Party in the enforcement of any terms of this Guaranty.
This Guaranty is a continuing guarantee and shall:
(i) remain in full force and effect until payment in full of
all sums payable by the Owner Participant Guarantor hereunder and by the Owner
Participant under the other Operative Documents, and performance in full of all
obligations whatsoever of the Owner Participant Guarantor hereunder and of the
Owner Participant in accordance with the terms and provisions of the other
Operative Documents;
(ii) be binding upon the Owner Participant Guarantor and its
successors and assigns; and
(iii) inure to the benefit of, and be enforceable by, each
Party and each Person which shall succeed to an interest of such Party in
accordance with the terms of the Operative Documents.
The Owner Participant 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
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<PAGE>
York County, for the purposes of any suit, action or other proceeding arising
out of this Guaranty 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, 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 this Guaranty 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. THIS GUARANTY 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 GUARANTY IS BEING DELIVERED IN NEW
YORK.
In the event that any provision of any Operative Document is altered,
modified, amended, waived or supplemented in accordance with the terms of the
Operative Documents, this Guaranty shall remain in full force and effect with
respect to such Operative Document as so altered, modified, amended, waived or
supplemented.
The capitalized terms used in this Guaranty and not otherwise defined
herein which are defined in, or by reference in, the Participation Agreement,
shall have the meanings specified therein.
All requests, notices or other communications hereunder shall be in
writing, addressed as follows:
If to the Owner Participant Guarantor:
National City Bank of Kentucky
101 South Fifth Street
Louisville, KY 40202
Attn: Assistant General Counsel
Telecopy No.: (502) 581-6351
If to a Party:
to the address set forth in the Participation Agreement
with respect thereto.
All requests, notices or other communications shall be given in the
same manner, and shall be effective at the time and under the terms, set forth
in Section 13 of the Participation Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Owner Participant Guarantor has caused this
Guaranty to be executed and delivered as of the day and year first above
written.
NATIONAL CITY BANK OF KENTUCKY
By /s/ J. Edward Vittitow
----------------------------------
Title: Senior Vice President
<PAGE>
SCHEDULE A
TO OWNER
PARTICIPANT
GUARANTY
[NW 1997 J]
PARTIES
NORTHWEST AIRLINES, INC.,
Lessee
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Owner Trustee
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Subordination Agent
<PAGE>
================================================================================
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 H]
Dated as of
December 29, 1997
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
NATIONAL CITY LEASING CORPORATION,
Owner Participant,
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee under each of
the Pass Through Trust Agreements,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
---------------------
One British Aerospace Avro 146-RJ85A Aircraft
N508XJ
Leased to Northwest Airlines, Inc.
================================================================================
<PAGE>
INDEX TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
Page
----
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........................................22
(c) General Indemnity............................................22
(d) Income Tax...................................................22
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.........................................................47
SECTION 17. Refinancings.....................................................47
SECTION 18. Collateral Account ..............................................49
(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 and the
Owner Participant Guarantor
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant and the Owner Participant Guarantor
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
(iii)
<PAGE>
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 H]
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT [NW 1997 H] dated
as of December 29, 1997, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware
corporation (the "Guarantor"), (iii) NATIONAL CITY LEASING CORPORATION, a
Kentucky 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 H], 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 H], 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 H], dated as of the date hereof
(said Amended and Restated Trust Agreement [NW 1997 H], 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
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<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
H] 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 H], 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 H] 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 H] 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 H] 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 H], 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 H] (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 H], 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 H], 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.
- 4 -
<PAGE>
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 December 31, 1997, by
transferring to the account of the Owner Trustee at State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028,
Account No. 9900-314-7, Reference: Northwest/NW 1997 H, 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
- 5 -
<PAGE>
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,
December 31, 1997, 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 December 31, 1997, whereupon the Owner Participant's Commitment
hereunder shall terminate. On such third Business Day (or such earlier date) or
December 31, 1997, as the case may be, or the earliest practicable Business Day
thereafter, the Owner Trustee shall return the amounts held by it hereunder to
- 6 -
<PAGE>
the Owner Participant, provided that the Owner Trustee shall have had a
reasonable time to liquidate any Cash Equivalents it has been authorized to
invest in pursuant to the preceding paragraph and to obtain the proceeds
therefrom in funds of the type originally received, and Lessee shall pay
interest on such funds to the Owner Participant at an interest rate equal to the
weighted average (based on outstanding principal amount) rate of interest on the
Secured Certificates issued pursuant to the Trust Indenture, such interest to be
payable for the period from and including such Scheduled Delivery Date to but
excluding the date such funds are returned to the Owner Participant in
accordance with the terms hereof; provided that if any such funds are returned
to the Owner Participant after 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 December 31,
1997) 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);
(16) the Assignment and Assumption Agreement; and
(17) the Owner Participant Guaranty.
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
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Sale, the FAA Bill of Sale, the Purchase Agreement Assignment, the
Tax Indemnity Agreement, the Pass Through Trust Agreements, the
Guarantee and any other documents to be executed on behalf of Lessee
or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby on the Delivery Date and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of Lessee and
the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby 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 and
the Owner Participant Guarantor (as the case may be) as to the
person or persons authorized to execute and deliver this Agreement,
the Tax Indemnity Agreement, the Trust Agreement, the Residual
Agreement, the Owner Participant Guaranty and any other documents to
be executed on behalf of the Owner Participant or the Owner
Participant Guarantor (as the case may be) in connection with the
transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Participant and the Owner Participant Guarantor, certified by
the Secretary or an Assistant Secretary of the Owner Participant and
the Owner Participant Guarantor (as the case may be), duly
authorizing the transactions contemplated hereby and the execution
and delivery of each of the documents required to be executed and
delivered on behalf of the Owner Participant or the Owner
Participant Guarantor (as the case may be) in connection with the
transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Participant and the Owner Participant Guarantor, each
certified by the Secretary or an Assistant Secretary of the Owner
Participant and the Owner Participant Guarantor (as the case may
be); 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:
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(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness;
(2) the FAA Bill of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft shall
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Federal Aviation
Administration, and the Trust Agreement shall have been filed (or
shall be in the process of being so filed) with the Federal Aviation
Administration;
(3) application for registration of the Aircraft in the name
of the Owner Trustee has been duly made with the Federal Aviation
Administration;
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date); and
(5) there has been no material adverse change in the financial
condition of the Guarantor and its subsidiaries, taken as a whole,
since December 31, 1996.
