SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Date of earliest event reported February 16, 1999
NORTHWEST AIRLINES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State of Incorporation)
95-4205287
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
0-23642
- --------------------------------------------------------------------------------
(Commission File Number)
2700 Lone Oak Parkway, Eagan, Minnesota 55121
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(612) 726-2111
- --------------------------------------------------------------------------------
(Registrant's telephone number)
<PAGE>
Item 7 Exhibits.
The documents listed below are filed as Exhibits with reference to the
Registration Statement on Form S-3 (Registration No. 333-41579) (the
"Registration Statement") of Northwest Airlines Corporation and Northwest
Airlines, Inc. The Registration Statement, the Preliminary Prospectus
Supplement, dated February 1, 1999 (filed with the Securities Exchange
Commission pursant to Rule 424(b)(2) on February 3, 1999), filed and the
Prospectus Supplement, dated February 4, 1999 (filed with the Securities
Exchange Commission pursuant to Rule 424(b)(2) on February 8, 1999), to the
Prospectus, dated February 27, 1998, relate to the offering of Northwest
Airlines, Inc.'s Pass Through Certificates, Series 1999-1.
1(a) Underwriting Agreement, dated as of February 4, 1999, by and among
Northwest Airlines Corporation, Northwest Airlines, Inc., Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston Corporation,
ABN AMRO Incorporated, Chase Securities Inc. and Salomon Smith
Barney Inc.
4(a)(1) Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Holdings Corporation (formerly known as Northwest
Airlines Corporation), Northwest Airlines, Inc. and State Street
Bank and Trust Company, as Trustee
4(a)(2) Supplemental Agreement, dated as of November 20, 1998, among
Northwest Airlines Holdings Corporation (formerly known as Northwest
Airlines Corporation), Northwest Airlines Corporation (formerly
known as Newbridge Parent Corporation), Northwest Airlines, Inc. and
State Street Bank and Trust Company, as Trustee
4(b)(1) Pass Through Trust Supplement No. 1999-1A, dated as of February 16,
1999, among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation), Northwest Airlines, Inc. and State Street Bank and
Trust Company, as Trustee
4(b)(2) Pass Through Trust Supplement No. 1999-1B, dated as of February 16,
1999, among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation), Northwest Airlines, Inc. and State Street Bank and
Trust Company, as Trustee
4(b)(3) Pass Through Trust Supplement No. 1999-1C, dated as of February 16,
1999, among Northwest Airlines Corporation, as Guarantor, Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation),
<PAGE>
Northwest Airlines, Inc. and State Street Bank and Trust Company, as
Trustee
4(c)(1) Irrevocable Revolving Credit Agreement (1999-1A), dated as of
February 16, 1999, between State Street Bank and Trust Company, as
Borrower, and Citibank N.A., as Liquidity Provider
4(c)(2) Irrevocable Revolving Credit Agreement (1999-1B), dated as of
February 16, 1999, between State Street Bank and Trust Company, as
Borrower, and Citibank N.A., as Liquidity Provider
4(c)(3) Irrevocable Revolving Credit Agreement (1999-1C), dated as of
February 16, 1999, between State Street Bank and Trust Company, as
Borrower, and Citibank N.A., as Liquidity Provider
4(d) Intercreditor Agreement, dated as of February 16, 1999, among State
Street Bank and Trust Company, as Trustee, Citibank, N.A., as
Liquidity Provider, and State Street Bank and Trust Company, as
Subordination Agent and Trustee
4(e)(1) Deposit Agreement (Class A), dated as of February 16, 1999, between
First Security Bank, National Association, as Escrow Agent, and ABN
AMRO Bank N.V., Chicago Branch, as Depositary
4(e)(2) Deposit Agreement (Class B), dated as of February 16, 1999, between
First Security National Bank, National Association, as Escrow Agent,
and ABN AMRO Bank N.V., Chicago Branch, as Depositary
4(e)(3) Deposit Agreement (Class C), dated as of February 16, 1999, between
First Security National Bank, National Association, as Escrow Agent,
and ABN AMRO Bank N.V., Chicago Branch as Depositary
4(f)(1) Escrow and Paying Agent Agreement (Class A), dated as of February
16, 1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc., as Underwriters, and State Street Bank
and Trust Company, as Pass Through Trustee and Paying Agent
4(f)(2) Escrow and Paying Agent Agreement (Class B), dated as of February
16, 1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc., as Underwriters, and State Street Bank
and Trust Company, as Pass Through Trustee and Paying Agent
<PAGE>
4(f)(3) Escrow and Paying Agent Agreement (Class C), dated as of February
16, 1999, among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc., as Underwriters, and State Street Bank
and Trust Company, as Pass Through Trustee and Paying Agent
4(g) Note Purchase Agreement, dated as of February 16, 1999, among
Northwest Airlines, Inc., State Street Bank and Trust Company, as
Pass Through Trustee, Paying Agent and Subordination Agent, and
First Security Bank, National Association, as Escrow Agent
99(a) Participation Agreement [NW 1999_], dated as of [______], among
Northwest Airlines, Inc., as Lessee, Northwest Airlines Corporation,
as Guarantor, the Owner Participant named therein, as Owner
Participant, State Street Bank and Trust Company, in its individual
capacity and as Pass Though Trustee and Indenture Trustee, First
Security Bank, National Association, as Owner Trustee, and State
Street Bank and Trust Company, as Subordination Agent
99(b) Lease Agreement [NW 1999_], dated as of [______], between First
Security Bank, National Association, as Owner Trustee and Northwest
Airlines, Inc., as Lessee
99(c) Trust Indenture and Security Agreement [NW 1999_], dated as of
[______], between First Security Bank, National Association, as
Owner Trustee, and State Street Bank and Trust Company, as Indenture
Trustee
99(d) Purchase Agreement Assignment [NW 1999_], dated as of, [______],
between Northwest Airlines, Inc., as Assigner, and First Security
Bank, National Association, as Assignee
99(e) Trust Agreement [NW 1999_], dated as of [______], between [______],
as Owner Participant, and First Security Bank, National Association,
as Owner Trustee
99(f) Guarantee [NW 1999_], dated as of [______], from Northwest Airlines
Corporation
99(g) Participation Agreement [NW 1999_], dated as of [______], among
Northwest Airlines, Inc., as Owner, Northwest Airlines Corporation,
as Guarantor, State Street Bank and Trust Company, in its individual
capacity and as Pass Through Trustee, Subordination Agent and
Indenture Trustee
99(h) Trust Indenture and Security Agreement [NW 1999_], dated as of
[______], between Northwest Airlines, Inc., as Owner, and State
Street Bank and Trust Company, as Indenture Trustee
<PAGE>
99(i) Guarantee [NW 1999_], dated as of [______], from Northwest Airlines
Corporation
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTHWEST AIRLINES CORPORATION
Dated: February 23, 1999 By: /s/ Douglas M. Steenland
----------------------------------------------
Name: Douglas M. Steenland
Senior Vice President, General
Counsel and Secretary
================================================================================
NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
Pass Through Certificates
Series 1999-1
UNDERWRITING AGREEMENT
Dated: February 4, 1999
================================================================================
<PAGE>
NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
UNDERWRITING AGREEMENT
February 4, 1999
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
Northwest Airlines, Inc., a Minnesota corporation (the "Company"),
proposes that State Street Bank and Trust Company, as pass through trustee (the
"Trustee") under the Class A Trust, the Class B Trust and the Class C Trust
(each as defined below), issue and sell to the underwriters named in Schedule II
hereto its pass through certificates in the aggregate principal amounts and with
the interest rates and final distribution dates set forth on Schedule I hereto
(the "Offered Certificates") on the terms and conditions stated herein. The
aggregate principal amount of Offered Certificates due on each such final
distribution date is referred to as a "Pass Through Certificate Designation."
The Offered Certificates will be issued pursuant to the Pass Through
Trust Agreement, dated June 3, 1996, among Northwest Airlines Corporation, a
Delaware corporation and the ultimate parent company of the Company (the
"Guarantor"), the Company and the Trustee, as amended by the Supplemental
Agreement, dated November 20, 1998, among the Guarantor, Northwest Airlines
Holdings Corporation, a Delaware corporation and the indirect parent company of
the Company ("Holdings"), the Company, and the Trustee (together, the "Basic
Agreement"), as supplemented with respect to each series of Offered Certificates
by a separate Pass Through Trust Supplement to be dated as of the Closing Date
(as defined below)
<PAGE>
2
(individually, a "Trust Supplement"), among the Guarantor, Holdings, the Company
and the Trustee (the Basic Agreement as supplemented by each such Trust
Supplement being referred to herein individually as a "Pass Through Agreement").
The Trust Supplements are related to the creation and administration of
Northwest Airlines Pass Through Trust, Series 1999-1A (the "Class A Trust"),
Northwest Airlines Pass Through Trust, Series 1999-1B (the "Class B Trust") and
Northwest Airlines Pass Through Trust, Series 1999-1C (the "Class C Trust" and,
together with the Class A Trust and the Class B Trust, the "Trusts").
As used herein, unless the context otherwise requires, the term
"Underwriters" shall mean the firms named as Underwriters in Schedule II, and
the term "you" shall mean the Underwriter or Underwriters, if no underwriting
syndicate is purchasing the Offered Certificates, or the representative or
representatives of the Underwriters, if an underwriting syndicate is purchasing
the Offered Certificates, as indicated in Schedule II.
The cash proceeds of the offering of Offered Certificates by each
Trust will be paid to First Security Bank, National Association, as escrow agent
(the "Escrow Agent"), under an Escrow and Paying Agent Agreement among the
Escrow Agent, the Underwriters, the Trustee and State Street Bank and Trust
Company, as paying agent (the "Paying Agent"), for the benefit of the holders of
Offered Certificates issued by such Trust (each, an "Escrow Agreement"). The
Escrow Agent will deposit such cash proceeds (each, a "Deposit") with ABN AMRO
Bank N.V., Chicago Branch (the "Depositary"), in accordance with a Deposit
Agreement relating to the respective Trust (the "Deposit Agreement"), and will
withdraw Deposits upon request to allow the Trustee to purchase Equipment Notes
(as defined in the Note Purchase Agreement referred to herein) from time to time
pursuant to a Note Purchase Agreement to be dated as of the Closing Date (the
"Note Purchase Agreement") among the Guarantor, the Company, State Street Bank
and Trust Company, as Trustee of each of the Trusts, as Subordination Agent (as
hereinafter defined) and as Paying Agent, and the Escrow Agent. The Escrow Agent
will issue receipts to be attached to each related Offered Certificate ("Escrow
Receipts") representing each holder's fractional undivided interest in amounts
deposited with the Escrow Agent and will pay to such holders through the related
Paying Agent interest accrued on the Deposits and received by such Paying Agent
pursuant to the related Deposit Agreement at a rate per annum equal to the
interest rate applicable to the corresponding Offered Certificates.
Certain amounts of interest payable on the Offered Certificates will
be entitled to the benefits of separate liquidity facilities. Citibank, N.A.
(the "Liquidity Provider") will enter into a separate revolving credit agreement
with respect to each Trust (each, a "Liquidity Facility") to be dated as of the
Closing Date for the benefit of the holders of the Offered Certificates. The
Liquidity Provider and the holders of the Offered Certificates will be entitled
to the benefits of an Intercreditor Agreement to be dated as of the Closing Date
(the "Intercreditor Agreement") among the Trustee, State Street Bank and Trust
Company, as subordination agent and trustee thereunder (the "Subordination
Agent"), and the Liquidity Provider.
<PAGE>
3
The Guarantor and the Company have filed with the Securities and
Exchange Commission (the "Commission") a shelf registration statement on Form
S-3 (File No. 333-41579) relating to certain classes of securities (such
registration statement, including the exhibits thereto and the documents filed
by the Guarantor with the Commission pursuant to the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") that are incorporated by reference therein,
as amended at the date hereof, being herein referred to as the "Registration
Statement") and the offering thereof from time to time in accordance with Rule
415 of the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Securities Act"). The Registration
Statement has been declared effective by the Commission. A prospectus supplement
reflecting the terms of the Offered Certificates, the terms of the offering
thereof and the other matters set forth therein, as further specified in Section
5(c) hereof, will be prepared and filed together with the base prospectus
referred to below pursuant to Rule 424 under the Securities Act (such prospectus
supplement, in the form first filed on or after the date hereof pursuant to Rule
424, being herein referred to as the "Prospectus Supplement" and any prospectus
supplement relating to the Offered Certificates filed prior to the filing of the
Prospectus Supplement being herein referred to as a "Preliminary Prospectus
Supplement"). The base prospectus, dated February 27, 1998, included in the
Registration Statement relating to offerings of pass through certificates
generally, as supplemented by the Prospectus Supplement, and including the
documents incorporated by reference therein, is herein called the "Prospectus",
except that, if such base prospectus is amended or supplemented on or prior to
the date on which the Prospectus Supplement is first filed pursuant to Rule 424,
the term "Prospectus" shall refer to such base prospectus as so amended or
supplemented and as supplemented by the Prospectus Supplement, in either case
including the documents incorporated by reference therein. Any reference herein
to the terms "amendment" or "supplement" with respect to the Registration
Statement, the Prospectus, any Preliminary Prospectus Supplement or any
preliminary prospectus shall be deemed to refer to and include any documents
filed with the Commission under the Exchange Act after the date hereof, the date
the Prospectus is filed with the Commission, or the date of such Preliminary
Prospectus Supplement or preliminary prospectus, as the case may be, and
incorporated therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act.
Capitalized terms not otherwise defined in this Agreement shall have
the meanings specified therefor in the Pass Through Agreements, the Note
Purchase Agreement or the Intercreditor Agreement referred to in the Pass
Through Agreements; provided that, as used in this Agreement, the term
"Operative Documents" shall mean the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Liquidity Facilities, the Pass Through
Agreements, the Note Purchase Agreement, the Participation Agreements, the
Indentures, the Leases and the Guarantees.
Section 1. Representations and Warranties. The Guarantor and the
Company jointly and severally represent and warrant to, and agree with each
Underwriter that:
<PAGE>
4
(a) The Guarantor and the Company meet the requirements for use of
Form S-3 under the Securities Act; the Registration Statement has become
effective; on the original effective date of the Registration Statement,
on the effective date of the most recent post-effective amendment thereto,
if any, and on the date of the filing by the Guarantor of any annual
report on Form 10-K after the original effective date of the Registration
Statement, the Registration Statement, and any amendments and supplements
thereto complied in all material respects with the requirements of the
Securities Act and the Registration Statement did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; on the date hereof and on the Closing Date (as defined below),
neither the Prospectus nor any amendments thereof and supplements thereto,
includes or will include an untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions based upon
information relating to any Underwriter furnished in writing to the
Guarantor or the Company by or on behalf of any Underwriter expressly for
use in the Prospectus or to statements or omissions in that part of the
Registration Statement which shall constitute the Statement of Eligibility
of the Trustee under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), on Form T-1.
(b) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were or hereafter are filed with the Commission, complied and will comply
in all material respects with the requirements of the Exchange Act.
(c) Ernst & Young LLP, who have reported upon the audited
consolidated financial statements and the financial statement schedules,
if any, included or incorporated by reference in the Registration
Statement, are independent public accountants within the meaning of the
Securities Act.
(d) This Agreement has been duly authorized, executed and delivered
by each of the Company and the Guarantor.
(e) The Company does not have any "significant subsidiaries" as
defined in Regulation S-X, and the Guarantor does not have any significant
subsidiaries (other than the Company).
(f) The consolidated financial statements included or incorporated
by reference in the Registration Statement present fairly the consolidated
financial position of the Guarantor and its consolidated subsidiaries as
of the dates indicated and the consolidated results of operations and cash
flows or changes in financial position of the
<PAGE>
5
Guarantor and its consolidated subsidiaries for the periods specified.
Except as stated therein, such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved. The financial statement
schedules, if any, included or incorporated by reference in the
Registration Statement present fairly the information required to be
stated therein. The summary consolidated financial data included in the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included or incorporated by reference in the
Registration Statement.
(g) Each of the Company and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Minnesota and Delaware, respectively, with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectus and to perform its
obligations under this Agreement; and each of the Guarantor and the
Company is duly qualified to transact business as a foreign corporation
and is in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the failure
to so qualify or be in good standing would not have a material adverse
effect on the condition (financial or other), earnings, business or
prospects of the Guarantor and its consolidated subsidiaries, considered
as one enterprise (a "Material Adverse Effect").
(h) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code) and is an air
carrier operating under a certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code,
for aircraft capable of carrying 10 or more individuals or 6,000 pounds or
more of cargo. There is in force with respect to the Company an air
carrier operating certificate issued pursuant to Part 121 of the
regulations under the sections of Title 49, United States Code, relating
to aviation (the "Federal Aviation Act"). All of the outstanding shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by the Guarantor,
indirectly through Holdings and NWA Inc., each a Delaware corporation,
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind.
(i) The Operative Documents to which the Guarantor, Holdings and/or
the Company will be a party will be duly executed and delivered by the
Guarantor, Holdings and/or the Company, as the case may be on or prior to
the Closing Date or the applicable Delivery Date (as defined in the
Participation Agreements), as the case may be.
(j) The Operative Documents to which the Guarantor, Holdings and/or
the Company is, or is to be, a party are or will be substantially in the
form heretofore supplied
<PAGE>
6
to you (in the case of the Indentures, the Leases and the Participation
Agreements relating to the Leased Aircraft, except for such modifications
permitted by the Note Purchase Agreement), and, when duly executed and
delivered by the Guarantor, Holdings or the Company, as the case may be,
will constitute valid and binding obligations of the Guarantor, Holdings
or the Company, as the case may be, enforceable against the Guarantor,
Holdings and the Company, as the case may be, in accordance with their
terms, except as may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, (B) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), (C) in the case of any Lease, applicable laws which may affect
the remedies provided therein but which do not affect the validity of such
Lease or make such remedies inadequate for the potential realization of
the benefits intended to be provided thereby and (D) an implied covenant
of good faith and fair dealing. The Basic Agreement as executed is
substantially in the form filed as an exhibit to the Registration
Statement and has been duly qualified under the Trust Indenture Act. The
Offered Certificates, the Equipment Notes and the Operative Documents will
conform in all material respects to the descriptions thereof in the
Prospectus.
(k) When executed, authenticated, issued and delivered in the manner
provided for in each Pass Through Agreement and sold and paid for as
provided in this Agreement, the Offered Certificates will constitute valid
and binding obligations of the related Trustees, entitled to the benefits
of the related Pass Through Agreements and enforceable against the related
Trustees in accordance with their terms, except as may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, (B) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (C) an
implied covenant of good faith and fair dealing. When executed,
authenticated, issued and delivered in the manner provided for in the
related Escrow Agreements, the Escrow Receipts will be legally and validly
issued and will be entitled to the benefits of the related Escrow
Agreements.
(l) The Equipment Notes to be issued under each Indenture, when duly
executed and delivered by the related Owner Trustee or the Company, as the
case may be, and duly authenticated by the Indenture Trustee in accordance
with the terms of such Indenture, will be duly issued under such Indenture
and will constitute the valid and binding obligations of such Owner
Trustee or the Company, as the case may be, except as may be subject to
(A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, (B) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and (C) an
implied covenant of good faith and fair
<PAGE>
7
dealing. The holders of the Equipment Notes will be entitled to the
benefits of such Indenture.
(m) Since the respective dates as of which information is given in
the Prospectus, except as otherwise stated therein or contemplated
thereby, there has not been any material adverse change in the condition
(financial or otherwise), earnings, business or prospects of the Guarantor
and its consolidated subsidiaries, considered as one enterprise, whether
or not arising in the ordinary course of business.
(n) Neither the Company nor the Guarantor is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a Material Adverse Effect.
The execution and delivery by the Company and the Guarantor of this
Agreement and by the Company, Holdings and/or the Guarantor of the
Operative Documents to which the Company, Holdings and/or Guarantor is, or
is to be, a party, the issuance and delivery of the Offered Certificates,
the consummation by the Company, Holdings and the Guarantor of the
transactions contemplated by this Agreement, by such Operative Documents
and the Prospectus, and compliance by the Company, Holdings and the
Guarantor with the terms of this Agreement and such Operative Documents
have been duly authorized by all necessary corporate action on the part of
the Company, Holdings and the Guarantor and do not and will not result in
any violation of the charter or by-laws of the Company, Holdings or the
Guarantor, and do not and will not result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company, Holdings or the Guarantor under (A) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
other instrument to which the Company, Holdings or the Guarantor is a
party or by which either may be bound or to which any of its properties
may be subject and which is included or incorporated by reference as an
exhibit to any document incorporated by reference in the Prospectus or
included as an exhibit to the Registration Statement (other than the
Operative Documents and except for such breaches, defaults, liens, charges
or encumbrances that would not have a Material Adverse Effect) or (B) any
existing applicable law, rule, regulation, judgment, order or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or the Guarantor or any of
their respective properties (other than the securities or Blue Sky or
similar laws of the various states and of foreign jurisdictions), except
for such breaches, defaults, liens, charges or encumbrances that would not
have a Material Adverse Effect.
(o) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality or
court, domestic or foreign, is
<PAGE>
8
required for the valid authorization, issuance, sale and delivery of the
Offered Certificates and the Equipment Notes, the valid authorization,
execution, delivery and performance by the Guarantor and/or the Company of
this Agreement and the Operative Documents to which the Guarantor and/or
the Company is, or is to be, a party, or the consummation by the Guarantor
or the Company of the transactions contemplated by this Agreement and such
Operative Documents, except such as are required under the Securities Act,
the Trust Indenture Act and the securities or Blue Sky or similar laws of
the various states and of foreign jurisdictions and except for filings or
recordings with the Federal Aviation Administration (the "FAA") and under
the Uniform Commercial Code as is in effect in Utah and Minnesota, which
filings or recordings shall have been made, or duly presented for filing,
on or prior to the applicable Delivery Date (as defined in the
Participation Agreement relating to the Aircraft to be acquired or leased
on such date).
(p) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the
Company or the Guarantor, threatened against the Company or the Guarantor
that is required to be disclosed in the Prospectus or that could
reasonably be expected to have a Material Adverse Effect or that could
reasonably be expected to materially and adversely affect the consummation
of the transactions contemplated by this Agreement; the aggregate of all
pending legal or governmental proceedings that are not described in the
Prospectus to which the Company or the Guarantor is a party or which
affect any of their respective properties, including ordinary routine
litigation incidental to their business, would not reasonably be expected
to have a Material Adverse Effect.
(q) There are no contracts or documents of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described and
filed as required.
(r) The Company and the Guarantor each possess all adequate
certificates, authorizations and permits issued by appropriate
governmental agencies or bodies which are necessary to conduct, in all
material respects, the business now operated by them and have not received
any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit that, if determined
adversely to the Company or the Guarantor, would have, singly or in the
aggregate, a Material Adverse Effect.
(s) Except as disclosed in the Prospectus, no labor dispute with the
employees of the Company or the Guarantor exists or, to the knowledge of
the Company and the Guarantor, is imminent, in either case, which might
reasonably be expected to have a Material Adverse Effect.
<PAGE>
9
(t) None of the Guarantor, the Company or any Trust is an
"investment company", within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"); and after giving effect
to the offering and sale of the Offered Certificates and the application
of the proceeds thereof as described in the Prospectus, none of the Trusts
will be, nor will the escrow arrangements relating to the Trusts
contemplated by the respective Escrow Agreements result in the creation
of, an "investment company", as defined in the Investment Company Act.
(u) The Company and the Guarantor have not taken and will not take,
directly or indirectly, any action prohibited by Regulation M under the
Exchange Act, to the extent applicable, in connection with the offering of
the Offered Certificates.
(v) The information regarding year 2000 compliance and the Euro
conversion included or incorporated by reference in the Registration
Statement and the Prospectus complies in all material respects with the
requirements of the Securities Act (including Staff Legal Bulletin No. 6,
SEC Release No. 33-7558 (July 29, 1998) and SEC Release No. 33-7609
(November 9, 1998)).
Any certificate signed by a duly authorized officer of the Company
or the Guarantor and delivered to an Underwriter or to counsel for the
Underwriters in connection with the offering of Offered Certificates shall be
deemed a representation and warranty by the Company or the Guarantor, as the
case may be, to the Underwriters as to the matters covered thereby.
Section 2. Purchase and Sale. (a) Subject to the terms and
conditions set forth herein and in Schedule III, and in reliance upon the
representations and warranties herein contained, the Guarantor and the Company
agree to cause the Trustee to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Trustee, at the purchase
price specified in Schedule I, the respective amounts of Offered Certificates of
each Pass Through Certificate Designation set forth opposite the name of such
Underwriter in Schedule II. Concurrently with the issuance of the Offered
Certificates, the Escrow Agent shall issue and deliver to the Trustee the Escrow
Receipts in accordance with the terms of the Escrow Agreements, which Escrow
Receipts shall be attached to the related Offered Certificates.
(b) The Company is advised by you that the Underwriters propose to
make a public offering of the Offered Certificates as soon after this Agreement
has been entered into as in your judgment is advisable as set forth in the
Prospectus.
(c) As compensation to the Underwriters for their respective
commitments and obligations hereunder in respect of the Offered Certificates,
including their respective undertakings to distribute the Offered Certificates,
the Company will pay to the Underwriters the sum set forth in Schedule III. Such
payment will be made on the Closing Date simultaneously
<PAGE>
10
with the issuance and sale of the Offered Certificates (with the related Escrow
Receipts attached) to the Underwriters. Payment of such compensation shall be
made by wire transfer of immediately available funds.
Section 3. Delivery of and Payment for the Offered Certificates. (a)
Delivery of and payment for the Offered Certificates (with attached Escrow
Receipts) shall be made at the offices of Simpson, Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017-3954 at 10:00 A.M. on February 16,
1999 or on such other date, time and place as may be agreed upon by the Company,
the Guarantor and you (such date and time of delivery and payment for the
Offered Certificates being herein called the "Closing Date"). Delivery of the
Offered Certificates (with attached Escrow Receipts) issued by each Trust shall
be made to your account at The Depository Trust Company for the respective
accounts of the several Underwriters against payment by the Underwriters to or
upon the order of the Trustee by wire transfer of immediately available funds to
the Company's account at Norwest Bank (National Association) or as otherwise
instructed in writing by the Company. Upon delivery the Offered Certificates
shall be registered in the name of Cede & Co. or in such other names, and in
such denominations as you may request in writing at least two full business days
in advance of the Closing Date.
(b) The Company agrees to have one or more global certificates
representing the Offered Certificates available for inspection and checking by
you in New York, New York not later than one full business day prior to the
Closing Date.
Section 4. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Offered Certificates
pursuant to this Agreement are subject to the following conditions:
(a) On the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the Securities
Act and no proceedings therefor shall have been instituted or threatened
by the Commission.
(b) On the Closing Date, you shall have received an opinion of each
of Simpson Thacher & Bartlett, counsel for the Company and the Guarantor,
and Cadwalader, Wickersham & Taft, special counsel for the Company and the
Guarantor, each dated the Closing Date and in form and substance
reasonably satisfactory to you and counsel for the Underwriters,
substantially to the effect set forth in Exhibits A-1 and A-2 hereto,
respectively.
(c) On the Closing Date, you shall have received an opinion of the
General Counsel of the Company and the Guarantor, dated the Closing Date
and in form and substance reasonably satisfactory to you and counsel for
the Underwriters, substantially to the effect set forth in Exhibit B
hereto.
<PAGE>
11
(d) On the Closing Date, you shall have received an opinion of
Bingham Dana LLP, counsel for State Street Bank and Trust Company
individually and as Trustee, Subordination Agent and Paying Agent, dated
the Closing Date and in form and substance reasonably satisfactory to you
and counsel to the Underwriters, substantially to the effect as set forth
in Exhibit C hereto.
(e) On the Closing Date, you shall have received an opinion of Ray,
Quinney & Nebeker, counsel for the Escrow Agent, dated the Closing Date,
and in form and substance reasonably satisfactory to you and counsel to
the Underwriters, substantially to the effect as set forth in Exhibit D
hereto.
(f) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy, counsel for the Liquidity Provider, dated
the Closing Date and in form and substance reasonably satisfactory to you
and counsel to the Underwriters, substantially to the effect as set forth
in Exhibit E hereto.
(g) On the Closing Date, you shall have received an opinion of
Clifford Chance, Netherlands counsel for the Depositary, and an opinion of
Vedder, Price, Kaufman & Kammholz, U.S. counsel for the Depositary, each
dated the Closing Date and in form and substance reasonably satisfactory
to you and substantially to the effect set forth in Exhibits F-1 and F-2
hereto, respectively.
(h) On the Closing Date, you shall have received an opinion of
Shearman & Sterling, as counsel for the Underwriters, dated the Closing
Date, with respect to the issuance and sale of the Offered Certificates,
the Registration Statement, the Prospectus and other related matters as
the Underwriters may reasonably require.
(i) On the Closing Date, (i) (A) the Registration Statement, as it
may then be amended or supplemented, shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (B)
the Prospectus, as it may then be amended or supplemented, shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were
made, (C) the Company and the Guarantor shall have complied with all
agreements and satisfied all conditions on their respective parts to be
performed or satisfied at or prior to the Closing Date, and (D) the other
representations and warranties of the Company and the Guarantor set forth
in this Agreement and each of the Operative Documents shall be accurate in
all material respects as though expressly made at and as of the Closing
Date (except to the extent that such representations and warranties refer
to an earlier or later date, in which case they shall be accurate in all
material respects as of such dates) and (ii) subsequent to the execution
and delivery of this Agreement, there shall not have been any material
adverse change in the
<PAGE>
12
condition (financial or other), earnings, business or prospects of the
Guarantor and its consolidated subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business that, in your
judgment, is so material and adverse that it makes it impracticable or
inadvisable to proceed with the public offering or the sale of and payment
for the Offered Certificates. At the Closing Date, you shall have received
a certificate of the President or a Senior or Executive Vice President,
and other senior officers of the Company and the Guarantor approved by
you, dated as of the Closing Date, to such effect.
(j) On each of the date hereof and the Closing Date, you shall have
received a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you and counsel to the
Underwriters, from Ernst & Young LLP, the Company's independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain other financial or statistical data
and certain financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading nor
any notice given to the Company or the Guarantor or any public notice
given, in either case by a rating agency described below, of any intended
or potential downgrading or of a possible change that does not indicate
the direction of the possible change, in the rating accorded any of the
Company's or the Guarantor's securities, including Offered Certificates,
by any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(l) The Company and the Guarantor shall have furnished to you and to
counsel for the Underwriters, in form and substance satisfactory to you
and to them, such other documents, certificates and opinions as such
counsel may reasonably request in order to pass upon the matters referred
to in Section 4(h) and in order to evidence the accuracy and completeness
of any of the representations, warranties or statements, the performance
of any covenant by the Company or the Guarantor theretofore to be
performed, or the compliance with any of the conditions herein contained.
(m) On the Closing Date, each of the Operative Documents (other than
the Indentures, Leases, Participation Agreements and Guarantees) shall
have been duly executed and delivered by each of the parties thereto; the
representations and warranties of the Company and the Guarantor contained
in each of such executed Operative Documents shall be true and correct in
all material respects as of the Closing Date (except to the extent that
they relate solely to an earlier or later date, in which case they shall
be true and correct as of such earlier or later date) and the Underwriters
shall have received a
<PAGE>
13
certificate of the President or a Senior or Executive Vice President of
the Company, dated as of the Closing Date, to such effect.
(n) Each of the Appraisers shall have furnished to the Underwriters
a letter from such Appraiser, addressed to the Guarantor and the Company
and dated the Closing Date, confirming that such Appraiser and each of its
directors and officers (i) is not an affiliate of the Guarantor, the
Company or any of its affiliates, (ii) does not have any substantial
interest, direct or indirect, in the Guarantor, the Company or any of its
affiliates and (iii) is not connected with the Guarantor, the Company or
any of its affiliates as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
(o) On the Closing Date, the Offered Certificates shall be rated
"AA", in the case of the Offered Certificates of the Class A Trust, "A",
in the case of the Offered Certificates of the Class B Trust and "BBB+",
in the case of the Offered Certificates of the Class C Trust, by Standard
& Poor's Ratings Service; and "Aa3", in the case of the Offered
Certificates of the Class A Trust, "A2", in the case of the Offered
Certificates of the Class B Trust and "Baa2", in the case of the Offered
Certificates of the Class C Trust, by Moody's Investors Service, Inc.
The Guarantor and the Company agree to furnish, promptly after the
Closing Date and the applicable Delivery Date, to the Underwriters a copy of
each opinion required to be delivered under the applicable Participation
Agreement addressed to the Underwriters and of such other documents furnished in
connection with the fulfillment of the conditions precedent therein as the
Underwriters or counsel for the Underwriters may reasonably request.
If any of the conditions specified in this Section 4 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Guarantor at
any time prior to the Closing Date and such termination shall be without
liability of any party to any other party, except as provided in Section 6.
Notwithstanding any such termination, the provisions of Section 7 shall remain
in effect.
Section 5. Certain Covenants of the Company and the Guarantor. The
Company and the Guarantor covenant with each Underwriter as follows:
(a) To furnish to you, without charge, as soon as practicable on the
business day next succeeding the date of this Agreement and during the
period mentioned in paragraph (e) below, as many copies of the Prospectus,
and any supplements or amendments thereto, as you may reasonably request.
<PAGE>
14
(b) To furnish to you as many conformed copies of the Registration
Statement (as originally filed) and of all amendments thereto, whether
filed before or after such Registration Statement became effective, as
many copies of all exhibits and documents filed therewith or incorporated
by reference therein (through the end of the period mentioned in paragraph
(e) below) and one signed and as many conformed copies of all consents and
certificates of experts as you may reasonably request and, if requested by
you, to furnish to you, for each of the Underwriters, one conformed copy
of the Registration Statement (as originally filed) and of each amendment
thereto (including documents incorporated by reference into the Prospectus
but without exhibits).
(c) Promptly following the execution of this Agreement, to prepare a
Prospectus Supplement that complies with the Securities Act and that sets
forth the principal amount of the Offered Certificates and their terms not
otherwise specified in the Preliminary Prospectus Supplement or the base
prospectus included in the Registration Statement, the name of each
Underwriter participating in the offering and the principal amount of the
Offered Certificates that each severally has agreed to purchase, the name
of each Underwriter, if any, acting as a representative of the
Underwriters in connection with the offering, the price at which the
Offered Certificates are to be purchased by the Underwriters from the
Company, any initial public offering price, any selling concession and
reallowance and any delayed delivery arrangements, and such other
information as you, the Company and the Guarantor deem appropriate in
connection with the offering of the Offered Certificates. The Company and
the Guarantor will timely transmit copies of the Prospectus Supplement to
the Commission for filing pursuant to Rule 424 under the Securities Act.
(d) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish each Underwriter with a copy of each such
proposed amendment or supplement, and to file no such proposed amendment
or supplement to which you reasonably object by notice to the Company
after a reasonable period of review; provided that the foregoing shall not
prevent the Guarantor from filing reports required to be filed by it
pursuant to the Exchange Act, and provided further that the Guarantor
shall have provided you with a copy of any such report prior to its filing
with the Commission.
(e) If, during such period after the first date of the public
offering of the Offered Certificates when the Prospectus is required by
law to be delivered in connection with sales of the Offered Certificates
by an Underwriter or dealer, any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the Underwriters or
counsel for the Company and the Guarantor, to amend the Registration
Statement or amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if it is necessary, in the
reasonable opinion of either such counsel, to amend the Registration
Statement or amend or supplement the Prospectus to comply with law,
forthwith to
<PAGE>
15
prepare and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to
which the Offered Certificates may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so that
the Registration Statement or the Prospectus, as so amended or
supplemented, will comply with law and to cause such amendments or
supplements to be filed promptly with the Commission.
(f) During the period mentioned in paragraph (e) above, to notify
you immediately, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the transmittal to the Commission for
filing of any supplement to the Prospectus or any document that would as a
result thereof be incorporated by reference in the Prospectus, (iii) of
the receipt of any comments from the Commission with respect to the
Registration Statement, the Prospectus or the Prospectus Supplement, (iv)
of any request by the Commission for any amendment to the Registration
Statement or any supplement to the Prospectus or for additional
information relating thereto or to any document incorporated by reference
in the Prospectus and (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, of the
suspension of the qualification of the Offered Certificates for offering
or sale in any jurisdiction, or of the institution or threatening of any
proceeding for any of such purposes; and to use every reasonable effort to
prevent the issuance of any such stop order or of any order suspending
such qualification and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(g) To use their respective reasonable efforts, in cooperation with
the Underwriters, to qualify the Offered Certificates for offer and sale
under the securities laws of such states and other jurisdictions as you
may reasonably request and to maintain such qualifications in effect for
so long as required for the distribution of such Offered Certificates;
provided, however, that neither the Company nor the Guarantor shall be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject. The Company and the Guarantor will use their reasonable
efforts to file such statement and reports as may be required by the laws
of each jurisdiction in which the Offered Certificates have been qualified
as above provided. The Company and the Guarantor will also supply you with
such information as is necessary for the determination of legality of the
Offered Certificates for investment under the laws of such jurisdictions
as you may reasonably request.