(x) 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
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opinion substantially in the form of Exhibit J-2 hereto from the
Manufacturer's in-house counsel, in each case with respect to the
Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit K hereto from Ray, Quinney & Nebeker,
special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, the Guarantor and Lessee, an
opinion substantially in the form of Exhibit L-1 hereto from Thelen,
Marrin, Johnson & Bridges LLP, special counsel for the Owner Participant
and the Owner Participant Guarantor, and an opinion substantially in the
form of Exhibit L-2 hereto from the Owner Participant's and the Owner
Participant Guarantor'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.
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(xix) Lessor's Cost for the Aircraft shall be $21,000,000.
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(xxi) The Owner Participant shall have received from 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. ss.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
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for the Pass Through Trustee, and reasonably satisfactory as to scope and
substance to the Owner Participant, the Guarantor and Lessee, and (C) such
other documents and evidence with respect to the Pass Through Trustee as
it may reasonably request in order to establish the due consummation of
the transactions contemplated by this Agreement, the taking of all
necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, 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
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this Agreement shall have been issued, and all such orders, permits,
waivers, exemptions, authorizations and approvals shall be in full force
and effect on the Delivery Date.
(ii) The conditions specified in Sections 5(a)(ii), 5(a)(iii) and
5(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 5(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee and the Guarantor) in the manner specified in
Section 5(a)(v), shall each be satisfactory in form and substance to
Lessee and the Guarantor, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof shall have been
delivered to Lessee or its special counsel and the Guarantor or its
special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 5(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 5(a)(xxiv)(A), and (C) such other documents and evidence with
respect to the Pass Through Trustee as Lessee or its special counsel and
the Guarantor or its special counsel may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all corporate proceedings in connection therewith
and compliance with the conditions herein set forth.
(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 5(a)(xii), 5(a)(xiii), 5(a)(xiv), 5(a)(xv), 5(a)(xvi),
5(a)(xvii) and 5(a)(xxiv)(B) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and
the Guarantor and its special counsel.
(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
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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.
(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;
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(ii) Lessee is a Certificated Air Carrier, and its chief executive
office (as such term is used in Article 9 of the Uniform Commercial Code
in effect in the State of Minnesota) is located at Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party and the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement and each other Operative Document to which Lessee
or the Guarantor (as the case may be) is a party, have been duly
authorized by all necessary corporate action on the part of Lessee or the
Guarantor, do not require any stockholder approval, or approval or consent
of any trustee or holder of any material indebtedness or material
obligations of Lessee or the Guarantor, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on Lessee or the Guarantor
(as the case may be) or the certificate of incorporation or 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
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and are, or on the Delivery Date will be, in full force and effect (other
than a flying time wire, all steps to obtain the issuance of which will
have been, on the Delivery Date, taken or caused to be taken by Lessee),
(D) on or prior to the Delivery Date, the registration of the Aircraft
referred to in Section 5(a)(ix)(3), (E) on or prior to the Delivery Date,
the registrations and filings referred to in Section 7(a)(vi), and (F)
authorizations, consents, approvals, actions, notices and filings required
to be obtained, taken, given or made either only after the date hereof or
the failure of which to obtain, take, give or make would not be reasonably
likely to have a material adverse effect on the condition (financial or
otherwise), business or properties of the Guarantor and its subsidiaries
considered as one enterprise;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee 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;
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<PAGE>
(vii) neither Lessee, the Guarantor nor any of their affiliates has
directly or indirectly offered the Certificates for sale to any Person
other than in a manner permitted by the Securities Act of 1933, as
amended, and by the rules and regulations thereunder;
(viii) neither Lessee nor the Guarantor is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(ix) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of time;
(xi) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of Lessee
will not be unreasonably small for the conduct of the business in which
Lessee is engaged or is about to engage; Lessee has no intention or belief
that it is about to incur debts beyond its ability to pay as they mature;
and Lessee's sale of the Aircraft is made without any intent to hinder,
delay or defraud either present or future creditors;
(xii) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation G of the Board of Governors of the Federal
Reserve System; and
(xiii) all sales or use tax then due and for which Lessee is
responsible pursuant to Section 7(b)(i) hereof shall have been paid, other
than such taxes which are being contested by Lessee in good faith and by
appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Aircraft.
(b) General Tax Indemnity. [Intentionally Omitted]
(c) General Indemnity. [Intentionally Omitted]
(d) Income Tax. [Intentionally Omitted]
SECTION 8. Representations, Warranties and Covenants.
(a) [Intentionally Omitted.]
(b) [Intentionally Omitted.]
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<PAGE>
(c) Each of the Owner Participant and First Security Bank, National
Association, in its individual capacity, represents and warrants to the other
parties to this Agreement that it is, and on the Delivery Date will be, a
Citizen of the United States without making use of any voting trust, voting
powers agreement or similar arrangement. The Owner Participant agrees, solely
for the benefit of Lessee and the Loan Participants, that if (i) it shall cease
to be, or believes itself likely to cease to be, a Citizen of the United States
and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner Participant shall (at its
own expense and without any reimbursement or indemnification from Lessee)
promptly effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee and
the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole expense
of the Owner Participant, to cooperate with the Owner Participant in complying
with its obligations under the provisions of the second sentence of this Section
8(c). First Security Bank, National Association, in its 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,
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further represents and warrants that (A) on the Delivery Date the Owner Trustee
shall have received whatever title to the Aircraft as was conveyed to it by
Lessee, and (B) the Trust Agreement, and, assuming due authorization, execution
and delivery of the Trust Agreement by the Owner Participant, the other Owner
Trustee Documents, when executed and delivered, shall have been duly executed
and delivered by one of its officers who is duly authorized to execute and
deliver such instruments on behalf of the Owner Trustee. First Security Bank,
National Association, in its individual capacity, represents that it has not
offered any interest in the Trust Estate or any Secured Certificates or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone, and that no officer or responsible employee of the Corporate Trust
Department of First Security Bank, National Association, has knowledge of any
such offer or solicitation by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither it
nor anyone acting in its behalf has offered any Secured Certificates for sale
to, or solicited any offer to buy any Secured Certificate from, any person or
entity other than in a manner in compliance with, and which does not require
registration under, the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
(f) The Owner Participant and the Indenture Trustee agree that, at
any time after the Depreciation Period, 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
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necessary and (2) the Owner Trustee and the Indenture Trustee shall have
received a certificate from Lessee that all possible preparations to
accomplish such filing, recording and other action shall have been done,
and such filing, recording and other action shall be accomplished and a
supplemental opinion to that effect shall be delivered to the Owner
Trustee and the Indenture Trustee on or prior to the effective date of
such change in registration), (D) it is not necessary, solely as a
consequence of such change in registration and without giving effect to
any other activity of the Owner Trustee, the Owner Participant or the
Indenture Trustee (or any Affiliate thereof), as the case may be, for the
Owner Trustee, the Owner Participant or the Indenture Trustee to qualify
to do business in such jurisdiction, (E) there is no tort liability of the
owner of an aircraft not in possession thereof under the laws of such
jurisdiction (it being agreed that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Participant, such
opinion shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee shall
have agreed to provide insurance covering the risk of requisition of use
of such Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the
loss of use of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, Lessee
shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom. Lessee shall pay all costs, expenses, fees, recording and
registration taxes, including the reasonable fees and 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 ____________ and has the corporate power and authority
to carry on its present business and operations and to own or lease its
properties, and has the corporate power and authority to enter into and to
perform its obligations under the Owner Participant Documents; this
Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization,
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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;
(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; and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
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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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<PAGE>
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 G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent 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:
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(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. ss.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. ss.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
warranties to the same extent as if such representations and
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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. ss. 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 March 15,
1998). In the event that the transactions contemplated hereunder close on or
prior to December 31, 1997, the Owner Participant agrees to transfer to the
Owner Trustee promptly but in any event no later than March 31, 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 2.0772% 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 2.0772% 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 December 31, 1997
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any of 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;
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(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 Lessor's Cost) 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 ss.ss. 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.