(h) To make generally available to the Guarantor's security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an
<PAGE>
16
earnings statement of the Guarantor (in form complying with the provisions
of Rule 158 of the Securities Act), covering (i) a period of 12 months
beginning after the effective date of the Registration Statement and any
post-effective amendment thereof but not later than the first day of the
Guarantor's fiscal quarter next following such effective date and (ii) a
period of 12 months beginning after the date of this Agreement but not
later than the first day of the Guarantor's fiscal quarter next following
the date of this Agreement.
(i) For a period of two years after the Closing Date, to make
available upon request to the Underwriters, copies of all annual reports,
quarterly reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall
be furnished by the Company or the Guarantor to the holders of Offered
Certificates or to their security holders generally provided that at such
time the Guarantor is required to furnish such reports under the Exchange
Act.
(j) Between the date of this Agreement and the Closing Date, not to
offer, sell or enter into any agreement to sell, directly or indirectly,
any equipment notes, pass through certificates, equipment trust
certificates or equipment purchase certificates secured by aircraft owned
or leased by the Company or the Guarantor (or rights relating thereto)
other than the Offered Certificates or Equipment Notes relating thereto,
without your prior written consent.
(k) During the period when a prospectus relating to the Offered
Certificates is required to be delivered under Section 5(c) of the
Securities Act, to file promptly all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(l) To comply to the best of their abilities with the Securities
Act, the Exchange Act and the Trust Indenture Act so as to permit the
completion of the distribution of the Offered Certificates as contemplated
in this Agreement and in the Prospectus.
Section 6. Payment of Expenses. The Company and the Guarantor will
pay or cause to be paid all costs and expenses incident to the performance of
their obligations under this Agreement, including, without limitation, (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, any
Preliminary Prospectus Supplement and the Prospectus and any amendments or
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters, (b) the printing or processing and distribution of this Agreement,
the Offered Certificates, the Operative Documents, the Blue Sky Survey and any
Legal Investment Survey, (c) the delivery of the Offered Certificates, (d) the
fees and disbursements of counsel and accountants for the Guarantor and the
Company, (e) the qualification of the Offered Certificates under the applicable
securities
<PAGE>
17
laws in accordance with Section 5(g), including filing fees and reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the Blue Sky Survey, (f) any fees charged by rating agencies for
rating the Offered Certificates (including annual surveillance fees related to
the Offered Certificates as long as they are outstanding), (g) the fees and
expenses of the Trustee, the Subordination Agent, the Liquidity Provider, the
Depositary, the Escrow Agent and the Paying Agent, including the reasonable fees
and disbursements of their respective counsel for the Trustee, in connection
with the Offered Certificates and the Operative Documents, (h) the fees and
disbursements of counsel for the Underwriters, (i) all fees and expenses
relating to appraisals of the Aircraft and (j) all other reasonable
out-of-pocket expenses incurred by the Underwriters in connection with the
transactions contemplated by this Agreement. The Guarantor and the Company will
also cause to be paid all expenses incident to the performance of its
obligations under the Leases and the Indentures and each of the other agreements
and instruments referred to in the Indentures and the Participation Agreements.
If this Agreement is terminated by the Underwriters in accordance
with the provisions of Sections 4 or 8, the Company and the Guarantor, jointly
and severally, agree to reimburse the Underwriters for all their reasonable
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriters.
Section 7. Indemnification and Contribution. (a) The Company and the
Guarantor, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
by any Underwriter or any such controlling person in connection with defending
or investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any Preliminary Prospectus Supplement or the
Prospectus (as amended or supplemented if the Company or the Guarantor shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Guarantor or
the Company by or on behalf of any Underwriter expressly for use therein;
provided that such indemnity with respect to the Prospectus shall not inure to
the benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Offered Certificates which are the subject thereof if such person was not
sent a copy of the Prospectus at or prior to the confirmation of the sale of
such Offered Certificates to such person in any case where such delivery is
required by the Securities Act and the untrue statement or omission of a
material fact contained in such Preliminary Prospectus Supplement was corrected
in such subsequent Prospectus, unless such
<PAGE>
18
failure to deliver the Prospectus was a result of noncompliance by the Company
and the Guarantor with their delivery requirements set forth in Section 5
hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and the Guarantor, each of their directors, each
of their officers who signed the Registration Statement and each person, if any,
who controls the Company or the Guarantor within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company and the Guarantor to such Underwriter,
but only with reference to information relating to such Underwriter furnished in
writing to the Guarantor or the Company by or on behalf of any Underwriter
expressly for use in the Registration Statement, any Preliminary Prospectus
Supplement, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either of the two preceding paragraphs, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing. An
indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may, except as provided in the immediately following sentence,
assume the defense of such action, with counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to paragraph (a) above, and by the Company or the
Guarantor, in the case of parties indemnified pursuant to paragraph (b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have
<PAGE>
19
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor on the one hand and the
Underwriters on the other hand from the offering of the Offered Certificates or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Guarantor on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantor
on the one hand and the Underwriters on the other hand in connection with the
offering of the Offered Certificates shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Offered
Certificates (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Offered Certificates. The relative fault
of the Company and the Guarantor on the one hand and of the Underwriters on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Guarantor or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective principal
amounts of Offered Certificates they have purchased hereunder, and not joint.
(e) The Company, the Guarantor and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Offered
<PAGE>
20
Certificates underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations and warranties of the Company or the Guarantor
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of the Guarantor or Company, its officers or directors or any
person controlling the Guarantor or the Company and (iii) acceptance of and
payment for any of the Offered Certificates.
Section 8. Termination of Agreement. (a) (i) This Agreement shall be
subject to termination in your absolute discretion, by notice given to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (A) trading generally shall have been suspended or materially
limited on the New York Stock Exchange or the Nasdaq National Market, (B)
trading of any securities of the Guarantor or the Company shall have been
suspended on any exchange or in any over-the-counter market, (C) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities, or (D) there shall have
occurred any outbreak or escalation of hostilities involving the United States
or any calamity or crisis and (ii) in the case of any of the events specified in
clauses (i)(A) through (D), such event singly or together with any other such
event makes it, in your reasonable judgment, impracticable to market the Offered
Certificates on the terms or in the manner contemplated in the Prospectus or
inadvisable to enforce contracts for the sale of the Offered Certificates.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 6. Notwithstanding any such termination, the
provisions of Section 7 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 4, with the effect stated in such Section.
Section 9. Default. If, on the Closing Date any one or more of the
Underwriters shall fail or refuse to purchase Offered Certificates that it has
or they have agreed to purchase hereunder on such date, and the aggregate
principal amount of Offered Certificates which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
<PAGE>
21
one-tenth of the aggregate principal amount of the Offered Certificates to be
purchased on such date, the other Underwriters shall be obligated severally in
the proportions that the principal amount of Offered Certificates specified to
be purchased by them on Schedule II bears to the aggregate principal amount of
Offered Certificates specified to be purchased by all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Offered Certificates which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the principal amount of Offered Certificates that any Underwriter has agreed to
purchase pursuant to Section 2 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such principal amount of Offered Certificates
without the written consent of such Underwriter. If on the Closing Date any
Underwriter or Underwriters shall fail or refuse to purchase Offered
Certificates and the aggregate principal amount of Offered Certificates with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Offered Certificates to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Offered Certificates are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter, the Company or the Guarantor, except that the Company and the
Guarantor will continue to be liable for the payment of expenses for any
non-defaulting Underwriter to the extent set forth in Section 6. In any such
case either you or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Guarantor or the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Guarantor or the Company shall be unable to
perform its obligations under this Agreement, the Company will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder.
Section 10. Counterparts. This Agreement may be signed in two or
more counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
Section 11. Governing Law and Time. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York.
Specified times of the day refer to New York City time.
<PAGE>
22
Section 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered,
mailed, or transmitted by any standard form of telecommunication, including
telex or facsimile transmission. Notices to the Underwriters shall be directed
to Morgan Stanley & Co. Incorporated, 1221 Avenue of the Americas, New York, New
York 10036, Telephone No.: 212-762-8640, Facsimile No.: 212-762-8832, Attention:
Legal Department. Notices to the Company shall be directed to it by mail at
Northwest Airlines, Inc., 5101 Northwest Drive, St. Paul, Minnesota 55111, with
a copy to Northwest Airlines Corporation at the same address, attention of Vice
President-Finance and Treasurer, or by delivery to the Company and the Guarantor
at 2700 Lone Oak Parkway, Eagan, Minnesota 55121, attention of Vice
President-Finance and Treasurer.
Section 13. Parties. This Agreement is made solely for the benefit
of the Underwriters, the Company, the Guarantor and, to the extent expressed,
any person controlling the Company, the Guarantor or the Underwriters within the
meaning of Section 15 of the Securities Act, and their respective executors,
administrators, successors and assigns and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from the
Underwriters of the Offered Certificates.
Section 14. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
------------------------------
<PAGE>
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Guarantor and
each Underwriter in accordance with its terms.
Very truly yours,
NORTHWEST AIRLINES, INC.
By: /s/ Robert H. Nazarian
--------------------------------------
Name: Robert H. Nazarian
Title: Treasurer
NORTHWEST AIRLINES CORPORATION
By: /s/ Mickey P. Foret
--------------------------------------
Name: Mickey P. Foret
Title: Executive Vice President and
Chief Financial Officer
Accepted as of the date first above written:
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Christopher Chaput
---------------------------------
Name: Christopher Chaput
Title: Vice President
<PAGE>
Form of Opinion of
Simpson Thacher & Bartlett
(i) NWA Corp. has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of Delaware and
has full corporate power and authority to conduct its business as described in
the Registration Statement and the Prospectus.
(ii) The PT Agreement, the Supplemental Agreement and each Pass
Through Trust Agreement have been duly authorized, executed and delivered by NWA
Corp. and Holdings and constitute valid and legally binding obligations of NWA
Corp., Holdings, the Company and the Trustee enforceable against NWA Corp.,
Holdings, the Company and the Trustee in accordance with their terms.
(iii) The Basic Agreement has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(iv) Assuming the Certificates have been duly authorized, executed,
authenticated and issued by the Trustee, upon payment and delivery therefor in
accordance with the Underwriting Agreement, the Certificates will constitute
valid and legally binding obligations of the Trustee enforceable against the
Trustee in accordance with their terms and entitled to the benefits of the
Applicable Pass Through Trust Agreement.
(v) No consent, approval, authorization, order, registration or
qualification of or with any federal or New York governmental agency or body or
any Delaware government agency or body acting pursuant to the Delaware General
Corporation Law or, to our knowledge, any federal or New York court or any
Delaware court acting pursuant to the Delaware General Corporation Law is
required for the valid authorization, issuance and delivery of the Certificates,
the valid authorization, execution and delivery by the Company, Holdings or NWA
Corp. of, and the performance by the Company, Holdings, and NWA Corp. of their
respective obligations under, the Basic Agreement, the Supplemental Agreement,
the Pass Through Trust Agreements, the Note Purchase Agreement and the
Underwriting Agreement, except such as have been obtained and made under the Act
and Trust Indenture Act and such as may be required under state securities laws
of the Federal Aviation Act of 1958, as amended (the "Federal Aviation Act").
(vi) Although we are not aware of any judicial authority, none of
the Trusts is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"). None of NWA Corp., Holdings or
the Company is an "investment company" within the meaning of and subject to
regulation under the Investment Company Act.
<PAGE>
A-1-2
(vii) Each of the Escrow Agreements and the Note Purchase Agreement
is a valid and binding obligation of the Paying Agent and the Trustee that is a
party thereto enforceable against such Paying Agent and Trustee in accordance
with its terms. The Note Purchase Agreement is a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
(viii) Each of the Escrow Agreements creates a valid escrow under
New York law and a valid equitable interest in the escrowed property in favor of
the corresponding Trustee. Neither a New York court nor a United States federal
court applying New York law or the Bankruptcy Code (in the case of a holder of
an Escrow Receipt that is eligible for relief under Section 109 of the
Bankruptcy Code), if properly presented with the issue and after having properly
considered such issue, would permit any holder of an Escrow Receipt to terminate
the related Escrow Agreement, except in accordance with its terms.
(ix) So long as an Escrow Agreement has not been terminated and
whether or not any insolvency proceeding has been commenced, creditors of any
person that is a holder of an Escrow Receipt issued under the Escrow Agreement,
a receiver, liquidator, or holder of a lien against the assets of any such
person, and any trustee in bankruptcy of such person (if the person is eligible
for relief under Section 109 of the Bankruptcy Code) (collectively, the
"Creditors") may acquire valid claims or liens, as to the Deposits established
under the Deposit Agreement and as to the related Deposit Agreement and Escrow
Agreement, only against the rights of the holder of the Escrow Receipt under the
Escrow Agreement and do not have, and may not through the enforcement of such
Creditors' rights acquire, any greater right than the holder of the Escrow
Receipt with respect to the Deposits, Deposit Agreement or Escrow Agreement.
(x) No creditor of NWA Corp. or any of its subsidiaries, and no
holder of a lien against the assets of any such person, such as trustees,
receivers or liquidators (whether or not any insolvency proceeding has been
commenced), may acquire valid claims or liens as to the Deposits and the related
Deposit Agreements and Escrow Agreements.
(xi) The Intercreditor Agreement, the Liquidity Facilities and the
Note Purchase Agreement constitute valid and legally binding obligations of the
Subordination Agent, enforceable against the Subordination Agent in accordance
with its terms. The Intercreditor Agreement constitutes a valid and legally
binding obligation of each Trustee, enforceable against such Trustee in
accordance with its terms.
(xii) Except as disclosed in the Prospectus, and to our knowledge,
there are no pending or threatened actions, suits or proceedings against NWA
Corp. or any of its subsidiaries that are required to be disclosed in the
Registration Statement or the Prospectus that are not so disclosed.
<PAGE>
A-1-3
(xiii) Each of the Registration Statement and Post-Effective
Amendment has become effective under the Act, the Prospectus has been filed in
accordance with Rule 424(b) of the rules and regulations of the Commission under
the Act and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement or the Post-Effective Amendment has been issued and no
proceedings for that purpose have been instituted or threatened by the
Commission.
(xiv) The statements made in the Registration Statement and the
Prospectus under the captions "Description of the Certificates", "Description of
the Deposit Agreements", "Description of the Escrow Agreements", "Description of
the Liquidity Facilities", "Description of the Intercreditor Agreement" and
"Description of the Equipment Notes" (other than the statements made under the
sub-caption "The Leases" about which we express no opinion), insofar as they
purport to constitute summaries of certain terms of documents referred to
therein, constitute accurate summaries of the terms of such documents in all
material respects.
(xv) The statements made in the Registration Statement and the
Prospectus under the caption "ERISA Considerations", insofar as such statements
purport to summarize certain legal matters referred to therein, constitute
accurate summaries thereof in all material respects.
(xvi) The Underwriting Agreement has been duly authorized, executed
and delivered by NWA Corp.
(xvii) Each of the Escrow Agreements, the Deposit Agreements and the
Note Purchase Agreement is a valid and binding obligation of the Escrow Agent
enforceable against the Escrow Agent in accordance with its terms.
(xviii) Assuming the Escrow Receipts applicable to an Escrow
Agreement have been duly authorized, executed and issued by the Escrow Agent,
upon delivery to the Depositary on behalf of the Escrow Agent of the initial
escrow amount specified in such Escrow Agreement, such Escrow Receipts will be
entitled to the benefits of such Escrow Agreement.
Such counsel may state that its opinion as set forth in paragraphs
(ii), (iv), (vii), (xi), (xvii) and (xviii) are subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing. In addition such counsel shall also state that
they have not independently verified the accuracy, completeness or fairness of
the statements made or included in the Registration Statement, the Prospectus or
(i) the Annual Report on Form 10-K of the Guarantor for the fiscal year ended
December 31, 1997 and (ii) the Quarterly Reports on Form 10-Q of the Guarantor
for the fiscal quarters ended March 31, 1998, June 30, 1998 and September 30,
1998 and the Current Reports on Form 8-K of the Guarantor, dated December 30,
<PAGE>
A-1-4
1997, January 25, 1998, February 19, 1998, March 2, 1998, April 15, 1998, June
25, 1998, August 28, 1998 and January 22, 1999 (collectively, the "Exchange Act
Documents") and take no responsibility therefor, except as and to the extent set
forth in paragraphs (viii) and (ix) above, and in the course of the preparation
by the Company and the Guarantor of the Registration Statement and the
Prospectus (excluding the Exchange Act Documents), such counsel participated in
conferences with certain officers and employees of the Company and the
Guarantor, with representatives of the independent public accountants for the
Company and the Guarantor and with counsel to the Company and the Guarantor.
Such counsel may state that they did not prepare the Exchange Act Documents
(other than the Form 8-K of the Guarantor dated January 25, 1998), however, such
counsel discussed the Exchange Act Documents with the Company and the Guarantor
and with counsel to the Company and the Guarantor prior to their filing with the
Commission, and, based upon such counsel's examination of the Registration
Statement, the Prospectus and the Exchange Act Documents, such counsel's
investigations made in connection with the preparation of Registration Statement
and the Prospectus (excluding the Exchange Act Documents) and such counsel's
participation in the conferences referred to above, (i) such counsel is of the
opinion that the Registration Statement at the time such Registration Statement
became effective and the Prospectus (excluding the Exchange Act Documents), as
of February 4, 1999, complied as to form in all material respects with the
requirements of the Securities Act, the Trust Indenture Act and the applicable
rules and regulations of the Commission thereunder and that the Exchange Act
Documents complied as to form when filed in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of the
Commission thereunder, except that in each case such counsel may state that it
expresses no opinion with respect to the financial statements or other financial
data contained or incorporated by reference in the Registration Statement, the
Prospectus or the Exchange Act Documents, and (ii) such counsel has no reason to
believe that the Registration Statement, at the time such Registration Statement
became effective (including the Exchange Act Documents on file with the
Commission on such effective date) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading or that the
Prospectus (including the Exchange Act Documents) as of February 4, 1999, or as
of the Closing Date contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that in each case such counsel may state that it expresses no belief with
respect to the financial statements and other financial data contained or
incorporated by reference in the Registration Statement, the Prospectus or the
Exchange Act Documents.