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(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
H, 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 & Assitant
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>
NATIONAL CITY LEASING CORPORATION,
Owner Participant
By: /s/ Donald J. Zeillmann
----------------------------------------
Name: Donald J. Zeillmann
Title: Vice President
Address: 101 South 5th Street
Louisville, Kentucky 40202
Attn: Vice President Operations
Telecopy No.: (502) 581-6488
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: /s/ Donald E Smith
----------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Owner Trustee
By: /s/ Greg A. Hawley
----------------------------------------
Name: Greg A. Hawley
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE>
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity, except as otherwise
provided herein, but solely as Pass Through
Trustee,
Pass Through Trustee
By: /s/ Donald E. Smith
----------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, except as otherwise
provided herein, but solely as Subordination
Agent,
Subordination Agent
By: /s/ Donald E. Smith
----------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: c/o State Street Bank and
Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
SCHEDULE I
Names and Addresses
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant: National City Leasing Corporation
101 South Fifth Street
Louisville, KY 40202
Attn: Vice President Operations
Telecopy No.: (502) 581-6488
Payments made to the Owner Participant as provided in
Section 3.06 of the Trust Indenture shall be made to:
National City Bank, Kentucky
ABA No. 083 000 056
Credit: National City Leasing Corporation
Acct. No. 35406657 2
<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 H
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 H
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
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------- --------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due
January 2, 2016 $10,369,450.52
1997-1B 7.248% Series B Secured Certificates due
January 2, 2013 $3,112,327.96
1997-1C 7.039% Series C Secured Certificates due
July 2, 2007 $1,967,999.99
Debt Portion $15,449,778.47
Owner Participant Equity Investment
- ----------------- -----------------
National City Leasing Corporation $5,550,221.53
<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 H]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina
Australia
Austria
Bahamas
Belgium
Brazil
Canada
Chile
Denmark
Egypt
Finland
France
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Italy
Japan
Luxembourg
Malaysia
Malta
Mexico
Morocco
Netherlands
New Zealand
Norway
Paraguay
People's Republic of China
Philippines
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Tobago
Trinidad
United Kingdom
Uruguay
Venezuela
Exhibit A-1
<PAGE>
ANNEX A [NW 1997 H]
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 H], dated as of December 29, 1997, 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.
ANNEX A-2
<PAGE>
"Beneficial Interest" means the interest of the Owner Participant
(or the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated the Delivery
Date, specifically referring to the Airframe and each Engine, which Bill of Sale
shall contain, among other things, a statement that such Bill of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Bill of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the Lease.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in the City of
New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"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 H], 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 H], dated as of December 29, 1997, 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, 2004, 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 H], dated as of
December 29, 1997, 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 H], dated as of December 29, 1997, 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 H], dated as of December 29, 1997,
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 January 2, 1998 and each January 2 and
July 2 thereafter, to and including the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease Agreement, and any subsequent Lease Supplement entered
into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
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 The Royal Bank of Canada, as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or
claims against any Loan Participant not related to the transactions contemplated
by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
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 Owner Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 H], 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 H], 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 H], 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
ANNEX A-13
<PAGE>
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 H], 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 Participant Guarantor" means the entity executing the Owner
Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner Participant
Guaranty [NW 1997 H], dated as of December 29, 1997, made by the Owner
Participant Guarantor in favor of Lessee, Lessor, the Purchasers, the
Subordination Agent and the Indenture Trustee, as such Owner Participant
Guaranty may be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
"Owner Trustee" means the entity executing the 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.
ANNEX A-14
<PAGE>
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 H], dated as of December 29, 1997, 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.
"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.
ANNEX A-15
<PAGE>
"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.
"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 H], dated as of December 29, 1997, 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.
ANNEX A-16
<PAGE>
"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.
"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 (N508XJ), dated as
of December 29, 1997, 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
ANNEX A-17
<PAGE>
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.
"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
ANNEX A-18
<PAGE>
connection with the transactions contemplated by the Intercreditor Agreement. As
used herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 H], dated as of December 29, 1997, 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
ANNEX A-19
<PAGE>
& 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 and the
Owner Participant Guarantor, 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 H], dated as of December 29, 1997, 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.
ANNEX A-20
<PAGE>
"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.
"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>
================================================================================
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 I]
Dated as of
February 3, 1998
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
FIRST AMERICAN NATIONAL BANK,
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
N509XJ
Leased to Northwest Airlines, Inc.
================================================================================
<PAGE>
INDEX TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
Page
----
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 ................................ 22
(c) General Indemnity .................................... 22
(d) Income Tax ........................................... 22
SECTION 8. Representations, Warranties and Covenants ................. 22
SECTION 9. Reliance of Liquidity Provider ............................ 42
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
(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 I]
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT [NW 1997 I] dated
as of February 3, 1998, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware
corporation (the "Guarantor"), (iii) FIRST AMERICAN NATIONAL BANK, a national
banking association (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 I], 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 I], 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 I], dated as of the date hereof
(said Amended and Restated Trust Agreement [NW 1997 I], 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
I] 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 I], 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 I] 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 I] 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 I] 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 I], 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 I] (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 Supplement") covering the Aircraft, supplementing
the Trust Agreement and the Trust Indenture;
- 3 -
<PAGE>
(iv) the Owner Trustee and Lessee will enter into the Lease
Agreement [NW 1997 I], 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 I], 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.
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
- 4 -
<PAGE>
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 February 13, 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 I, 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 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
- 5 -
<PAGE>
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,
February 13, 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 February 13, 1998, whereupon the Owner Participant's Commitment
hereunder shall terminate. On such third Business Day (or such earlier date) or
February 13, 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 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
- 6 -
<PAGE>
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 February 13, 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;
(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
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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.
(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.
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(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;
(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;
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(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 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
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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;
(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
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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.
(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;
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(2) a copy of the general 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 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;
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(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 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
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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 $21,000,000.
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(xxi) The Owner Participant shall have received from 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.
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(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. ss.1110 with respect to the Aircraft.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties
contained herein of the Pass Through Trustee are correct as though made on
and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which
case such representations and warranties are correct on and as of such
earlier date), (B) an opinion substantially in the form of Exhibit Q
hereto addressed to the Owner Participant, the Guarantor and Lessee of
Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee,
and reasonably satisfactory as to scope and substance to the Owner
Participant, the Guarantor and Lessee, and (C) such other documents and
evidence with respect to the Pass Through Trustee as it may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement, the taking of all necessary corporate
action in connection therewith and compliance with the conditions herein
set forth.
(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, 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
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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.
(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.
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(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, the Special
Purchase Price, the Initial Installment and the Remaining Installments
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.
(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.
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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 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
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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
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
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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;
(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;
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(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 G 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 as if fully set forth
herein.
(d) Income Tax. [Intentionally Omitted]
SECTION 8. Representations, Warranties and Covenants.
(a) [Intentionally Omitted.]
(b) [Intentionally Omitted.]
(c) Each of the Owner Participant and First Security Bank, National
Association, in its individual capacity, represents and warrants to the other
parties to this Agreement that it is, and on the Delivery Date will be, a
Citizen of the United States without making use of any voting trust, voting
powers agreement or similar arrangement. The Owner Participant agrees, solely
for the benefit of Lessee and the Loan Participants, that if (i) it shall cease
to be, or believes itself likely to cease to be, a Citizen of the United States
and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner Participant shall (at its
own expense and without any reimbursement or indemnification from Lessee)
promptly effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each
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holder of a Secured Certificate for any damages suffered by any such other party
or holder as the result of the representation and warranty of the Owner
Participant in the first sentence of this Section 8(c) proving to be untrue as
of the Delivery Date; and (B) the Owner Participant shall be liable to pay on
request to Lessee, any Sublessee and the Loan Participants for any damages which
may be incurred by Lessee, any Sublessee or the Loan Participants as a result of
the Owner Participant's failure to comply with its obligations pursuant to the
second sentence of this Section 8(c). Each party hereto agrees, upon the request
and at the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the second
sentence of this Section 8(c). First Security Bank, National Association, in its
individual capacity, agrees that if at any time an officer or responsible
employee of the Corporate Trust Department of First Security Bank, National
Association, shall obtain Actual Knowledge that First Security Bank, National
Association, has ceased to be a Citizen of the United States without making use
of a voting trust, voting powers agreement or similar arrangement, it will
promptly resign as Owner Trustee (if and so long as such citizenship is
necessary under the Federal Aviation Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
material adverse effect on the Loan Participants, Lessee or the Owner
Participant), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or
First Security Bank, National Association, in its individual capacity, does not
comply with the requirements of this Section 8(c), the Owner Trustee, the
Indenture Trustee and the Participants hereby agree that an Event of Default (or
an event which would constitute an Event of Default but for lapse of time or the
giving of notice or both) shall not have occurred and be continuing under the
Lease due to non-compliance by Lessee with the registration requirements in the
Lease.
(d) First Security Bank, National Association, in its individual
capacity, represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Documents to which it is a
party are kept is Salt Lake City, Utah. First Security Bank, National
Association, in its individual capacity, agrees that it will not change the
location of such office to a location outside of Salt Lake City, Utah, without
prior written notice to all parties. First Security Bank, National Association,
in its individual capacity, further represents and warrants that (A) on the
Delivery Date the Owner Trustee shall have received whatever title to the
Aircraft as was conveyed to it by Lessee, and (B) the Trust Agreement, and,
assuming due authorization, execution and delivery of the Trust Agreement by the
Owner Participant, the other Owner Trustee Documents, when executed and
delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank, National Association, in its individual
capacity, represents that it has not offered any interest in the Trust Estate or
any Secured Certificates or any similar securities for sale to, or solicited any
offer to acquire the same from, anyone, and that no officer or responsible
employee of the Corporate Trust Department of First Security Bank, National
Association, has knowledge of any such offer or solicitation by anyone other
than Lessee.
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<PAGE>
(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, the Owner Participant and the Indenture Trustee
shall have received favorable opinions (subject to customary exceptions)
addressed to each such party, from counsel of recognized reputation reasonably
acceptable to the Owner Participant qualified in the laws of the relevant
jurisdiction to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of
Lessee, and the rights and remedies of the Owner Trustee, under the Lease
shall remain valid, binding and (subject to customary bankruptcy and
equitable remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction (or
the laws of the jurisdiction to which the laws of such jurisdiction would
refer as the applicable governing law), (C) after giving effect to such
change in registration, the Lien of the Trust Indenture on the Owner
Trustee's right, title and interest in and to the Aircraft and the Lease
shall continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion cannot be given
at the time of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) the Owner Trustee
and the Indenture Trustee shall have received a certificate from Lessee
that all possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and other
action shall be accomplished and a supplemental opinion to that effect
shall be delivered to the Owner Trustee, the Owner Participant 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
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<PAGE>
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), (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,
and (G) as to such other matters that Lessee, in the majority of Lessee's
aircraft lease transactions entered into within one year of the proposed
change in registration of the Aircraft, is required to have covered by
counsel in the country of reregistration outside of the United States as a
precondition to reregistration of the aircraft which are the subject of
such lease transactions.