Insofar as the opinions expressed by such counsel relate to or are
dependent upon matters governed by the laws of the State of Minnesota, such
counsel may state that it has relied upon the opinion of the Office of the
General Counsel of the Company, delivered to you concurrently with such
counsel's opinion.
<PAGE>
A-2-1
EXHIBIT A-2
Form of Opinion of
Cadwalader, Wickersham & Taft
(i) The statements set forth under "Description of Equipment Notes
- -- The Leases and Certain Provisions of the Owned Aircraft Indentures" in the
Prospectus Supplement, insofar as they purport to constitute summaries of
certain terms of the Form Aircraft Financing Documents referred to in such
caption, constitute accurate summaries of such terms of the Form Aircraft
Financing Documents in all material respects.
(ii) The statements set forth under "Description of the Equipment
Notes -- Remedies" in the Prospectus Supplement, insofar as such statements
purport to summarize provisions of Section 1110 of the Bankruptcy Code, provide
a fair summary of such provisions.
(iii) The statements made in the Prospectus Supplement under the
caption "Certain U.S. Federal Income Tax Consequences", insofar as such
statements purport to summarize certain legal matters referred to therein,
constitute accurate summaries thereof in all material respects.
(iv) The Trust created by each Applicable Pass Through Trust
Agreement will not be classified as an association or a publicly traded
partnership taxable as a corporation for federal income tax purposes and will
not be subject to federal income tax.
<PAGE>
EXHIBIT B
Form of Opinion of the General Counsel
of the Guarantor and the Company
(i) The Company has been duly incorporated, is validly existing and
in good standing under the laws of the State of Minnesota with corporate power
and corporate authority under such laws to own, lease and operate its properties
and conduct its business as described in the Prospectus and to perform its
obligations under the Underwriting Agreement, the Pass Through Agreements and
the Operative Documents to which the Company is, or is to be, a party.
(ii) The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it owns
or leases property of a nature, or transacts business of a type, that would make
such qualification necessary, except where the failure to so qualify or be in
good standing would not have a Material Adverse Effect.
(iii) The Guarantor is duly qualified to transact business as a
foreign corporation and is in good standing in the State of Minnesota.
(iv) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code) and is an air
carrier operating under a certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo; there is in
force with respect to the Company an air carrier operating certificate issued
pursuant to Part 121 of the regulations under the Federal Aviation Act; all of
the outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and are owned by the
Guarantor, indirectly through Holdings and NWA Inc., each a Delaware
corporation, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind.
(v) To my knowledge, except as disclosed in the Exchange Act
Documents, there are no statutes or regulations, or any pending or threatened
legal or governmental proceedings, required to be described in the Prospectus
that are not described as required, nor any contracts or documents of a
character required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described, referred to or filed as required.
(vi) The execution and delivery by the Guarantor, Holdings and/or
the Company, as the case may be, of the Underwriting Agreement and the Operative
Documents to which each, as the case may be, is a party, the issuance and sale
of the Offered Certificates, the issuance of the Escrow Receipts attached to the
Offered Certificates, the consummation by the Guarantor, Holdings and/or the
Company of the transactions contemplated therein and compliance by the
Guarantor, Holdings and/or the Company, as the case may be, with the terms
<PAGE>
B-2
thereof, do not and will not result in any violation of the charter or by-laws
of the Guarantor, Holdings or the Company, and do not and will not result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance (except
for Permitted Liens) upon any property or assets of the Guarantor, Holdings or
the Company under (A) any indenture, mortgage, loan agreement, note, lease or
other agreement or instrument included or incorporated by reference as an
exhibit to the Exchange Act Documents (except for such breaches, defaults,
liens, charges or encumbrances that would not have a Material Adverse Effect) or
included as an exhibit to the Registration Statement (except for such breaches,
defaults, liens, charges or encumbrances that would not have a Material Adverse
Effect), (B) any existing law, rule or regulation of the State of Minnesota or
the United States of America applicable to the Guarantor, Holdings or the
Company (other than the securities or Blue Sky laws of the State of Minnesota,
as to which laws I express no opinion), or (C) any judgment, order or decree of
any government, governmental instrumentality or court, domestic or foreign,
known to me and having jurisdiction over the Guarantor, Holdings or the Company
or any of their respective properties.
(vii) Under any provision of law or regulation applicable to the
Company, Holdings or the Guarantor of the State of Minnesota or the United
States of America, no authorization, approval, consent, order or license of or
filing with or notice to any governmental agency or body or any court is
required for the valid authorization, issuance and delivery of the Offered
Certificates, the issuance of the Escrow Receipts attached to the Offered
Certificates, the valid authorization, execution and delivery by the Guarantor,
Holdings or the Company of, and the performance by the Company, Holdings and the
Guarantor of their respective obligations under, the Underwriting Agreement and
the Operative Documents, except such as are required under the securities or
Blue Sky laws of the State of Minnesota.
(viii) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(ix) The Exchange Act Documents (except for the financial statements
and schedules and other financial data included or incorporated by reference
therein or omitted therefrom, as to which I express no opinion), as of the dates
they were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act.
In addition, counsel shall state that such counsel or lawyers on his
staff have participated in the preparation of the Registration Statement, the
Prospectus and the Exchange Act Documents and have participated in conferences
with certain officers and employees of the Company and the Guarantor, counsel
employed by the Company and the Guarantor, representatives of the independent
public accountants for the Company and the Guarantor, representatives of the
Underwriters and counsel for the Underwriters, at which conferences the contents
of the Registration Statement and Prospectus and related matters were discussed.
Such counsel shall also state that, although such counsel is not passing upon
and does not assume any
<PAGE>
B-3
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus or the Exchange Act
Documents and has not made any independent check or verification thereof, on the
basis of the participation of such counsel or lawyers on his staff in the
conferences referred to above and their examination of the Registration
Statement, the Prospectus and the Exchange Act Documents, nothing has come to
such counsel's attention that leads him to believe that the Registration
Statement, as of the effective date hereof (including the Exchange Act Documents
on file with the Commission on such effective date) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
the Prospectus (including the Exchange Act Documents) as of its date or at the
Closing Date contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that such counsel need express no opinion with
respect to the financial statements, schedules and other financial data included
or incorporated or deemed to be incorporated by reference in the Registration
Statement or Prospectus or with respect to the Statement of Qualification on
Form T-1.
<PAGE>
EXHIBIT C
Form of Opinion of
Bingham Dana LLP
(i) State Street is a Massachusetts trust company, validly formed
and authorized to operate as a state-chartered trust company under the laws of
the Commonwealth of Massachusetts and, in its individual capacity or as Pass
Through Trustee, Subordination Agent or Paying Agent, as the case may be, has
the requisite corporate and trust power and authority to execute, deliver and
perform its obligations under the Operative Documents to which it is a party
and, in its capacity as Pass Through Trustee, to issue and execute the
Certificates delivered on the date hereof.
(ii) State Street, in its individual capacity or as Pass Through
Trustee, Subordination Agent or Paying Agent, as the case may be, has duly
authorized the Operative Documents to which it is a party, and has duly executed
and delivered the Operative Documents to which it is a party, which constitute
valid and binding obligations of State Street, in its individual capacity or as
Pass Through Trustee, Subordination Agent or Paying Agent, as the case may be,
enforceable against State Street, in its individual capacity or as Pass Through
Trustee, Subordination Agent or Paying Agent, as the case may be, in accordance
with their respective terms.
(iii) The Certificates issued on the date hereof have been duly
authorized and validly executed, authenticated, issued and delivered by State
Street, in its capacity as Pass Through Trustee, pursuant to the Pass Through
Trusts, and such Certificates constitute valid and binding obligations of State
Street, in its capacity as Pass Through Trustee, enforceable against State
Street, as Pass Through Trustee, in accordance with their respective terms and
holders of such Certificates are entitled to the benefits of the Pass Through
Trusts.
(iv) The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Pass Through Trustee, Subordination
Agent or Paying Agent, as the case may be, of the Operative Documents to which
it is a party and the consummation of the transactions therein contemplated and
compliance with the terms thereof and issuance on the date hereof of the
Certificates under the Pass Through Trusts do not and will not result in the
violation of the provisions of the charter documents or by-laws of State Street
and, to the best of our knowledge, do not conflict with, or result in a breach
of any terms or provisions of, or constitute a default under, or result in the
creation or the imposition of any lien, charge or encumbrance upon any property
or assets of State Street under any indenture, mortgage or other agreement or
instrument, in each case known to us, to which State Street is a party or by
which it is bound, or violates any applicable Massachusetts or federal law, rule
or regulation governing State Street's banking or trust powers, or, to the best
of our knowledge, of any judgment, order or decree, in each case known to us,
applicable to State Street of any court, regulatory body, administrative agency,
government or governmental body having jurisdiction over State Street.
<PAGE>
C-2
(v) No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Pass Through Trustee, Subordination
Agent or Paying Agent, as the case may be, of the Operative Documents to which
it is a party or the consummation of any of the transactions by State Street, in
its individual capacity or as Pass Through Trustee, Subordination Agent or
Paying Agent, as the case may be, contemplated thereby or the issuance of the
Certificates on the date hereof under the Pass Through Trusts (except as shall
have been duly obtained, given or taken); and such authorization, execution,
delivery, performance, consummation and issuance do not conflict with or result
in a breach of any such law.
(vi) There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such state in connection with the execution and delivery by State Street, in
its individual capacity or as Pass Through Trustee, Subordination Agent or
Paying Agent, as the case may be, of the Operative Documents (except for taxes
on any fees payable to State Street in its individual capacity) or in connection
with the issuance, execution and delivery of the Certificates issued on the date
hereof by State Street, as Pass Through Trustee, pursuant to the Pass Through
Trusts (except for taxes on any fees payable to State Street in its individual
capacity), and there are no taxes, fees or other governmental charges payable by
the Subordination Agent imposed by the Commonwealth of Massachusetts or any
political subdivision of such state in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the Equipment Notes
(except for taxes on any fees payable to State Street in its individual
capacity).
(vii) The statements in the February 4, 1999 Prospectus Supplement
to the Northwest Airlines, Inc. Prospectus dated February 27, 1998 under the
caption "Certain Massachusetts Taxes" to the extent that they constitute matters
of law or legal conclusions with respect thereto, have been reviewed by us and
are correct in all material respects.
(viii) To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the Pass Through Trusts or affect
the right, power and authority of State Street, in its individual capacity or as
Pass Through Trustee, Subordination Agent or the Paying Agent, as the case may
be, to enter into or perform its obligations under the Operative Documents to
which it is a party or to issue the Certificates on the date hereof.
<PAGE>
EXHIBIT D
Form of Opinion of
Ray, Quinney & Nebeker
1. The Escrow Agent is a national banking association duly organized
and validly existing in good standing under the laws of the United States and
has the full corporate power, authority and legal right under the laws of the
United States of America pertaining to its banking, trust and fiduciary powers
to conduct its business and operations as currently conducted and to enter into,
execute and deliver the Operative Documents (as defined in the Underwriting
Agreement) to which the Escrow Agent is a party (the "Transaction Documents")
and the Escrow Receipts and perform its obligations thereunder.
2. The execution, delivery and performance by the Escrow Agent of
the Transaction Documents and the Escrow Receipts, the consummation by the
Escrow Agent of the transactions contemplated thereby and compliance by the
Escrow Agent with the terms thereof (i) have been duly authorized by all
necessary corporate action on the part of the Escrow Agent and do not require
any stockholder approval or consent of any trustee or holder of any indebtedness
or obligations of the Escrow Agent, (ii) do not and will not contravene, or
result in a breach of or constitute any default under its charter documents or
by-laws, or the provisions of any indenture, mortgage, contract or other
agreement known to us, to which it is party or by which it or any of its
properties is or may be bound or affected and (iii) does not and will not
contravene any law or governmental rule or regulation of the United States of
America or the State of Utah, or any order, judgment, injunction or decree known
to us and applicable to or binding on the Escrow Agent or by which any of its
properties is bound, or require the consent or approval of, the giving of notice
to, or the registration with, or the taking of any action in respect of, or
under, the laws of the United States of America or the laws of the State of Utah
or any subdivision or agency thereof.
3. Each of the Transaction Documents and the Escrow Receipts has
been duly executed and delivered by the Escrow Agent and assuming that each such
agreement is the legal, valid and binding obligation of each other party
thereto, is the legal, valid and binding obligation of the Escrow Agent,
enforceable against the Escrow Agent in accordance with its terms.
4. To our knowledge, there are no pending or threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf of
the Escrow Agent) against or affecting the Escrow Agent or any of its property
before or by any court or administrative agency which, individually or in the
aggregate, if adversely determined, (A) would adversely affect the ability of
the Escrow Agent to perform its obligations under any of the Transaction
Documents or the Escrow Receipts or (B) would call into question or challenge
the validity of the Transaction Documents or the Escrow Receipts or the
enforceability thereof.
<PAGE>
EXHIBIT E
Form of Opinion of
Milbank, Tweed, Hadley & McCloy
(1) each Relevant Document constitutes the legal, valid and binding
obligation of Citibank, enforceable against Citibank in accordance with its
terms, except as may be limited by bankruptcy, conservatorship, receivership,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer or
other similar laws relating to or affecting the rights of creditors of national
banking associations generally and except as the enforceability of such Relevant
Document is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing; and
(2) the payment obligations of Citibank under each Liquidity
Agreement rank at least pari passu in right of payment with all other unsecured
and unsubordinated obligations of Citibank (other than those obligations
preferred by mandatory operation of law and with the exception of any rights of
set-off or counterclaim which may be asserted against Citibank).
<PAGE>
EXHIBIT F-1
Form of Opinion of
Clifford Chance
(i) ABN AMRO Bank N.V. is duly registered with the Commercial
Register of the Amsterdam Chamber of Commerce as (i) a public company with
limited liability (naamloze vennootschap), (ii) incorporated on 29 March 1824
and (iii) validly existing under the laws of The Netherlands and has the
corporate power under the laws of The Netherlands to enter into the Transaction
Documents and to perform its obligations thereunder through its Chicago Branch.
(ii) The execution, delivery and performance of the Transaction
Documents by the Chicago Branch of ABN AMRO Bank N.V. have been duly authorized
by all necessary corporate action on the part of ABN AMRO Bank N.V. and do not
contravene any provision of applicable law or regulation in The Netherlands or
of the Articles of Association and no further authorization by or any corporate
action of ABN AMRO Bank N.V. is required in connection with the execution,
delivery and performance by it of the Transaction Documents.
(iii) Assuming the Transaction Documents constitute legal, valid and
binding obligations under the laws of the State of New York, and assuming due
authorization, execution and delivery thereof by all other parties to such
Transaction Documents, the Transaction Documents, when executed and delivered by
Claudia C. Heldring and Carla Waggoner of the Chicago Branch of ABN AMRO Bank
N.V., will constitute legal, valid and binding obligations of ABN AMRO Bank N.V.
enforceable against ABN AMRO Bank N.V. in accordance with their terms, except as
such enforceability may be limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar laws affecting the rights of
creditors against ABN AMRO Bank N.V. generally, as the same may be applied in
the event of bankruptcy, insolvency, liquidation or reorganization of, or other
similar occurrence with respect to, ABN AMRO Bank N.V. or in the event of a
moratorium or similar occurrence affecting ABN AMRO Bank N.V., and subject to
the provisions of Chapter X of the Act on the Supervision of the Credit System
1992 (Wet Toezicht Kredietwezen 1992) regarding emergency measures for credit
institutions in The Netherlands.
(iv) No consent, approval, authorization or order of, or filing with
any governmental authority or body or any court in The Netherlands is required
as a condition to the enforceability of ABN AMRO Bank N.V.'s obligations under
the Transaction Documents.
(v) The courts of The Netherlands will observe and give effect to
the choice of the laws of the State of New York as the laws governing the
Transaction Documents in any proceedings in relation thereto on the basis and
within the scope of and subject to the limitations imposed by the 1980 Rome
Convention on the Law Applicable to Contractual Obligations (the "Rome
Convention").
<PAGE>
F-1-2
With the express reservation that as Dutch lawyers we are not
qualified to assess the exact meaning and consequences of the terms of the
Transaction Documents under the laws of the State of New York, on the face of
such document we are not aware of any provision that is likely to be manifestly
incompatible with Netherlands' public policy (a limitation on the chosen law
arising under article 16 Rome Convention) or that is likely to give rise to
situations where mandatory rules of Netherlands' law will prevail over the
chosen law of such document (a limitation on the chosen law arising under
article 7 Rome Convention). It should also be noted that we are not aware of any
published order, ruling or decision of a Netherlands' court, in which such a
court has given overriding effect to foreign mandatory rules pertaining to a law
other than the chosen (or applicable) law or Netherlands' law (a limitation on
the chosen law arising under article 7(1) Rome Convention) in commercial or
financial litigation brought before such courts.
(vi) In the absence of an applicable treaty or convention providing
for the recognition and enforcement of judgments in civil and commercial matters
which is binding in The Netherlands, a judgment rendered by a foreign court
against ABN AMRO Bank N.V. will not be recognized and enforced by the courts of
The Netherlands and in order to obtain a judgment that is enforceable against
ABN AMRO Bank N.V., it will be necessary to relitigate the matter before the
competent court of The Netherlands and to submit the judgment rendered by the
foreign court in the course of such proceedings, in which case the Netherlands'
court may give such effect to the foreign judgment as it deems appropriate.
There are no treaties between The Netherlands and the United States of America
on the recognition and enforcement of civil or commercial judgments. However,
according to current practice, based upon case law, Netherlands' courts will in
all probability recognize, give "res judicata" to and render a judgment in
accordance with a foreign judgment if and to the extent that the following
conditions are met:
(a) the foreign court rendering the judgment has jurisdiction over
the matter on internationally acceptable grounds (e.g. if the parties have
agreed, for example in a contract, to submit their disputes to the foreign
court) and has conducted the proceedings in accordance with generally
accepted principles of fair trial (e.g. after proper service of process);
(b) the foreign judgment is final and definite; and
(c) such recognition is not in conflict with Netherlands' public
policy (i.e. a fundamental principle of Dutch law) or an existing
Netherlands' judgment.