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 United States and has the corporate power and authority
to carry on its present business and operations and to own or lease its
properties, and has the corporate power and authority to enter into and to
perform its obligations under the Owner Participant Documents; this
Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by
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<PAGE>
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;
(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; and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
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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 against 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 against 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
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that such bank, financial 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 (or has effected a voting trust agreement,
voting powers agreement or other similar arrangement so as not to affect the
then continued (if applicable) United States registration of the Aircraft), and
has full power and authority to enter into the transactions contemplated hereby,
(N) the Transferee has the requisite power and authority to enter into and carry
out the transactions contemplated hereby and such Transferee shall have
delivered to Lessee, the Owner Trustee 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 representation 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 loss of any sales, use,
value added or similar tax resulting from such transfer, (R) the transferor
Owner Participant pays all of the costs and expenses (including, without
limitation, fees and expenses of counsel) incurred in connection with such
transfer, including the reasonable costs and expenses of the Owner Trustee, the
Indenture Trustee, Lessee and the Loan Participants in connection therewith, and
(S) the terms of the Operative Documents and the Overall Transaction shall not
be altered. Upon any such transfer by the Owner Participant as above provided,
the Transferee shall be deemed the Owner Participant for all purposes hereof and
of the other Operative Documents and each reference herein to the transferor
Owner Participant shall thereafter be deemed for all purposes to be to the
Transferee and the transferor Owner Participant shall be relieved, released and
discharged of all
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obligations of the transferor Owner Participant under the Owner Participant
Documents arising after the date of such transfer except to the extent fully
attributable to or arising out of acts or events occurring prior thereto and not
assumed by the Transferee (in each case, to the extent of the participation so
transferred). If the Owner Participant intends to transfer any of its interests
hereunder, it shall give 30 days prior written notice thereof to the Indenture
Trustee, the Owner Trustee and Lessee, specifying the name and address of the
proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless
waived by the Loan Participants, Lessee shall not be entitled to assume the
Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of Default shall have
occurred and be continuing or any condition or event shall exist which, with the
passage of time or giving of notice or both, would become such an Event of
Default.
(p) First Security Bank, National Association, and State Street Bank
and Trust Company, each in its individual capacity, agrees for the benefit of
Lessee to comply with the terms of the Trust Indenture which it is required to
comply with in its individual capacity.
(q) The Owner Participant represents and warrants that it is not
acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA or of any "plan" within the meaning of Section
4975(e)(1) of the Code. Each Loan Participant agrees that it will not transfer
any Secured Certificate (or any part thereof) to any entity (except pursuant to
Section 2.14 of the Trust Indenture) unless such entity makes (or is deemed to
have made) a representation and warranty as of the date of transfer that either
no part of the funds to be used by it for the purchase and holding of such
Secured Certificate (or any part thereof) constitutes assets of any "employee
benefit plan" or that such purchase and holding will not result in a "prohibited
transaction" (as defined in Section 4975 of the Code and ERISA). The Owner
Participant agrees that it will not transfer any of its right, title or interest
in and to this Agreement, the Trust Estate or the Trust Agreement or any
proceeds therefrom to any entity unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer that either no
part of the funds to be used by it for the purchase of such right, title and
interest (or any part thereof) constitutes assets of any "employee benefit plan"
or that such transfer will not result in a prohibited transaction (as defined in
Section 4975 of the Code and ERISA). The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(1) of
the initial supplement to each Pass Through Trust Agreement without the prior
written consent of the Owner Participant.
(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
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assignment of an interest, provided such participant or assignee agrees to hold
such terms confidential to the same extent as herein provided) or the Owner
Participant's beneficial interest in the Trust Estate and any exercise of
remedies under the Lease and the Trust Indenture), (C) with the prior written
consent of the Manufacturer and Lessee, (D) to the Owner Trustee's, the
Indenture Trustee's and each Participant's counsel or special counsel,
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 G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent 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:
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(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. ss.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. ss.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, Initial
Installment and Remaining Installments, and the Owner Participant hereby agrees
to make such recalculations as and when contemplated by the Lease and subject to
all the terms and conditions of the Lease and promptly to take such further
actions as may be necessary or desirable to give effect to and to cause the
Owner Trustee to give effect to the provisions of Section 3 of the Lease.
(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
warranties to the same extent as if such representations and
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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. ss. 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 April 30,
1998). In the event that the transactions contemplated hereunder close on or
prior to February 13, 1998, the Owner Participant agrees to transfer to the
Owner Trustee promptly but in any event no later than May 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, Lessee at its sole
option shall have the right to pay directly any or all Transaction Expenses of
the type specified in clauses (8) and (12) of the definition of Transaction
Expenses.
(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 February 13, 1998
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any of 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;
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(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 ss.ss. 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.
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(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
I, 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
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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 & 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
---------------------------------------
Name: Joseph E. Francht
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (612) 726-0665
- Signature Page -
<PAGE>
FIRST AMERICAN NATIONAL BANK,
Owner Participant
By: s/ Evelyn D. Tade
---------------------------------------
Name: Evelyn D. Tade
Title: Senior Vice President
Address: 300 Deaderick Street
Nashville, Tennessee 37201
Attn: Equipment Finance Division
Telecopy No.: (615) 748-1435/1439
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: s/ Donald E. Smith
---------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee,
Owner Trustee
By: s/ Greg A. Hawley
---------------------------------------
Name: Greg A. Hawley
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
- Signature Page -
<PAGE>
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity, except as otherwise
provided herein, but solely as Pass Through
Trustee,
Pass Through Trustee
By: s/ Donald E. Smith
---------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, except as otherwise
provided herein, but solely as Subordination
Agent,
Subordination Agent
By: s/ Donald E. Smith
---------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: c/o State Street Bank and
Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
SCHEDULE I
Names and Addresses
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant: First American National Bank
300 Deaderick Street
Nashville, TN 37201
Attn: Equipment Finance Division
Telecopy No.: (615) 748-1435/1439
Payments made to the Owner Participant as provided in
Section 3.06 of the Trust Indenture shall be made to:
First American National Bank
ABA No. 064000017
For deposit to: First American Leasing
Account No. 1000848407
<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 I
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 I
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
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------ --------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due
January 2, 2016 $10,560,952.07
1997-1B 7.248% Series B Secured Certificates due
January 2, 2013 $3,538,462.47
1997-1C 7.039% Series C Secured Certificates due
January 2, 2007 $1,980,000.00
Debt Portion $16,079,414.54
Owner Participant Equity Investment
- ----------------- -----------------
First American National Bank $4,920,585.46
<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 I]
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 I]
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 I], dated as of February 3, 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 I], 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 I], dated as of February 3, 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 I], dated as of
February 3, 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 I], dated as of February 3, 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 Installment" has the meaning set forth in Section 19(d) of
the Lease.
"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 I], dated as of February 3, 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, January 29, 2017, and each
succeeding July 29 and January 29, 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.
ANNEX A-10
<PAGE>
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA Bill of Sale, the Bill of Sale, the Purchase
Agreement Assignment, 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.
ANNEX A-11
<PAGE>
"Losses" has the meaning specified in Section 18 of the
Participation Agreement.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Trust Indenture (unless all Secured
Certificates then outstanding shall be held by the Owner Trustee or the Owner
Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semiannual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Secured
Certificate and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date of such Secured Certificate and (B) the other maturing as close as
possible to, but later than, the Average Life Date of such Secured Certificate,
in each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent H.15(519),
such weekly average yield to maturity as published in such H.15(519).
"H.15(519)" means the weekly statistical release designated as such, or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount shall be the
third Business Day prior to the applicable redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable redemption date.
"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>
"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.
"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 I], 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 I], 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.
ANNEX A-13
<PAGE>
"Original Trust Agreement" means that certain Trust Agreement [NW
1997 I], 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 I], 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 I], dated as of February 3, 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
ANNEX A-14
<PAGE>
supplemented from time to time pursuant to the 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
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.
ANNEX A-15
<PAGE>
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"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 I], dated as of February 3, 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.
"Remaining Installments" has the meaning set forth in Section 19(d)
of the Lease.
ANNEX A-16
<PAGE>
"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.
"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 (N509XJ), dated as
of February 3, 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."
ANNEX A-17
<PAGE>
"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.
"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
ANNEX A-18
<PAGE>
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 I], dated as of February 3, 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;
ANNEX A-19
<PAGE>
(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 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 I], dated as of February 3, 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
ANNEX A-20
<PAGE>
Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement. The initial Trust Agreement and
Indenture Supplement shall be dated the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the 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 I]
Section 7(b) - General Tax Indemnity
[Intentionally Omitted]
EXHIBIT R-1
<PAGE>
EXHIBIT S
TO PARTICIPATION
AGREEMENT
[NW 1997 I]
Section 7(c) - General Indemnity
[Intentionally Omitted]
EXHIBIT S-1
<PAGE>
================================================================================
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 J]
Dated as of
March 18, 1998
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
NATIONAL CITY LEASING CORPORATION,
Owner Participant,
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee under each
of the Pass Through Trust
Agreements,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
---------------------
One British Aerospace Avro 146-RJ85A Aircraft
N510XJ
Leased to Northwest Airlines, Inc.
================================================================================
<PAGE>
INDEX TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
Page
----
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 ..................................... 22
(c) General Indemnity ......................................... 22
(d) Income Tax ................................................ 23
SECTION 8. Representations, Warranties and Covenants ..................... 23
SECTION 9. Reliance of Liquidity Provider ................................ 42
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 ...................................................... 47
SECTION 17. Refinancings .................................................. 47
SECTION 18. Collateral Account ............................................ 49
(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 and the
Owner Participant Guarantor
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant and the Owner Participant Guarantor
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 J]
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT [NW 1997 J] dated
as of March 18, 1998, among (i) NORTHWEST AIRLINES, INC., a Minnesota
corporation (the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware
corporation (the "Guarantor"), (iii) NATIONAL CITY LEASING CORPORATION, a
Kentucky 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 J], 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 J], 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 J], dated as of the date hereof
(said Amended and Restated Trust Agreement [NW 1997 J], 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
J] 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 J], 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 J] 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 J] 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 J] 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 J], 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 J] (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 Supplement") covering the Aircraft, supplementing
the Trust Agreement and the Trust Indenture;
-3-
<PAGE>
(iv) the Owner Trustee and Lessee will enter into the Lease
Agreement [NW 1997 J], 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 J], 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.
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
-4-
<PAGE>
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 March 31, 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 J, 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 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
-5-
<PAGE>
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,
March 31, 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 March 31, 1998, whereupon the Owner Participant's Commitment hereunder
shall terminate. On such third Business Day (or such earlier date) or March 31,
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
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
-6-
<PAGE>
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 March 31, 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;
(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
-7-
<PAGE>
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.
(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.
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(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;
(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;
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(14) the Residual Agreement;
(15) an excerpted copy of the Purchase Agreement (insofar as
it relates to the Aircraft);
(16) the Assignment and Assumption Agreement; and
(17) the Owner Participant Guaranty.
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 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;
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(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;
(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
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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.
(D)(1) an incumbency certificate of the Owner Participant and
the Owner Participant Guarantor (as the case may be) as to the
person or persons authorized to execute and deliver this Agreement,
the Tax Indemnity Agreement, the Trust Agreement, the Residual
Agreement, the Owner Participant Guaranty and any other documents to
be executed on behalf of the
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Owner Participant or the Owner Participant Guarantor (as the case
may be) in connection with the transactions contemplated hereby and
the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Participant and the Owner Participant Guarantor, certified by
the Secretary or an Assistant Secretary of the Owner Participant and
the Owner Participant Guarantor (as the case may be), duly
authorizing the transactions contemplated hereby and the execution
and delivery of each of the documents required to be executed and
delivered on behalf of the Owner Participant or the Owner
Participant Guarantor (as the case may be) in connection with the
transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Participant and the Owner Participant Guarantor, each
certified by the Secretary or an Assistant Secretary of the Owner
Participant and the Owner Participant Guarantor (as the case may
be); 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 the Owner Participant Guarantor, and an opinion substantially in the
form of Exhibit L-2 hereto from the Owner Participant's and the Owner
Participant Guarantor'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 $21,000,000.