(vii) Assuming that under the laws of the State of New York to which
they are expressed to be subject, and any other relevant laws (other than those
of The Netherlands) the Transaction Documents constitute general unsecured and
unsubordinated obligations of ABN AMRO Bank N.V., the payment obligations of ABN
AMRO Bank N.V. under the Transaction Documents rank at least pari passu with all
other unsecured and unsubordinated obligations of ABN AMRO Bank N.V. (other than
those obligations preferred by mandatory operation of law
<PAGE>
F-1-3
and the exception of any rights of set-off or counter-claim which may be
asserted against ABN AMRO Bank N.V.).
(viii) Under the laws of The Netherlands, the submission to the
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York and the appellate
courts, contained in Section 14 of the Indemnity Agreement constitutes an
effective submission by ABN AMRO Bank N.V. to the jurisdiction of such courts.
(ix) Payments of interest and principal in respect of the Deposits
may be made free of withholding or deduction for or on account of any taxes of
whatsoever nature imposed, levied, withheld, or assessed by The Netherlands or
any political subdivision or taxing authority thereof or therein.
<PAGE>
EXHIBIT F-2
Form of Opinion of Vedder, Price, Kaufman & Kammholz
as U.S. counsel for the Depositary
(i) Each of the Deposit Agreements constitutes the legal, valid and
binding obligation of ABN AMRO enforceable against it in accordance with its
terms, except as such enforcability is limited by (i) bankruptcy, receivership,
conservatorship, insolvency, fraudulent transfer, liquidation, reorganization,
moratorium or other laws affecting creditors' rights and remedies generally from
time to time in effect as the same may be applied in the event of the
bankruptcy, receivership, conservatorship, insolvency, moratorium, liquidation,
reorganization or similar situation of any such party, or other similar
occurrence with respect to any such party or by laws affecting the rights of
creditors or depository institutions, (ii) the possible judicial application of
foreign laws or governmental action affecting creditors' rights generally, (iii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), public policy and applicable
law relating to fiduciary duties, and (iv) any implied covenant of good faith
and fair dealing.
(ii) ABN AMRO Bank N.V. is licensed by the Office of Banks and Real
Estate of the State of Illinois to maintain its branch at 135 LaSalle Street,
Chicago, Illinois (the "Branch"), in accordance with the banking law of the
State of Illinois and the Branch has the full power, authority and legal right
to execute and deliver the Deposit Agreements.
(iii) The execution, delivery and performance by ABN AMRO of the
Deposit Agreements, and the consummation of the transactions contemplated
therein do not violate any banking law, or any governmental rule or regulation
relating thereto, of the United States of America, the State of Illinois or the
State of New York.
(iv) No authorization, consent, approval or other action by, and no
notice to or filing with, any banking authority or regulatory body of the United
States of America, the State of Illinois or the State of New York is required
for the due execution, delivery and performance by ABN AMRO of the Deposit
Agreements other than administrative and ministerial filings which ABN AMRO is
obligated to make in the ordinary course of its business (which filings we have
assumed have been and will continue to be made in a timely manner).
(v) The payment obligations of ABN AMRO under the Deposit Agreements
constitute unsecured and unsubordinated obligations of ABN AMRO.
<PAGE>
SCHEDULE I
Pass Through Certificates, Series 1999-1
Pass Through Aggregate Final
Certificate Principal Interest Distribution
Designation Amounts Rate Date
----------- ------- ---- ----
1999-1A $235,505,000 6.81% February 1, 2020
1999-1B $111,555,000 7.36% February 1, 2020
1999-1C $74,140,000 8.13% February 1, 2014
<PAGE>
SCHEDULE II
Pass Through Certificates, Series 1999-1
<TABLE>
<CAPTION>
Morgan Credit Suisse
Stanley & Co. First Boston ABN AMRO Chase Salomon Smith
Incorporated Corporation Incorporated Securities Inc. Barney Inc.
------------ ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C>
1999-1A $47,101,000 $47,101,000 $47,101,000 $47,101,000 $47,101,000
1999-1B $22,311,000 $22,311,000 $22,311,000 $22,311,000 $22,311,000
1999-1C $14,828,000 $14,828,000 $14,828,000 $14,828,000 $14,828,000
----------- ----------- ----------- ----------- -----------
Total $84,240,000 $84,240,000 $84,240,000 $84,240,000 $84,240,000
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
SCHEDULE III
NORTHWEST AIRLINES, INC.
Underwriting fees,
discounts, commissions
or other compensation: $3,580,200
NORTHWEST AIRLINES CORPORATION
NORTHWEST AIRLINES, INC.
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of June 3, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions................................................... 2
Section 1.02. Compliance Certificates and Opinions.......................... 9
Section 1.03. Form of Documents Delivered to Trustee........................ 9
Section 1.04. Acts of Certificateholders.................................... 10
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Amount Unlimited; Issuable in Series.......................... 11
Section 2.02. Acquisition of Equipment Notes................................ 13
Section 2.03. Acceptance by Trustee......................................... 14
Section 2.04. Limitation of Powers.......................................... 14
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of Certificates.............. 15
Section 3.02. Authentication of Certificates................................ 15
Section 3.03. Temporary Certificates........................................ 15
Section 3.04. Registration of Transfer and Exchange of Certificates......... 16
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates............. 16
Section 3.06. Persons Deemed Owners......................................... 17
Section 3.07. Cancellation.................................................. 17
Section 3.08. Limitation of Liability for Payments.......................... 17
Section 3.09. Book-Entry and Definitive Certificates........................ 17
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.............. 19
Section 4.02. Distributions from Certificate Account and Special
Payments Account.............................................. 19
Section 4.03. Statements to Certificateholders.............................. 20
Section 4.04. Investment of Special Payment Moneys.......................... 21
- i -
<PAGE>
Page
----
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence............................ 21
Section 5.02. Consolidation, Merger, etc.................................... 22
ARTICLE VI
DEFAULT
Section 6.01. Events of Default............................................. 23
Section 6.02. Incidents of Sale of Equipment Notes.......................... 23
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee
May Bring Suit................................................ 24
Section 6.04. Control by Certificateholders................................. 24
Section 6.05. Waiver of Past Defaults....................................... 24
Section 6.06. Right of Certificateholders to Receive Payments Not
To Be Impaired................................................ 25
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions............................................ 25
Section 6.08. Remedies Cumulative........................................... 26
Section 6.09. Undertaking for Costs......................................... 26
ARTICLE VII
THE TRUSTEE
Section 7.01. Notice of Defaults............................................ 26
Section 7.02. Certain Rights of Trustee..................................... 26
Section 7.03. Not Responsible for Recitals or Issuance of Certificates...... 27
Section 7.04. May Hold Certificates......................................... 28
Section 7.05. Money Held in Trust........................................... 28
Section 7.06. Compensation and Reimbursement................................ 28
Section 7.07. Corporate Trustee Required; Eligibility....................... 29
Section 7.08. Resignation and Removal; Appointment of Successor............. 29
Section 7.09. Acceptance of Appointment by Successor........................ 31
Section 7.10. Merger, Conversion, Consolidation or Succession to
Business...................................................... 31
Section 7.11. Maintenance of Agencies....................................... 32
Section 7.12. Money for Certificate Payments to Be Held in Trust............ 33
Section 7.13. Registration of Equipment Notes in Trustee's Name............. 33
Section 7.14. Representations and Warranties of Trustee..................... 33
Section 7.15. Withholding Taxes; Information Reporting...................... 34
Section 7.16. Trustee's Liens............................................... 34
Section 7.17. Preferential Collection of Claims............................. 34
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders .............................. 35
Section 8.02. Preservation of Information; Communications to
Certificateholders............................................ 35
- ii -
<PAGE>
Page
----
Section 8.03. Reports by Trustee............................................ 35
Section 8.04. Reports by the Guarantor and Company.......................... 35
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders............................................ 36
Section 9.02. Supplemental Agreements with Consent of
Certificateholders............................................ 37
Section 9.03. Documents Affecting Immunity or Indemnity..................... 38
Section 9.04. Execution of Supplemental Agreements.......................... 38
Section 9.05. Effect of Supplemental Agreements............................. 38
Section 9.06. Conformity with Trust Indenture Act........................... 38
Section 9.07. Reference in Certificates to Supplemental Agreements.......... 38
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other
Note Documents................................................ 38
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.01. Termination of the Trusts.................................... 39
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders................... 40
Section 12.02. Liabilities of Certificateholders............................ 40
Section 12.03. Certificates Nonassessable and Fully Paid.................... 40
Section 12.04. Registration of Equipment Notes in Name of
Subordination Agent.......................................... 40
Section 12.05. Notices...................................................... 40
Section 12.06. Governing Law................................................ 41
Section 12.07. Severability of Provisions................................... 41
Section 12.08. Trust Indenture Act Controls................................. 42
Section 12.09. Effect of Headings and Table of Contents..................... 42
Section 12.10. Successors and Assigns....................................... 42
Section 12.11. Benefits of Agreement........................................ 42
Section 12.12. Legal Holidays............................................... 42
Section 12.13. Counterparts................................................. 42
Section 12.14. Communication by Certificateholders with Other
Certificateholders........................................... 42
Exhibit A - Form of Certificate
- iii -
<PAGE>
Reconciliation and tie between Pass Through Trust Agreement dated as of June 3,
1996 and the Trust Indenture Act of 1939. This reconciliation does not
constitute part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- --------------- -----------------
310(a)(1) 7.07
(a)(2) 7.07
312(a) 3.09; 8.01; 8.02
313(a) 7.06
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.12
11.01
(d)(2) 7.12; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.01
316(a)(last sentence) 1.01
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.12
318(a) 12.06
<PAGE>
This PASS THROUGH TRUST AGREEMENT, dated as of June 3, 1996, among
Northwest Airlines Corporation, a Delaware corporation (the "Guarantor"),
Northwest Airlines, Inc., a Minnesota corporation (the "Company"), and State
Street Bank and Trust Company, a Massachusetts trust company, as Trustee, is
made with respect to the formation from time to time of separate Northwest
Airlines Pass Through Trusts, and the issuance from time to time of separate
series of Pass Through Certificates representing fractional undivided interests
in the respective Trusts.
WITNESSETH:
WHEREAS, from time to time the Guarantor, the Company and the Trustee may
enter into a Trust Supplement (this and certain other defined terms used herein
are defined in Section 1.01) pursuant to which the Trustee shall declare the
creation of a separate Trust for the benefit of the Holders of the series of
Certificates to be issued in respect of such Trust, and the initial Holders of
the Certificates of such series, as the grantors of such Trust, by their
respective acceptances of the Certificates of such series, shall join in the
creation of such Trust with the Trustee;
WHEREAS, all Certificates to be issued in respect of each separate Trust
will be issued as a separate series pursuant to this Agreement, will evidence
fractional undivided interests in such Trust and will have no rights, benefits
or interests in respect of any other separate Trust or the property held
therein, subject, however, to the provisions of any Intercreditor Agreement to
which one or more Trusts may be a party;
WHEREAS, from time to time, pursuant to the terms and conditions of this
Agreement with respect to each separate Trust formed hereunder, the Trustee on
behalf of such Trust shall purchase one or more issues of Equipment Notes having
the same interest rate as, and final maturity dates not later than the final
Regular Distribution Date of, the series of Certificates issued in respect of
such Trust and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders of such Trust;
WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of
Equipment Notes by, the Trustee on behalf of each Trust created from time to
time pursuant to this Agreement, (i) the Company as the "issuer", as such term
is defined in and solely for purposes of the Securities Act of 1933, as amended,
of the Certificates to be issued in respect of each Trust and as the "obligor",
as such term is defined in and solely for purposes of the Trust Indenture Act of
1939, as amended, and (ii) the Guarantor have each duly authorized the execution
and delivery of this Basic Agreement and each Trust Supplement with respect to
all such Certificates and are undertaking to perform certain administrative and
ministerial duties hereunder and are also undertaking to pay the fees and
expenses of the Trustee;
WHEREAS, this Basic Agreement, as supplemented from time to time, is
subject to the provisions of the Trust Indenture Act of 1939, as amended, and
shall, to the extent applicable, be governed by such provisions;
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and of other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
2
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. For all purposes of this Basic Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein:
(3) all references in this Basic Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Basic Agreement;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Basic Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(5) the term "this Agreement" (as distinguished from "this Basic
Agreement") refers, unless the context otherwise requires, to this Basic
Agreement as supplemented by the Trust Supplement creating a particular
Trust and establishing the series of Certificates issued or to be issued
in respect thereof, with reference to such Trust and such series of
Certificates, as this Basic Agreement as so supplemented may be further
supplemented with respect to such Trust and such series of Certificates.
Act: With respect to any Certificateholder has the meaning specified in
Section 1.04.
Affiliate: With respect to any specified Person, means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control",
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
Aircraft: Means one or more aircraft, including engines therefor, owned by
or leased to the Company and securing one or more Equipment Notes.
Authorized Agent: With respect to the Certificates of any series, means
any Paying Agent or Registrar for the Certificates of such series.
Basic Agreement: Means this Pass Through Trust Agreement, as the same may
from time to time be supplemented, amended or modified, but does not include any
Trust Supplement.
Book-Entry Certificates: With respect to the Certificates of any series,
means a beneficial interest in the Certificates of such series, ownership and
transfers of which shall be made through book entries as described in Section
3.09.
<PAGE>
3
Business Day: With respect to the Certificates of any series, means any
day other than a Saturday, a Sunday or a day on which commercial banks are
required or authorized to close in Minneapolis, Minnesota or New York, New York;
and, so long as any such Certificate is outstanding, a city and state in which
the Trustee or any related Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Certificate: Means any one of the certificates executed and authenticated
by the Trustee, substantially in the form of Exhibit A hereto.
Certificate Account: With respect to the Certificates of any series, means
the account or accounts created and maintained for such series pursuant to
Section 4.01(a) and the related Trust Supplement.
Certificateholder or Holder: With respect to the Certificates of any
series, means the Person in whose name a Certificate of such series is
registered in the Register for Certificates of such series.
Certificate Owner: With respect to the Certificates of any series, means,
for purposes of Section 3.09, the Person who owns a Book-Entry Certificate of
such series.
Clearing Agency: Means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
Clearing Agency Participant: Means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects, directly or indirectly, book-entry transfers and pledges of securities
deposited with the Clearing Agency.
Company: Means Northwest Airlines, Inc., a Minnesota corporation, or its
successor in interest pursuant to Section 5.02.
Controlling Party: Means the Person entitled to act as such pursuant to
the terms of any Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan Trustee,
means the office of such trustee in the city at which at any particular time its
corporate trust business shall be principally administered.
Cut-off Date: With respect to the Certificates of any series, means the
date designated as such in the Trust Supplement establishing such series.
Definitive Certificates: With respect to the Certificate of any series,
has the meaning specified in Section 3.09.
Direction: Has the meaning specified in Section 1.04(c).
Equipment Note: With respect to the Certificates of any series, has the
meaning given to "Secured Certificate" in the related Indenture.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor federal statute.
<PAGE>
4
Escrow Account: With respect to the Certificates of any series, has the
meaning specified in Section 2.02(b).
Escrowed Funds: With respect to any Trust, has the meaning specified in
Section 2.02(b).
Event of Default: Means, in respect of any Trust, the occurrence of an
Indenture Default under any Indenture pursuant to which Equipment Notes held by
such Trust were issued.
Fractional Undivided Interest: Means the fractional undivided interest in
a Trust that is evidenced by a Certificate relating to such Trust.
Guarantor: Means Northwest Airlines Corporation, a Delaware corporation,
or its successor in interest.
Indenture: With respect to any Trust, means each of the one or more
separate trust indenture and security agreements described in, or on a schedule
attached to, this Agreement which relates to an issue of Equipment Notes to be
held in such Trust and an indenture having substantially the same terms and
conditions as such trust indenture and security agreement and which relates to a
Substitute Aircraft; as each such agreement may be amended or supplemented in
accordance with its respective terms; and Indentures means all of such
agreements.
Indenture Default: With respect to any Indenture, means any Indenture
Event of Default (as such term is defined in such Indenture).
Initial Regular Distribution Date: With respect to the Certificates of any
series, means the first Regular Distribution Date on which a Scheduled Payment
is to be made.
Intercreditor Agreement: Means any agreement by and among one or more
Trusts, one or more Liquidity Providers and a Subordination Agent providing for
the distribution of payments made in respect of Equipment Notes held by such
Trusts.
Issuance Date: With respect to the Certificates of any series, means the
date of the issuance of such Certificates.
Lease: Means any lease between an Owner Trustee, as the lessor, and the
Company, as the lessee, referred to in the related Indenture, as each such lease
may be amended or supplemented in accordance with its respective terms; and
Leases means all such Leases.
Letter of Representations: With respect to the Certificates of any series,
means the agreement among the Company, the Trustee and the initial Clearing
Agency substantially in the form attached as an Exhibit to the related Trust
Supplement.
Liquidity Facility: With respect to the Certificates of any Series, means
any revolving credit agreement or similar facility relating to the Certificates
of such series between a Liquidity Provider and a Subordination Agent, as
amended, replaced, supplemented or otherwise modified from time to time in
accordance with its terms and the terms of any Intercreditor Agreement.
<PAGE>
5
Liquidity Provider: With respect to the Certificates of any Series, means
a bank or other financial institution that agrees to provide Liquidity
Facilities for the benefit of the holders of Certificates of such series.
Loan Trustee: With respect to any Equipment Note or the Indenture
applicable thereto, means the bank or trust company designated as loan or
indenture trustee under such Indenture; and any successor to such Loan Trustee
as such trustee; and Loan Trustees means all of the Loan Trustees under the
Indentures.
Note Documents: With respect to any Equipment Note, means the related
Indenture, Note Purchase Agreement, and if the related Aircraft is leased to the
Company, the related Lease and the related Owner Trustee's Purchase Agreement.
Note Purchase Agreement: With respect to the Certificates of any series,
means any note purchase, refunding, participation or similar agreement providing
for, among other things, the purchase of Equipment Notes by the Trustee on
behalf of the relevant Trust; and Note Purchase Agreements means all such
agreements.