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or
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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. ss.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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<PAGE>
(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 G 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) Each of the Owner Participant and First Security Bank, National
Association, in its individual capacity, represents and warrants to the other
parties to this Agreement that it is, and on the Delivery Date will be, a
Citizen of the United States without making use of any voting trust, voting
powers agreement or similar arrangement. The Owner Participant agrees, solely
for the benefit of Lessee and the Loan Participants, that if (i) it shall cease
to be, or believes itself likely to cease to be, a Citizen of the United States
and (ii) the
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Aircraft shall or would therefore become ineligible for registration in the name
of the Owner Trustee under the Federal Aviation Act and regulations then
applicable thereunder, then the Owner Participant shall (at its own expense and
without any reimbursement or indemnification from Lessee) promptly effect a
voting trust, voting powers agreement or other similar arrangement or take any
other action as may be necessary to prevent any deregistration and to maintain
the United States registration of the Aircraft. It is agreed that: (A) the Owner
Participant shall be liable to pay on request to each of the other parties
hereto and to each holder of a Secured Certificate for any damages suffered by
any such other party or holder as the result of the representation and warranty
of the Owner Participant in the first sentence of this Section 8(c) proving to
be untrue as of the Delivery Date; and (B) the Owner Participant shall be liable
to pay on request to Lessee, any Sublessee and the Loan Participants for any
damages which may be incurred by Lessee, any Sublessee or the Loan Participants
as a result of the Owner Participant's failure to comply with its obligations
pursuant to the second sentence of this Section 8(c). Each party hereto agrees,
upon the request and at the sole expense of the Owner Participant, to cooperate
with the Owner Participant in complying with its obligations under the
provisions of the second sentence of this Section 8(c). First Security Bank,
National Association, in its individual capacity, agrees that if at any time an
officer or responsible employee of the Corporate Trust Department of First
Security Bank, National Association, shall obtain Actual Knowledge that First
Security Bank, National Association, has ceased to be a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
Lessee or the Owner Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the
Owner Participant or First Security Bank, National Association, in its
individual capacity, does not comply with the requirements of this Section 8(c),
the Owner Trustee, the Indenture Trustee and the Participants hereby agree that
an Event of Default (or an event which would constitute an Event of Default but
for lapse of time or the giving of notice or both) shall not have occurred and
be continuing under the Lease due to non-compliance by Lessee with the
registration requirements in the Lease.
(d) First Security Bank, National Association, in its individual
capacity, represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Documents to which it is a
party are kept is Salt Lake City, Utah. First Security Bank, National
Association, in its individual capacity, agrees that it will not change the
location of such office to a location outside of Salt Lake City, Utah, without
prior written notice to all parties. First Security Bank, National Association,
in its individual capacity, further represents and warrants that (A) on the
Delivery Date the Owner Trustee shall have received whatever title to the
Aircraft as was conveyed to it by Lessee, and (B) the Trust Agreement, and,
assuming due authorization, execution and delivery of the Trust Agreement by the
Owner Participant, the other Owner Trustee Documents, when executed and
delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank,
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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 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
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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 Kentucky and has the corporate power and authority to
carry on its present business and operations and to own or lease its
properties, and has the corporate power and authority to enter into and to
perform its obligations under the Owner Participant Documents; this
Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by
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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;
(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; and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
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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 G of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent 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:
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(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. ss.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. ss.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
warranties to the same extent as if such representations and
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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. ss. 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 May 31,
1998). In the event that the transactions contemplated hereunder close on or
prior to March 31, 1998, the Owner Participant agrees to transfer to the Owner
Trustee promptly but in any event no later than June 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 2.0900% 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 2.0900% 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 March 31, 1998 any
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of 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;
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(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 ss.ss. 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.
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(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
J, 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
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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.
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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/ Rolf S. Andresen
-------------------------------------
Name: Rolf S. Andresen
Title: Vice President and Controller
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Vice President and Controller
Telecopy No.: (612) 726-0665
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: s/ Rolf S. Andresen
-------------------------------------
Name: Rolf S. Andresen
Title: Vice President and Controller
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Vice President and Controller
Telecopy No.: (612) 726-0665
-Signature Page-
<PAGE>
NATIONAL CITY LEASING CORPORATION,
Owner Participant
By: s/ Donald J. Zeillmann
-------------------------------------
Name: Donald J. Zeillmann
Title: Vice President
Address: 101 South 5th Street
Louisville, Kentucky 40202
Attn: Vice President Operations
Telecopy No.: (502) 581-6488
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: s/ Donald E. Smith
-------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee,
Owner Trustee
By: s/ Greg A. Hawley
-------------------------------------
Name: Greg A. Hawley
Title: Vice President
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attn: Corporate Trust Department
Telecopy No.: (801) 246-5053
-Signature Page-
<PAGE>
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee,
Pass Through Trustee
By: s/ Donald E. Smith
-------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity,
except as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By: s/ Donald E. Smith
-------------------------------------
Name: Donald E. Smith
Title: Vice President
Address: c/o State Street Bank and
Trust Company
Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
SCHEDULE I
Names and Addresses
Lessee: Northwest Airlines, Inc.
U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Vice President and Controller
Telecopy No.: (612) 726-0665
Wire Transfer
First Bank, N.A., Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant: National City Leasing Corporation
101 South Fifth Street
Louisville, KY 40202
Attn: Vice President Operations
Telecopy No.: (502) 581-6488
Payments made to the Owner Participant as provided in
Section 3.06 of the Trust Indenture shall be made to:
National City Bank, Kentucky
ABA No. 083 000 056
Credit: National City Leasing Corporation
Acct. No. 35406657 2
<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 J
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 J
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
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------ --------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due
January 2, 2016 $10,574,426.83
1997-1B 7.248% Series B Secured Certificates due
January 2, 2011 $3,474,730.05
1997-1C 7.039% Series C Secured Certificates due
July 2, 2006 $1,983,999.99
Debt Portion $16,033,156.87
Owner Participant Equity Investment
- ----------------- -----------------
National City Leasing Corporation $4,966,843.13
<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 J]
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 J]
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
<PAGE>
Engines or engines from time to time installed thereon), or (B) so long as title
thereto shall remain vested in Lessor in accordance with the terms of Section 8
of the Lease after removal from such aircraft (except Engines or engines from
time to time installed thereon); provided, however, that at such time as an
aircraft (except Engines or engines from time to time installed thereon) shall
be deemed part of the property leased under the Lease in 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 J], dated as of March 18, 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 J], 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 J], dated as of March 18, 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 J], dated as of
March 18, 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 J], dated as of March 18, 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 J], dated as of March 18, 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, March 11, 2017, and each succeeding
September 11 and March 11, 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 Owner Participant Guaranty, the Purchase Agreement Assignment and
the Consent and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 J], 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 J], 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 J], 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
ANNEX A-13
<PAGE>
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 J], 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 Participant Guarantor" means the entity executing the Owner
Participant Guaranty as guarantor thereunder.