Officer's Certificate: Means a certificate signed, (a) in the case of the
Guarantor or the Company, by (i) a Co-Chairman of the Board of Directors, the
President or any Executive Vice President or Senior Vice President of the
Guarantor or the Company, signing alone or (ii) any Vice President of the
Guarantor or the Company signing together with the Secretary, the Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Guarantor or the
Company, or (b) in the case of the Trustee or an Owner Trustee or a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or such Loan
Trustee, as the case may be.
Other Agreements: Has the meaning specified in Section 6.01(b).
Opinion of Counsel: Means a written opinion of legal counsel who (a) in
the case of counsel for the Guarantor or the Company, may be (i) a senior
attorney in rank of the officers of the Guarantor or the Company a principal
duty of which is furnishing advice as to legal matters, (ii) Simpson Thacher &
Bartlett or (iii) such other counsel designated by the Guarantor or the Company
and reasonably acceptable to the Trustee and (b) in the case of any Owner
Trustee or any Loan Trustee, may be such counsel as may be designated by any of
them whether or not such counsel is an employee of any of them, and who shall be
reasonably acceptable to the Trustee.
Outstanding: With respect to Certificates of any series, means, as of the
date of determination, all Certificates of such series theretofore authenticated
and delivered under this Agreement, except:
(i) Certificates of such series theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates of such series if money in the full
amount required to make the final distribution with respect to such series
pursuant to Section 11.01 hereof has been theretofore deposited with the
Trustee in trust for the Holders of the Certificates of such series as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
<PAGE>
6
(iii) Certificates of such series in exchange for or in lieu of
which other Certificates of such series have been authenticated and
delivered pursuant to this Agreement.
Owner Participant: With respect to any Equipment Note, means the "Owner
Participant", if any, as referred to in the Indenture pursuant to which such
Equipment Note is issued and any permitted successor or assign of such Owner
Participant; and Owner Participants at any time of determination means all of
the Owner Participants thus referred to in the Indentures.
Owner Trustee: with respect to any Equipment Note, means the "Owner
Trustee", if any, as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity but solely as trustee;
and Owner Trustees means all of the Owner Trustees party to any of the
respective Indentures.
Owner Trustee's Purchase Agreement: With respect to the Certificates of
any series, if the related Aircraft is leased to the Company, has the meaning
specified therefor in the related Lease.
Paying Agent: With respect to the Certificates of any series, means the
paying agent maintained and appointed for the Certificates of such series
pursuant to Section 7.11.
Permitted Investments: Means obligations of the United States of America
or agencies or instrumentalities thereof for the payment of which the full faith
and credit of the United States of America is pledged, maturing in not more than
60 days or such lesser time as is necessary for payment of any Special Payments
on a Special Distribution Date.
Person: Means any person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates of any series less (ii) the aggregate amount of all
payments made in respect of such Certificates other than payments made in
respect of interest or premium thereon or reimbursement of any costs or expenses
incurred in connection therewith. The Pool Balance as of any Distribution Date
shall be computed after giving effect to the payment of principal, if any, on
the Equipment Notes or other Trust Property held in the Trust and the
distribution thereof to be made on such Distribution Date.
Pool Factor: Means, with respect to any series of Certificates as of any
date, the quotient (rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance of such series as at such date by (ii) the original
aggregate face amount of the Certificates of such series. The Pool Factor as of
any Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or other Trust Property and the
distribution thereof to be made on such Distribution Date.
Postponed Notes: With respect to any Trust or the related series of
Certificates, means the Equipment Notes to be held in such Trust as to which a
Postponement Notice shall have been delivered pursuant to Section 2.02(b).
Postponement Notice: With respect to any Trust or the related series of
Certificates, means an Officer's Certificate of the Company signed by an officer
of the Company (1) requesting that the Trustee temporarily postpone purchase of
the related Equipment Notes to a date later than the Issuance Date of
<PAGE>
7
such series of Certificates, (2) identifying the amount of the purchase price of
each such Equipment Note and the aggregate purchase price for all such Equipment
Notes, (3) setting forth the reasons for such postponement and (4) with respect
to each such Equipment Note, either (a) setting or resetting a new Transfer Date
(which shall be on or prior to the applicable Cut-off Date) for payment by the
Trustee of such purchase price and issuance of the related Equipment Note, or
(b) indicating that such new Transfer Date (which shall be on or prior to the
applicable Cut-off Date) will be set by subsequent written notice not less than
one Business Day prior to such new Transfer Date.
PTC Event of Default: Means any failure to pay within 10 Business Days of
the due date thereof: (i) the outstanding Pool Balance on a date specified in
any Trust Supplement or (ii) interest due on the Certificates of any series on
any Distribution Date.
Record Date: With respect to any Trust or the related series of
Certificates, means (i) for Scheduled Payments to be distributed on any Regular
Distribution Date, other than the final distribution, with respect to such
series, the 15th day (whether or not a Business Day) preceding such Regular
Distribution Date, and (ii) for Special Payments to be distributed on any
Special Distribution Date, other than the final distribution, with respect to
such series, the 15th day (whether or not a Business Day) preceding such Special
Distribution Date.
Register and Registrar: With respect to the Certificates of any series,
mean the register maintained and the registrar appointed for such series
pursuant to Sections 3.04 and 7.11.
Regular Distribution Date: With respect to distributions of Scheduled
Payments in respect of any series of Certificates, means each date designated as
such in this Agreement, until payment of all the Scheduled Payments to be made
under the Equipment Notes held in such Trust has been made.
Request: Means a request by the Company setting forth the subject matter
of the request accompanied by an Officer's Certificate and an Opinion of Counsel
as provided in Section 1.02 of this Basic Agreement.
Responsible Officer: With respect to any Trustee, any Loan Trustee and any
Owner Trustee, means any officer in the Corporate Trust Division of the Trustee,
Loan Trustee or Owner Trustee or any other officer customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with a particular subject.
Scheduled Payment: With respect to any Equipment Note, means any payment
of principal and interest on such Equipment Note or any payment of interest on
the Certificates of any series with funds drawn under the Liquidity Facility for
such series (other than any such payment which is not in fact received by the
Trustee or any Subordination Agent within five days of the date on which such
payment is scheduled to be made) due from the obligor thereon which payment
represents the installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such Equipment
Note, or both; provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of any Equipment Note shall
not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from time to time
constituted or created under the Securities Exchange Act of 1934, or, if at any
time after the execution of this
<PAGE>
8
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties on such date.
Special Distribution Date: With respect to the Certificates of any series,
means each date on which a Special Payment is to be distributed as specified in
this Agreement.
Special Payment: Means (i) any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate (as
defined in each Indenture) or (ii) the amounts required to be distributed
pursuant to the last paragraph of Section 2.02(b) or (iii) the amounts required
to be distributed pursuant to the penultimate paragraph of Section 2.02(b).
Special Payments Account: With respect to the Certificates of any series,
means the account or accounts created and maintained for such series pursuant to
Section 4.01(b) and the related Trust Supplement.
Specified Investments: With respect to any Trust, means, unless otherwise
specified in the related Trust Supplement, (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market commercial
paper of any corporation incorporated under the laws of the United States of
America or any State thereof rated at least P-2 or its equivalent by Moody's
Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's
Rating Group, (iii) certificates of deposit issued by commercial banks organized
under the laws of the United States or of any political subdivision thereof
having a combined capital and surplus in excess of $500,000,000 which banks or
their holding companies have a rating of A or its equivalent by Moody's
Investors Service, Inc. or Standard & Poor's Rating Group; provided, however,
that the aggregate amount at any one time so invested in certificates of deposit
issued by any one bank shall not exceed 5% of such bank's capital and surplus,
(iv) U.S. dollar denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in (iii) or any
subsidiary thereof and (v) repurchase agreements with any financial institution
having combined capital and surplus of at least $500,000,000 with any of the
obligations described in clauses (i) through (iv) as collateral; provided
further that if all of the above investments are unavailable, the entire amounts
to be invested may be used to purchase Federal Funds from an entity described in
clause (iii) above; and provided further that no investment shall be eligible as
a "Specified Investment" unless the final maturity or date of return of such
investment is on or before the Special Distribution Date next following the
Cut-off Date, if any, for such Trust by more than 20 days.
Subordination Agent: Shall have the meaning specified therefor in any
Intercreditor Agreement.
Substitute Aircraft: With respect to any Trust, means any Aircraft of a
type specified in this Agreement and, at the election of the Company,
substituted prior to the applicable Cut-off Date, if any, pursuant to the terms
of this Agreement.
Transfer Date: Has the meaning assigned to that term or any of the terms
"Delivery Date", "Funding Date" or "Closing Date" in a Note Purchase Agreement.
Triggering Event: Shall have the meaning specified therefor in any
Intercreditor Agreement.
Trust: With respect to the Certificates of any series, means the trust
under this Agreement.
Trustee: Means the institution executing this Basic Agreement as Trustee,
or its successor in interest, and any successor trustee appointed as provided
herein.
<PAGE>
9
Trust Indenture Act: Except as otherwise provided in Section 9.06, means
the Trust Indenture Act of 1939 as in force at the date as of which this Basic
Agreement was executed.
Trust Property: With respect to any Trust, means (i) the Equipment Notes
held as the property of such Trust, all monies at any time paid thereon and all
monies due and to become due thereunder, (ii) the rights of such Trust under any
Intercreditor Agreement, including all monies receivable in respect of such
rights, (iii) all monies receivable under any Liquidity Facility for such Trust
and (iv) funds from time to time deposited in the related Escrow Account, the
related Certificate Account and the related Special Payments Account and any
proceeds from the sale by the Trustee pursuant to Article VI hereof of any such
Equipment Note.
Trust Supplement: Means an agreement supplemental hereto pursuant to which
(i) a separate Trust is created for the benefit of the Holders of the
Certificates of a series, (ii) the issuance of the Certificates of such series
representing fractional undivided interests in such Trust is authorized and
(iii) the terms of the Certificates of such series are established.
Section 1.02. Compliance Certificates and Opinions. Upon any application
or request by the Company, any Owner Trustee or any Loan Trustee to the Trustee
to take any action under any provision of this Basic Agreement or, in respect of
the Certificates of any series, this Agreement, the Company, such Owner Trustee
or such Loan Trustee, as the case may be, shall furnish to the Trustee an
Officers' Certificate stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Basic Agreement or this
Agreement relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Basic Agreement or this Agreement
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Basic Agreement or, in respect of the
Certificates of any series, this Agreement (other than a certificate provided
pursuant to Section 8.04(d)) or any Trust Supplement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Basic Agreement or this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with
<PAGE>
10
respect to some matters and one or more other such Persons as to other matters
and any such Person may certify or give an opinion as to such matters in one or
several documents.
Any Opinion of Counsel stated to be based on the opinion of other counsel
shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Basic Agreement or, in respect of the Certificates of any
series, this Agreement, they may, but need not, be consolidated and form one
instrument.
Section 1.04. Acts of Certificateholders. (a) Any direction, consent,
waiver or other action provided by this Agreement in respect of the Certificates
of any series to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent or proxy duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required pursuant to this Agreement,
to the Company or any Loan Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Certificateholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of such Trust Supplement and
conclusive in favor of the Trustee, the Company and the related Loan Trustee, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates of any series Outstanding have
given any direction, consent or waiver (a "Direction"), under this Agreement,
Certificates owned by the Company, the Guarantor, any related Owner Trustee, any
related Owner Participant or any Affiliate of any such Person shall be
disregarded and deemed not to be Outstanding for purposes of any such
determination. In determining whether the Trustee shall be protected in relying
upon any such Direction, only Certificates which the Trustee knows to be so
owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such
Person owns 100% of the Certificates of any series Outstanding, such
Certificates shall not be so disregarded as aforesaid, and (ii) if any amount of
Certificates of such series so owned by any such Person have been pledged in
good faith, such Certificates shall not be disregarded as aforesaid if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Certificates and that the pledgee is not the Company,
the Guarantor, any related Owner Trustee, any related Owner Participant or any
Affiliate of any such Person.
<PAGE>
11
(d) The Company may at its option by delivery of an Officer's Certificate
to the Trustee set a record date to determine the Certificateholders in respect
of the Certificates of any series, entitled to give any consent, request,
demand, authorization, direction, notice, waiver or other Act. Notwithstanding
Section 316(c) of the Trust Indenture Act, such record date shall be the record
date specified in such Officer's Certificate which shall be a date not more than
30 days prior to the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such consent, request, demand,
authorization, direction, notice, waiver or other Act may be given before or
after such record date, but only the Certificateholders of record of the
applicable series at the close of business on such record date shall be deemed
to be Certificateholders for the purposes of determining whether
Certificateholders of the requisite proportion of Outstanding Certificates of
such series have authorized or agreed or consented to such consent, request,
demand, authorization, direction, notice, waiver or other Act, and for that
purpose the Outstanding Certificates of such series shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Basic Agreement not later than one year after the record
date.
(e) Any direction, consent, waiver or other action by the
Certificateholder of any Certificate shall bind the Certificateholder of every
Certificate issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Certificate.
(f) Except as otherwise provided in Section 1.04(c), Certificates of any
series owned by or pledged to any Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority, or
distinction as among all of the Certificates of such series.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Amount Unlimited; Issuable in Series.
(a) The aggregate principal amount of Certificates of each series which
may be authenticated and delivered under this Basic Agreement is limited to an
amount equal to the aggregate principal amount of the Equipment Notes held in
the related Trust. The Certificates may be issued from time to time in one or
more series and shall be designated generally as the "Pass Through
Certificates", with such further designations added or incorporated in such
title for the Certificates of each series as specified in the related Trust
Supplement. Each Certificate shall bear upon its face the designation so
selected for the series to which it belongs. All Certificates of the same series
shall be substantially identical except that the Certificates of a series may
differ as to denomination and as may otherwise be provided in the Trust
Supplement establishing the Certificates of such series. Each series of
Certificates issued pursuant to this Agreement will evidence fractional
undivided interests in the related Trust and, except as may be contained in any
Intercreditor Agreement, will have no rights, benefits or interests in respect
of any other Trust or the Trust Property held therein. All Certificates of the
same series shall be in all respects equally and ratably entitled to the
benefits of this Agreement without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement.
<PAGE>
12
(b) The following matters shall be established with respect to the
Certificates of each series issued hereunder by a Trust Supplement executed and
delivered by and among the Company, the Guarantor and the Trustee:
(1) the formation of the Trust as to which the Certificates of such
series represent fractional undivided interests and its designation (which
designation shall distinguish such Trust from each other Trust created
under this Basic Agreement and a Trust Supplement);
(2) the specific title of the Certificates of such series (which
title shall distinguish the Certificates of such series from each other
series of Certificates created under this Basic Agreement and a Trust
Supplement);
(3) any limit upon the aggregate principal amount of the
Certificates of such series which may be authenticated and delivered
(which limit shall not pertain to Certificates authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other
Certificates of the series pursuant to Sections 3.03, 3.04 and 3.05);
(4) the Cut-off Date with respect to the Certificates of such
series;
(5) the Regular Distribution Dates applicable to the Certificates of
such series;
(6) the Special Distribution Dates applicable to the Certificates of
such series;
(7) if other than as provided in Section 7.11(b), the Registrar or
the Paying Agent for the Certificates of such series, including any
Co-Registrar or additional Paying Agent;
(8) if other than as provided in Section 3.01, the denominations in
which the Certificates of such series shall be issuable;
(9) if other than United States dollars, the currency or currencies
(including currency units) in which the Certificates of such series shall
be denominated;
(10) the specific form of the Certificates of such series (including
the interest rate applicable thereto) and whether or not Certificates of
such series are to be issued as Book-Entry Certificates and, if such
Certificates are to be Book-Entry Certificates, the form of Letter of
Representations, if any (or, in the case of any Certificates denominated
in a currency other than United States dollars and if other than as
provided in Section 3.09, whether and the circumstances under which
beneficial owners of interests in such Certificates in permanent global
form may exchange such interests for Certificates of such series and of
like tenor of any authorized form and denomination);
(11) a description of the Equipment Notes to be acquired and held in
the related Trust and of the related Aircraft and Note Documents;
(12) provisions with respect to the terms for which the definitions
set forth in Article I hereof or the terms of Section 11.01 hereof permit
or require further specification in the related Trust Supplement;
(13) any restrictions (including legends) in respect of ERISA;
<PAGE>
13
(14) whether such series will be subject to an Intercreditor
Agreement and, if so, the specific designation of such Intercreditor
Agreement; and
(15) any other terms of the Certificates of such series (which terms
shall not be inconsistent with the provisions of the Trust Indenture Act),
including any terms which may be required or advisable under United States
laws or regulations or advisable in connection with the marketing of
Certificates of the series.
(c) At any time and from time to time after the execution and delivery of
this Basic Agreement and a Trust Supplement forming a Trust and establishing the
terms of Certificates of a series, Certificates of such series shall be
executed, authenticated and delivered by the Trustee to the Person or Persons
specified by the Company upon request of the Company and upon satisfaction of
any conditions precedent set forth in such Trust Supplement or in any other
document to which a Trustee is a party relating to the issuance of the
Certificates of such series.
Section 2.02. Acquisition of Equipment Notes.
(a) Unless otherwise specified in the related Trust Supplement, on or
prior to the Issuance Date of the Certificates of a series, the Trustee shall
execute and deliver the related Note Purchase Agreements in the form delivered
to the Trustee by the Company. The Trustee shall issue and sell such
Certificates, in authorized denominations and in such Fractional Undivided
Interests, so as to result in the receipt of consideration in an amount equal to
the aggregate purchase price of such Equipment Notes and, concurrently
therewith, the Trustee shall purchase, pursuant to the terms and conditions of
the Note Purchase Agreements, the Equipment Notes at a purchase price equal to
the amount of such consideration so received. Except as provided in Sections
3.03, 3.04 and 3.05 hereof, the Trustee shall not execute, authenticate or
deliver Certificates of such series in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are subject to the
provisions of Subsection (b) below.