"Owner Participant Guaranty" means that certain Owner Participant
Guaranty [NW 1997 J], dated as of March 18, 1998, made by the Owner Participant
Guarantor in favor of Lessee, Lessor, the Purchasers, the Subordination Agent
and the Indenture Trustee, as such Owner Participant Guaranty may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.
"Owner Trustee" means the entity executing the 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.
ANNEX A-14
<PAGE>
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 J], dated as of March 18, 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.
"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.
ANNEX A-15
<PAGE>
"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.
"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 J], dated as of March 18, 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.
ANNEX A-16
<PAGE>
"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.
"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 (N510XJ), dated as
of March 18, 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
ANNEX A-17
<PAGE>
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.
"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
ANNEX A-18
<PAGE>
connection with the transactions contemplated by the Intercreditor Agreement. As
used herein, "Lessor's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of Secured
Certificates and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in the
Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee,
in its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause (i),
and (iii) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 J], dated as of March 18, 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
ANNEX A-19
<PAGE>
& 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 and the
Owner Participant Guarantor, 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 J], dated as of March 18, 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.
ANNEX A-20
<PAGE>
"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.
"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 J]
Section 7(b) - General Tax Indemnity
[Intentionally Omitted.]
EXHIBIT R-1
<PAGE>
EXHIBIT S
TO PARTICIPATION
AGREEMENT
[NW 1997 J]
Section 7(c) - General Indemnity
[Intentionally Omitted.]
EXHIBIT S-1
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Exhibit 99(d)
SCHEDULE I
The documents listed below under the heading "[NW 1997 H] N508XJ"
(hereinafter referred to as the "H Documents") and the documents listed below
under the heading "[NW 1997 I] N509XJ" (hereinafter referred to the "I
Documents") have been provided in this filing.
The corresponding documents listed below under the heading "[NW 1997 G]
N507XJ" (hereinafter referred to as the "G Documents") are substantially
identical in all material respects to the I Documents with the following
exceptions: (i) the date of the G Documents is "as of December 23, 1997" and
the date of the I Documents is "as of February 3, 1998"; (ii) conforming
changes have been made to reflect the appropriate deal designation (i.e.,
1997 G, 1997 H, 1997 I, etc.) and the United States registration number of
the aircraft (i.e., N507XJ, N508XJ, N509XJ etc.), (iii) the amounts set forth
on Schedule II (Commitments) to each Participation Agreement differ, and (iv)
the tables of Secured Certificates Amortization attached to Schedule I of
each Trust Indenture and Security Agreement differ.
[NW 1997 G] N507XJ
Amended and Restated Participation Agreement [NW 1997 G], dated as of
December 23, 1997, 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.
Lease Agreement [NW 1997 G], dated as of December 23, 1997, between First
Security Bank, National Association, not in its individual capacity, except
as expressly provided therein, but solely as Owner Trustee, and Northwest
Airlines, Inc., Lessee.
Amended and Restated Guarantee [NW 1997 G], dated as of December 23, 1997,
from Northwest Airlines Corporation.
Trust Indenture and Security Agreement [NW 1997 G], dated as of September 25,
1997, between First Security Bank, National Association, not in its
individual capacity, except as expressly stated therein, but solely as Owner
Trustee, and State Street Bank and Trust Company, not in its individual
capacity, except as expressly stated therein, but solely as Indenture Trustee.
First Amendment to Trust Indenture and Security Agreement [NW 1997 G], dated
as of December 23, 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.
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Amended and Restated Trust Agreement [NW 1997 G], dated as of December 23,
1997, between the Owner Participant, Owner Participant, and First Security
Bank, National Association, Owner Trustee.
Purchase Agreement Assignment [NW 1997 G], dated as of December 23, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 G], dated as of December 23, 1997, from Aero
International (Regional), acting as agent for and on behalf of British
Aerospace (Operations) Limited.
[NW 1997 H] N508XJ
Amended and Restated Participation Agreement [NW 1997 H], dated as of
December 29, 1997, 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.
Lease Agreement [NW 1997 H], dated as of December 29, 1997, between First
Security Bank, National Association, not in its individual capacity, except
as expressly provided therein, but solely as Owner Trustee, and Northwest
Airlines, Inc., Lessee.
Amended and Restated Guarantee [NW 1997 H], dated as of December 29, 1997,
from Northwest Airlines Corporation.
Trust Indenture and Security Agreement [NW 1997 H], dated as of September 25,
1997, between First Security Bank, National Association, not in its
individual capacity, except as expressly stated therein, but solely as Owner
Trustee, and State Street Bank and Trust Company, not in its individual
capacity, except as expressly stated therein, but solely as Indenture Trustee.
First Amendment to Trust Indenture and Security Agreement [NW 1997 H], dated
as of December 29, 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.
Amended and Restated Trust Agreement [NW 1997 H], dated as of December 29,
1997, between the Owner Participant, Owner Participant, and First Security
Bank, National Association, Owner Trustee.
Purchase Agreement Assignment [NW 1997 H], dated as of December 29, 1997,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
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Consent and Agreement [NW 1997 H], dated as of December 29, 1997, from Aero
International (Regional), acting as agent for and on behalf of British
Aerospace (Operations) Limited.
[NW 1997 I] N509XJ
Amended and Restated Participation Agreement [NW 1997 I], dated as of
February 3, 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.
Lease Agreement [NW 1997 I], dated as of February 3, 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.
Amended and Restated Guarantee [NW 1997 I], dated as of February 3, 1998,
from Northwest Airlines Corporation.
Trust Indenture and Security Agreement [NW 1997 I], dated as of September 25,
1997, between First Security Bank, National Association, not in its
individual capacity, except as expressly stated therein, but solely as Owner
Trustee, and State Street Bank and Trust Company, not in its individual
capacity, except as expressly stated therein, but solely as Indenture Trustee.
First Amendment to Trust Indenture and Security Agreement [NW 1997 I], dated
as of February 3, 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.
Amended and Restated Trust Agreement [NW 1997 I], dated as of February 3,
1998, between the Owner Participant, Owner Participant, and First Security
Bank, National Association, Owner Trustee.
Purchase Agreement Assignment [NW 1997 I], dated as of February 3, 1998,
between Northwest Airlines, Inc., Assignor, and First Security Bank, National
Association, Assignee.
Consent and Agreement [NW 1997 I], dated as of February 3, 1998, from Aero
International (Regional), acting as agent for and on behalf of British
Aerospace (Operations) Limited.
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