(b) If on or prior to the Issuance Date with respect to a series of
Certificates the Company shall deliver to the Trustee a Postponement Notice
relating to one or more Postponed Notes, the Trustee shall postpone the purchase
of such Postponed Notes and shall deposit into an escrow account (as to such
Trust, the "Escrow Account") to be maintained as a part of the related Trust an
amount equal to the purchase price of such Postponed Notes (the "Escrowed
Funds"). The Escrowed Funds so deposited shall be invested by the Trustee at the
written direction and risk of, and for the benefit of, the Company in Specified
Investments (i) maturing no later than any scheduled Transfer Date relating to
such series of Certificates or (ii) if no such Transfer Date has been scheduled,
maturing on the next Business Day, or (iii) if the Company has given notice to
the Trustee that any Postponed Notes will not be issued, with respect to the
portion of the Escrowed Funds relating to such Postponed Notes, maturing on the
next applicable Special Distribution Date, if such investments are reasonably
available for purchase. The Trustee shall make withdrawals from the Escrow
Account only as provided in this Agreement. Upon request of the Company on one
or more occasions and the satisfaction of the closing conditions specified in
the applicable Note Purchase Agreements on or prior to the related Cut-off Date,
the Trustee shall purchase the applicable Postponed Notes with the Escrowed
Funds withdrawn from the Escrow Account. The purchase price shall equal the
principal amount of such Postponed Notes.
The Trustee shall hold all Specified Investments until the maturity
thereof and will not sell or otherwise transfer Specified Investments. If
Specified Investments held in an Escrow Account mature prior to any applicable
Transfer Date, any proceeds received on the maturity of such Specified
<PAGE>
14
Investments (other than any earnings thereon) shall be reinvested by the Trustee
at the written direction and risk of, and for the benefit of, the Company in
Specified Investments maturing as provided in the preceding paragraph.
Any earnings on Specified Investments received from time to time by the
Trustee shall be promptly distributed to the Company. The Company shall pay to
the Trustee for deposit to the relevant Escrow Account an amount equal to any
losses on such Specified Investments as incurred. On the Initial Regular
Distribution Date in respect of the Certificates of any series, the Company will
pay (in immediately available funds) to the Trustee an amount equal to the
interest that would have accrued on any Postponed Notes, if any, purchased after
the Issuance Date if such Postponed Notes had been purchased on the Issuance
Date, from the Issuance Date to, but not including, the date of the purchase of
such Postponed Notes by the Trustee.
If, in respect of the Certificates of any series, the Company notifies the
Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on
or prior to the Cut-off Date for any reason, on the next Special Distribution
Date for such Certificates occurring more than 20 days following the date of
such notice (i) the Company shall pay to the Trustee for deposit in the related
Special Payments Account, in immediately available funds, an amount equal to the
interest that would have accrued on the Postponed Notes designated in such
notice at a rate equal to the interest rate applicable to such Certificates from
the Issuance Date to, but not including, such Special Distribution Date and (ii)
the Trustee shall transfer an amount equal to that amount of Escrowed Funds that
would have been used to purchase the Postponed Notes designated in such notice
and the amount paid by the Company pursuant to the immediately preceding clause
(i) to the related Special Payments Account for distribution as a Special
Payment in accordance with the provisions hereof.
If, on such Cut-off Date, an amount equal to less than all of the Escrowed
Funds (other than Escrowed Funds referred to in the immediately preceding
paragraph) has been used to purchase Postponed Notes, on the next such Special
Distribution Date occurring more than 20 days following such Cut-off Date (i)
the Company shall pay to the Trustee for deposit in such Special Payments
Account, in immediately available funds, an amount equal to the interest that
would have accrued on such Postponed Notes contemplated to be purchased with
such unused Escrowed Funds (other than Escrowed Funds referred to in the
immediately preceding paragraph) but not so purchased at a rate equal to the
interest rate applicable to such Certificates from the Issuance Date to, but not
including, such Special Distribution Date and (ii) the Trustee shall transfer
such unused Escrowed Funds and the amount paid by the Company pursuant to the
immediately preceding clause (i) to such Special Payments Account for
distribution as a Special Payment in accordance with the provisions hereof.
Section 2.03. Acceptance by Trustee. The Trustee, upon the execution and
delivery of a Trust Supplement creating a Trust and establishing a series of
Certificates, shall acknowledge its acceptance of all right, title, and interest
in and to the Equipment Notes to be acquired pursuant to Section 2.02 hereof and
the related Note Purchase Agreements and shall declare that the Trustee holds
and will hold such right, title, and interest, together with all other property
constituting the Trust Property of such Trust, for the benefit of all then
present and future Certificateholders of such series, upon the trusts herein and
in such Trust Supplement set forth. By its payment for and acceptance of each
Certificate of such series issued to it under this Agreement, each initial
Certificateholder of such series as grantor of such Trust shall thereby join in
the creation and declaration of such Trust.
Section 2.04. Limitation of Powers. Each Trust shall be constituted solely
for the purpose of making the investment in the Equipment Notes provided for in
the related Trust Supplement, and, except
<PAGE>
15
as set forth herein or in this Agreement, the Trustee shall not be authorized or
empowered to acquire any other investments or engage in any other activities
and, in particular, the Trustee shall not be authorized or empowered to do
anything that would cause such Trust to fail to qualify as a "grantor trust" for
federal income tax purposes (including as subject to this restriction, acquiring
the Aircraft (as defined in the respective related Indentures) by bidding such
Equipment Notes or otherwise, or taking any action with respect to any such
Aircraft once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of Certificates. The
Certificates of each series shall be issued in fully registered form without
coupons and shall be substantially in the form attached hereto as Exhibit A,
with such omissions, variations and insertions as are permitted by this
Agreement, and may have such letters, numbers or other marks of identification
and such legends or endorsements printed, lithographed or engraved thereon, as
may be required to comply with the rules of any securities exchange on which
such Certificates may be listed or to conform to any usage in respect thereof,
or as may, consistently herewith, be prescribed by the Trustee or by the officer
executing such Certificates, such determination by said officer to be evidenced
by his signing the Certificates.
Except as provided in Section 3.09, the definitive Certificates of such
series shall be printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner permitted by the rules
of any securities exchange on which the Certificates may be listed, all as
determined by the officer executing such Certificates, as evidenced by his
execution of such Certificates.
Except as otherwise provided in the related Trust Supplement, the
Certificates of each series shall be issued in minimum denominations of $1,000
or integral multiples thereof except that one Certificate of such series may be
issued in a denomination of less than $1,000.
The Certificates of such series shall be executed on behalf of the Trustee
by manual or facsimile signature of a Responsible Officer of the Trustee.
Certificates of any series bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Trustee shall be valid and binding obligations of the
Trustee, notwithstanding that such individual has ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such office at the date of such Certificates. No Certificate of any series shall
be entitled to any benefit under this Agreement, or be valid for any purpose
unless there appears on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A hereto executed by the Trustee
by manual signature, and such certificate of authentication upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder. All Certificates of any series
shall be dated on the date of their authentication.
Section 3.02. Authentication of Certificates. The Trustee shall duly
authenticate and deliver Certificates of each series in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the related Note Purchase Agreements,
and evidencing the entire ownership of the related Trust.
Section 3.03. Temporary Certificates. Pending the preparation of
definitive Certificates of any series, the Trustee may execute, authenticate and
deliver temporary Certificates of such series which are
<PAGE>
16
printed, lithographed, typewritten, or otherwise produced, in any denomination,
containing substantially the same terms and provisions as set forth in Exhibit A
hereto, except for such appropriate insertions, omissions, substitutions and
other variations relating to their temporary nature as the officer executing
such temporary Certificates may determine, as evidenced by its execution of such
temporary Certificates.
If temporary Certificates of any series are issued, the Company will cause
definitive Certificates of such series to be prepared without unreasonable
delay. After the preparation of definitive Certificates of such series, the
temporary Certificates shall be exchangeable for definitive Certificates upon
surrender of such temporary Certificates at the Corporate Trust Office of the
Trustee, or at the office or agency of the Trustee maintained in accordance with
Section 7.11, without charge to the holder. Upon surrender for cancellation of
any one or more temporary Certificates, the Trustee shall execute, authenticate
and deliver in exchange therefor definitive Certificates of like series, in
authorized denominations and of a like aggregate Fractional Undivided Interest.
Until so exchanged, such temporary Certificates shall in all respects be
entitled to the same benefits under this Agreement as definitive Certificates.
Section 3.04. Registration of Transfer and Exchange of Certificates. The
Trustee shall cause to be kept at the office or agency to be maintained by it in
accordance with the provisions of Section 7.11 a register (the "Register") for
each series of Certificates in which, subject to such reasonable regulations as
it may prescribe, the Trustee shall provide for the registration of Certificates
of such series and of transfers and exchanges of such Certificates as herein
provided. The Trustee shall initially be the registrar (the "Registrar") for the
purpose of registering Certificates of each series and transfers and exchanges
of such Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office or such other office or agency, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of like series, in authorized
denominations of a like aggregate Fractional Undivided Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of like series, in authorized denominations and of a like
aggregate Fractional Undivided Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver
the Certificates that the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder thereof or its attorney duly authorized in writing.
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee shall
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be cancelled and subsequently destroyed by the Trustee.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Registrar, or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated,
<PAGE>
17
destroyed, lost or stolen Certificate, a new Certificate or Certificates of like
series, in authorized denominations and of like Fractional Undivided Interest.
In connection with the issuance of any new Certificate under this Section 3.05,
the Trustee shall require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Registrar)
connected therewith. Any duplicate Certificate issued pursuant to this Section
3.05 shall constitute conclusive evidence of the appropriate Fractional
Undivided Interest in the related Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Registrar, and any
Paying Agent of the Trustee may treat the person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.02 and for all other purposes whatsoever,
and neither the Trustee, the Registrar, nor any Paying Agent of the Trustee
shall be affected by any notice to the contrary.
Section 3.07. Cancellation. All Certificates surrendered for payment or
transfer or exchange shall, if surrendered to any Person party hereto other than
the Registrar, be delivered to the Registrar for cancellation. No Certificates
shall be authenticated in lieu of or in exchange for any Certificates cancelled
as provided in this Section, except as expressly permitted by this Agreement.
All cancelled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.08. Limitation of Liability for Payments. All payments or
distributions made to Certificateholders of any series under the related Trust
Supplement shall be made only from the Trust Property of the related Trust and
only to the extent that the Trustee shall have sufficient income or proceeds
from such Trust Property to make such payments in accordance with the terms of
Article IV of this Agreement. Each Certificateholder, by its acceptance of a
Certificate, agrees that it will look solely to the income and proceeds from the
Trust Property of the related Trust to the extent available for distribution to
such Certificateholder as provided in this Agreement.
Section 3.09. Book-Entry and Definitive Certificates.
(a) Except for one Certificate of each series that may be issued in a
denomination of less than $1,000, the Certificates of any series may be issued
in the form of one or more typewritten Certificates representing the Book-Entry
Certificates of such series, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by, or on behalf of, the Company. In such case, the
Certificates of such series delivered to The Depository Trust Company shall
initially be registered on the Register in the name of CEDE & Co., the nominee
of the initial Clearing Agency, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Certificates of such series, except as provided above and in Subsection (d)
below. As to the Certificates of any series, except with respect to the one
Certificate of such series that may be issued in a denomination of less than
$1,000, unless and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued pursuant to Subsection (d) below:
(i) the provisions of this Section 3.09 shall be in full force and
effect;
(ii) the Company, the Paying Agent, the Registrar and the Trustee
may deal with the Clearing Agency Participants for all purposes (including
the making of distributions on the Certificates) as the authorized
representatives of the Certificate Owners;
<PAGE>
18
(iii) to the extent that the provisions of this Section 3.09
conflict with any other provisions of this Agreement (other than the
provisions of any Trust Supplement amending this Section 3.09 as permitted
by this Basic Agreement), the provisions of this Section 3.09 shall
control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing Agency
Participants; and until Definitive Certificates are issued pursuant to
Subsection (d) below, the Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit
distributions of principal and interest and premium, if any, on the
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of such series
holding Certificates of such series evidencing a specified percentage of
the Fractional Undivided Interests in the related Trust, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Certificate Owners
and/or Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in Certificates of
such series and has delivered such instructions to the Trustee. The
Trustee shall have no obligation to determine whether the Clearing Agency
has in fact received any such instructions.
(b) Except with respect to the one Certificate of each series that may be
issued in a denomination of less than $1,000, whenever notice or other
communication to the Certificateholders of such series is required under this
Agreement, unless and until Definitive Certificates shall have been issued
pursuant to Subsection (d) below, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders of such series
to the Clearing Agency.
(c) Unless and until Definitive Certificates of a series are issued
pursuant to Subsection (d) below, on the Record Date prior to each applicable
Regular Distribution Date and Special Distribution Date, the Trustee will
request from the Clearing Agency a Securities Position Listing setting forth the
names of all Clearing Agency Participants reflected on the Clearing Agency's
books as holding interests in the Certificates on such Record Date.
(d) If with respect to the Certificates of any series (i) the Company
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities and the Trustee or the Company
is unable to locate a qualified successor, (ii) the Company at its option,
advises the Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Certificate Owners of Book-Entry Certificates of such series evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the related Trust, by Act of said Certificate Owners delivered to the Company
and the Trustee, advise the Company, the Trustee and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency Participants is no longer in the
best interests of the Certificate Owners of such series, then the Trustee shall
notify all Certificate Owners of such series, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Certificates. Upon surrender to the Trustee of all the Certificates of such
series held by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency Participants for registration of Definitive
Certificates in the names of Certificate Owners of such series, the Trustee
shall issue and deliver the Definitive Certificates of such series in
<PAGE>
19
accordance with the instructions of the Clearing Agency. Neither the Company,
the Registrar, the Paying Agent nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such registration instructions. Upon the issuance of
Definitive Certificates of such series, the Trustee shall recognize the Person
in whose name the Definitive Certificates are registered in the Register as
Certificateholders hereunder. Neither the Company nor the Trustee shall be
liable if the Trustee or the Company is unable to locate a qualified successor
Clearing Agency.
(e) Except as otherwise provided in the related Trust Supplement, the
Trustee shall enter into the applicable Letter of Representations with respect
to such series of Certificates and fulfill its responsibilities thereunder.
(f) The provisions of this Section 3.09 may be made inapplicable to any
series or may be amended with respect to any series in the related Trust
Supplement.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.
(a) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the Certificate Account in
trust for the benefit of the Certificateholders of such series, and shall make
or permit withdrawals therefrom only as provided in this Agreement. On each day
when a Scheduled Payment is made to the Trustee, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Scheduled
Payment into the Certificate Account.
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Special Payments Account as one or more
accounts, which shall be non-interest bearing except as provided in Section
4.04. The Trustee shall hold the Special Payments Account in trust for the
benefit of the Certificateholders of such series, and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when one
or more Special Payments are made to the Trustee, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Special Payments
into the Special Payments Account.
(c) The Trustee shall present to the Loan Trustee to which an Equipment
Note relates such Equipment Note on the date of its stated final maturity or, in
the case of any Equipment Note which is to be redeemed in whole pursuant to the
relevant Indenture, on the applicable redemption date under such Indenture.
Section 4.02. Distributions from Certificate Account and Special Payments
Account.
(a) On each Regular Distribution Date with respect to a series of
Certificates or as soon thereafter as the Trustee has confirmed receipt of the
payment of the Scheduled Payments due on the Equipment Notes held in the related
Trust on such date, the Trustee shall distribute out of the applicable
Certificate Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder of record of
such series on the Record Date with respect to such
<PAGE>
20
Regular Distribution Date (other than as provided in Section 11.01 concerning
the final distribution), by check mailed to such Certificateholder at the
address appearing in the Register, such Certificateholder's pro rata share
(based on the aggregate Fractional Undivided Interest in the related Trust held
by such Certificateholder) of the aggregate amount in the applicable Certificate
Account.
(b) On each Special Distribution Date with respect to any Special Payment
with respect to a series of Certificates or as soon thereafter as the Trustee
has confirmed receipt of the Special Payments due on the Equipment Notes held in
the related Trust or realized upon the sale of such Equipment Note, the Trustee
shall distribute out of the applicable Special Payments Account the entire
amount deposited therein pursuant to Section 4.01(b) of such Special Payment.
There shall be so distributed to each Certificateholder of record of such series
on the Record Date with respect to such Special Distribution Date (other than as
provided in Section 11.01 concerning the final distribution), by check mailed to
such Certificateholder at the address appearing in the Register, such
Certificateholder's pro rata share (based on the aggregate Fractional Undivided
Interest in the related Trust held by such Certificateholder) of the aggregate
amount in the applicable Special Payments Account on account of such Special
Payment.
(c) The Trustee shall, at the expense of the Company, cause notice of each
Special Payment with respect to a series of Certificates to be mailed to each
Certificateholder of such series at his address as it appears in the Register.
In the event of redemption or purchase of Equipment Notes held in the related
Trust, such notice shall be mailed not less than 20 days prior to the date any
such Special Payment is scheduled to be distributed. In the case of any other
Special Payments, such notice shall be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment.
Notices mailed by the Trustee shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02(b)) and the amount thereof constituting
principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date for the Certificates of such series, the total amount to
be received on such date for each $1,000 face amount Certificate.
If the amount of premium, if any, payable upon the redemption or purchase
of an Equipment Note has not been calculated at the time that the Trustee mails
notice of a Special Payment, it shall be sufficient if the notice sets forth the
other amounts to be distributed and states that any premium received will also
be distributed.
If any redemption of the Equipment Notes held in any Trust is cancelled,
the Trustee, as soon as possible after learning thereof, shall cause notice
thereof to be mailed to each Certificateholder of the related series at its
address as it appears on the Register.
Section 4.03. Statements to Certificateholders.
<PAGE>
21
(a) On each Regular Distribution Date and Special Distribution Date with
respect to a series of Certificates, the Trustee will include with each
distribution to Certificateholders of the related series a statement, giving
effect to such distribution to be made on such Regular Distribution Date or
Special Distribution Date, as the case may be, setting forth the following
information (per a $1,000 face amount Certificate as to (i) and (ii) below):
(i) The amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) The amount of such distribution allocable to interest; and
(iii) The Pool Balance and the Pool Factor of the related Trust.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee will request from the Clearing Agency a securities position
listing setting forth the names of all the Clearing Agency Participants
reflected on the Clearing Agency's books as holding interests in the
Certificates on such record date. On each Distribution Date, the applicable
Trustee will mail to each such Clearing Agency Participant the statement
described above and will make available additional copies as requested by such
Clearing Agency Participant for forwarding to holders of Certificates.
(b) Within a reasonable period of time after the end of each calendar year
but not later than the latest date permitted by law, the Trustee shall furnish
to each Person who at any time during such calendar year was a Certificateholder
of record a statement containing the sum of the amounts determined pursuant to
clauses (a)(i) and (a)(ii) with respect to the related Trust for such calendar
year or, in the event such Person was a Certificateholder of record during a
portion of such calendar year, for the applicable portion of such year, and such
other items as are readily available to the Trustee and which a
Certificateholder shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its Federal income tax returns. With respect
to Certificates registered in the name of a Clearing Agency or its nominee, such
report and such other items shall be prepared on the basis of information
supplied to the Trustees by the Clearing Agency Participants and shall be
delivered by the Trustee to such Clearing Agency Participants to be available
for forwarding by such Clearing Agency Participants.
Section 4.04. Investment of Special Payment Moneys. Any money received by
the Trustee pursuant to Section 4.01(b) representing a Special Payment which is
not to be promptly distributed shall, to the extent practicable, be invested in
Permitted Investments by the Trustee as directed in writing by the Company
pending distribution of such Special Payment pursuant to Section 4.02. Any
investment made pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such moneys are
required to be used to make the payment required under Section 4.02 on the
applicable Special Distribution Date and the Trustee shall hold any such
Permitted Investments until maturity. The Trustee shall have no liability with
respect to any investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee. All income and
earnings from such investments shall be distributed on such Special Distribution
Date as part of such Special Payment.
<PAGE>
22
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The Company, at its own
cost and expense, will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and
franchises, except as otherwise specifically permitted in Section 5.02;
provided, however, that the Company shall not be required to preserve any right
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company shall 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:
(a) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall be a
"citizen of the United States" (as defined in Section 40102(a)(15) of Title 49
of the United States Code) 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 10 or more individuals or 6,000 pounds or
more of cargo and with respect to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the regulations under the
sections of Title 49, United States Code, relating to aviation;
(b) the corporation formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety shall execute and
deliver to the Trustee applicable to the Certificates of each series a duly
authorized, valid, binding and enforceable agreement in form and substance
reasonably satisfactory to the Trustee containing an assumption by such
successor corporation or Person of the due and punctual performance and
observance of each covenant and condition of the Note Documents and of this
Agreement applicable to the Certificates of each series to be performed or
observed by the Company;
(c) immediately after giving effect to such transaction, no Event of
Default applicable to the Certificates of each series or event which is, or
after notice or passage of time, or both, would be, such an Event of Default
shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate of the Company and an Opinion of Counsel of the Company (which may
be the Company's General Counsel) reasonably satisfactory to the Trustee, each
stating that such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (b) above comply with this Section 5.02
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any conveyance, transfer or lease of
substantially all of the assets of the Company as an entirety in accordance with
this Section 5.02, the successor corporation or Person formed by such
consolidation or into which the Company 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, the Company under this Agreement applicable
to the Certificates of each series with the same effect as if such successor
corporation or Person had been named as the Company herein. No such conveyance,
transfer or lease of substantially all of the assets of the Company as an
entirety shall
<PAGE>
23
have the effect of releasing the Company or any successor corporation or Person
which shall theretofore have become such in the manner prescribed in this
Section 5.02 from its liability in respect of any Note Document and of this
Agreement applicable to the Certificates of such series to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies: Upon the
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time, direct the exercise of remedies.
(b) Purchase Rights of Certificateholders: By acceptance of its
Certificate, each Certificateholder agrees that at any time after the occurrence
and during the continuation of a Triggering Event, each Certificateholder of
Certificates of a series will have certain rights, the exercise of which will be
specified in the applicable Trust Supplement, to purchase the class of
Certificates with immediate seniority to the Certificates held by the purchasing
Certificateholder. The purchase price with respect to the Certificates of any
series shall be equal to the Pool Balance of the Certificates of such series,
together with accrued and unpaid interest thereon to the date of such purchase,
without premium, but including any other amounts then due and payable to the
Certificateholders under this Agreement, any Intercreditor Agreement or any
other Note Document or on or in respect of the Certificates of such series;
provided, however, that no such purchase of Certificates of such series shall be
effective unless the purchaser shall certify to the Trustee that
contemporaneously with such purchase, such purchaser is purchasing, pursuant to
the terms of this Agreement and the other Agreements, if any, relating to
Certificates of a series that are subject to the same Intercreditor Agreement
(such other Agreements, the "Other Agreements"), the Certificates of each such
series that is senior to the Certificates held by such purchaser. Each payment
of the purchase price of the Certificates of any series shall be made to an
account or accounts designated by the Trustee and each such purchase shall be
subject to the terms of this Section. Each Certificateholder of any series
agrees by its acceptance of Certificates of such series that it will, upon
payment from any such Certificateholders of Certificates with a lower seniority
of the purchase price specified herein, forthwith sell, assign, transfer and
convey to the purchaser thereof (without recourse, representation or warranty of
any kind except for its own acts), all of the right, title, interest and
obligation of such Certificateholder in this Agreement, any Intercreditor
Agreement, the Liquidity Facility, the Note Documents and all Certificates of
such series held by such Certificateholder (excluding all right, title and
interest under any of the foregoing to the extent such right, title or interest
is with respect to an obligation not then due and payable as respects any action
or inaction or state of affairs occurring prior to such sale) and the purchaser
shall assume all of such Certificateholder's obligations under this Agreement,
any Intercreditor Agreement, the Liquidity Facility and the Note Documents. The
Certificates of such series will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders to deliver any Certificates of such series and, upon such a
purchase, (i) the only rights of the Certificateholders will be to deliver the
Certificates to the purchaser and receive the purchase price for such
Certificates of such series and (ii) if the purchaser shall so request, such
Certificateholder will comply with all of the provisions of Section 3.04 hereof
to enable new Certificates of such series to be issued to the purchaser in such
denominations as it shall request. All charges and expenses in connection with
the issuance of any such new Certificates shall be borne by the purchaser
thereof.
<PAGE>
24
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all
or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
Trustee or of the officer making such sale shall be a sufficient discharge
to any purchaser for his purchase money, and, after paying such purchase
money and receiving such receipt, such purchaser or its personal
representative or assigns shall not be obliged to see to the application
of such purchase money, or be in any way answerable for any loss,
misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys collected
by the Trustee upon any sale made either under the power of sale given by
this Agreement or otherwise for the enforcement of this Agreement shall be
applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit. If there shall be a failure to make payment of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name, and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of any Intercreditor Agreement and any Note Documents,
shall be entitled and empowered to institute any suits, actions or proceedings
at law, in equity or otherwise, for the collection of the sums so due and unpaid
on such Equipment Notes or under such Lease and may prosecute any such claim or
proceeding to judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03 and
any Intercreditor Agreement, the Certificateholders holding Certificates of a
series evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in the related Trust shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee with respect to such Trust or pursuant to the terms of any
Intercreditor Agreement, or exercising any trust or power conferred on the
Trustee under this Agreement or any Intercreditor Agreement, including any right
of the Trustee as Controlling Party under any Intercreditor Agreement or as
holder of the Equipment Notes, provided that
(1) such Direction shall not in the opinion of the Trustee be in
conflict with any rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Certificateholders of such series not
taking part in such Direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such Direction.
<PAGE>
25
Section 6.05. Waiver of Past Defaults. Subject to any Intercreditor
Agreement, the Certificateholders holding Certificates of a series evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust (i) may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the Trustee is the
Controlling Party, may direct the Trustee to instruct the applicable Loan
Trustee to waive, any past Indenture Default under any Indenture and its
consequences, and thereby annul any Direction given by such Certificateholders
or the Trustee to such Loan Trustee with respect thereto, except a default:
(1) in the deposit of any Scheduled Payment or Special Payment under
Section 4.01 or in the distribution of any payment under Section 4.02 on
the Certificates of a series, or
(2) in the payment of the principal of (premium, if any) or interest
on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which under Article
IX hereof cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate of a series affected
thereby.
Upon any such waiver, such default shall cease to exist with respect
to Certificates of such series and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders of such series to the relevant Loan
Trustee shall be annulled with respect thereto; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment
Notes issued under the relevant Indenture to waive the corresponding Indenture
Default.
Section 6.06. Right of Certificateholders to Receive Payments Not To Be
Impaired. Anything in this Agreement to the contrary notwithstanding, including
without limitation Section 6.07 hereof, but subject to any Intercreditor
Agreement, the right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.02 hereof on the applicable Certificates
when due, or to institute suit for the enforcement of any such payment on or
after the applicable Regular Distribution Date or Special Distribution Date,
shall not be impaired or affected without the consent of such Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit Except Under Certain
Conditions. A Certificateholder of any series shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) the Certificateholders holding Certificates of such series
evidencing Fractional Undivided Interests aggregating not less than 25% of
the related Trust shall have requested the Trustee in writing to institute
such action, suit or proceeding and shall have offered to the Trustee
indemnity as provided in Section 7.02(e);
(3) the Trustee shall have refused or neglected to institute any
such action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
<PAGE>
26
(4) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Certificateholders
holding Certificates of such series evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the related
Trust.
It is understood and intended that no one or more of the
Certificateholders of any series shall have any right in any manner whatever
hereunder or under the related Trust Supplement or under the Certificates of
such series to (i) surrender, impair, waive, affect, disturb or prejudice any
property in the Trust Property of the related Trust or the lien of any related
Indenture on any property subject thereto, or the rights of the
Certificateholders of such series or the holders of the related Equipment Notes,
(ii) obtain or seek to obtain priority over or preference to any other such
Certificateholder of such series or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all the Certificateholders of such series subject to the
provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given hereunder to the
Trustee or to any of the Certificateholders of any series shall not be exclusive
of any other remedy or remedies, and every such remedy shall be cumulative and
in addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
Section 6.09. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Agreement, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, a court may require any
party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company or the Guarantor.
ARTICLE VII
THE TRUSTEE
Section 7.01. Notice of Defaults. As promptly as practicable after, and in
any event within 90 days after the occurrence of any default (as such term is
defined below) hereunder known to the Trustee, the Trustee shall transmit by
mail to the Company, any related Owner Trustees, the related Loan Trustees and
the Certificateholders holding Certificates of the related series in accordance
with Section 313(c) of the Trust Indenture Act, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of (premium, if any) or interest on any Equipment Note, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Certificateholders of the related
series. For the purpose of this Section in respect of any Trust, the term
"default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default in respect of that Trust.
Section 7.02. Certain Rights of Trustee. Subject to the provisions of
Section 315 of the Trust Indenture Act:
<PAGE>
27
(a) the Trustee may rely and shall be protected in acting or refraining
from acting in reliance upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Request;
(c) whenever in the administration of this Agreement or any Intercreditor
Agreement the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate of the
Company, any related Owner Trustee or any related Loan Trustee;
(d) the Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement or any Intercreditor Agreement at the
request or direction of any of the Certificateholders pursuant to this Agreement
or any Intercreditor Agreement unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the cost, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, or report, notice, request, direction, consent, order, bond, debenture
or other paper or document;
(g) the Trustee may execute any of the trusts or powers under this
Agreement or Intercreditor Agreement or perform any duties under this Agreement
or any Intercreditor Agreement either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
under this Agreement or any Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Certificateholders holding Certificates of any series evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
related Trust relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement or any Intercreditor
Agreement; and
(i) the Trustee shall not be required to expend or risk its own funds in
the performance of any of its duties under this Agreement, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk is not
reasonably assured to it.
(j) except during the continuance of an Event of Default, the Trustee
undertakes and shall be responsible to perform only such duties as are
specifically set forth herein and no implied covenants or obligations shall be
read into this Agreement or be enforceable against Trustee.
<PAGE>
28
Section 7.03. Not Responsible for Recitals or Issuance of Certificates.
The recitals contained herein and in the Certificates of each series, except the
certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.14, the Trustee makes no representations as to the validity
or sufficiency of this Basic Agreement or any Trust Supplement, any Note
Documents, any Note Purchase Agreement or any Intercreditor Agreement, any
Equipment Notes or the Certificates of any series, except that the Trustee
hereby represents and warrants that this Basic Agreement has been, and each
Trust Supplement, each Certificate and each Intercreditor Agreement of, or
relating to, each series will be, executed and delivered by one of its officers
who is duly authorized to execute and deliver such document on its behalf.
Section 7.04. May Hold Certificates. The Trustee, any Paying Agent,
Registrar or any of their Affiliates or any other agent, in their respective
individual or any other capacity, may become the owner or pledgee of
Certificates and subject to Sections 310(b) and 311 of the Trust Indenture Act
may otherwise deal with the Company, the Guarantor, any Owner Trustees or the
Loan Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.05. Money Held in Trust. Money held by the Trustee or the Paying
Agent in trust hereunder or under any Trust Supplement need not be segregated
from other funds except to the extent required herein or by law and neither the
Trustee nor the Paying Agent shall have any liability for interest upon any such
moneys except as provided for herein.
Section 7.06. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein or in any Trust
Supplement, to reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Basic Agreement, any Trust Supplement or any Intercreditor
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith or as may be incurred due to the Trustee's breach
of its representations and warranties set forth in Section 7.14;
(3) to indemnify, or cause to be indemnified, the Trustee for, and
to hold it harmless against, any loss, liability or expense (other than
for or with respect to any tax) incurred without negligence, willful
misconduct or bad faith, on its part, arising out of or in connection with
the acceptance or administration of this Trust, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder,
except for any such loss, liability or expense incurred by reason of the
Trustee's breach of its representations and warranties set forth in
Section 7.14. The Trustee shall notify the Company and the Guarantor
promptly of any claim for which it may seek indemnity. The Company and the
Guarantor shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel with the consent of the
Company and the Guarantor and the Company and the Guarantor will pay the
reasonable fees and expenses of such
<PAGE>
29
counsel. Neither the Company nor the Guarantor need pay for any settlement
made without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company and the Guarantor promptly of any claim
for any tax for which it may seek indemnity. The Trustee shall permit the
Company and the Guarantor to contest the imposition of such tax and the
Trustee, in its individual capacity, shall cooperate in the defense. The
Trustee, in its individual capacity, may have separate counsel with the
consent of the Company and the Guarantor and the Company and the Guarantor
will pay the reasonable fees and expenses of such counsel. Neither the
Company nor the Guarantor need pay for any taxes paid, in settlement or
otherwise, without its consent.
The Trustee shall be entitled to reimbursement from, and shall have a lien
prior to the Certificates of each series upon, all property and funds held or
collected by the Trustee in its capacity as Trustee with respect to such series
or the related Trust for any tax incurred without negligence, bad faith or
willful misconduct, on its part, arising out of or in connection with the
acceptance or administration of such Trust (other than any tax attributable to
the Trustee's compensation for serving as such), including any costs and
expenses incurred in contesting the imposition of any such tax. The Trustee
shall notify the Company of any claim for any tax for which it may seek
reimbursement. The Trustee shall cooperate in the contest by the Company of any
such claim. If the Trustee reimburses itself from the Trust Property of such
Trust for any such tax it will within 30 days mail a brief report setting forth
the amount of such tax and the circumstances thereof to all Certificateholders
of such series as their names and addresses appear in the Register.
As security for the performance of the obligations of the Company under
this Section with respect to each Trust the Trustee shall have a lien prior to
the Certificates of the related series upon all property and funds held or
collected by the Trustee in its capacity as Trustee with respect to such
Certificates and the related Trust.
Section 7.07. Corporate Trustee Required; Eligibility. Each Trust shall at
all times have a Trustee which shall be eligible to act as a trustee under
Section 310(a) of the Trust Indenture Act and shall have a combined capital and
surplus of at least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States, any State or Territory
thereof or of the District of Columbia that has a combined capital and surplus
of at least $75,000,000). If such corporation publishes reports of conditions at
least annually, pursuant to law or to the requirements of Federal, State,
Territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section 7.07, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published.
<PAGE>
30
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.07 to act as Trustee of any Trust, the
Trustee shall resign immediately as Trustee of such Trust in the manner and with
the effect specified in Section 7.08.
Section 7.08. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee of any Trust pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee under Section 7.09.
(b) The Trustee may resign at any time as trustee of any or all Trusts by
giving written notice thereof to the Company, the Authorized Agents, the related
Owner Trustees and the related Loan Trustees. If an instrument of acceptance by
a successor Trustee shall not have been delivered to the Company, the related
Owner Trustees and the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time as trustee of any Trust by Act
of the Certificateholders of the related series holding Certificates of such
series evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in such Trust delivered to the Trustee and to the Company,
the related Owner Trustees and the related Loan Trustees.
(d) If at any time in respect of any Trust:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act after written request therefor by the Company or by any
Certificateholder of the related series who has been a bona fide
certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.07 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder of the related series who has been a bona fide
Certificateholder for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee of such Trust.
(e) If a Responsible Officer of the Trustee shall obtain actual knowledge
of an Avoidable Tax (as hereinafter defined) in respect of any Trust which has
been or is likely to be asserted, the Trustee shall promptly notify the Company
and shall, within 30 days of such notification, resign as Trustee of such Trust
hereunder unless within such 30-day period the Trustee shall have received
notice that the Company has agreed to pay such tax. The Company shall promptly
appoint a successor Trustee of such Trust in a jurisdiction where there are no
Avoidable Taxes. As used herein, an "Avoidable Tax" in respect of such Trust
means a state or local tax: (i) upon (w) such Trust, (x) such Trust Property,
(y) Certificateholders of such Trust or (z) the Trustee for which the Trustee is
entitled to seek reimbursement
<PAGE>
31
from the Trust Property of such Trust, and (ii) which would be avoided if the
Trustee were located in another state, or jurisdiction within a state, within
the United States. A tax shall not be an Avoidable Tax in respect of any Trust
if the Company or any Owner Trustee shall agree to pay, and shall pay, such tax.
(f) If the Trustee shall resign, be removed or become incapable of acting
as trustee of any Trust, or if a vacancy shall occur in the office of the
Trustee of any Trust for any cause, the Company shall promptly appoint a
successor Trustee of such Trust. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a successor
Trustee of such Trust shall be appointed by Act of the Certificateholders of the
related series holding Certificates of such series evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in such
Trust delivered to the Company, the related Owner Trustees, the related Loan
Trustee and the retiring Trustee, the successor Trustees so appointed shall,
with the approval of the Company, which approval shall not be unreasonably
withheld, forthwith upon its acceptance of such appointment, become the
successor Trustee of such Trust and supersede the successor Trustee of such
Trust appointed as provided above. If no successor Trustee shall have been so
appointed as provided above and accepted appointment in the manner hereinafter
provided, the resigning Trustee or any Certificateholder who has been a bona
fide Certificateholder of the related series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee of such Trust.
(g) The successor Trustee of a Trust shall give notice of the resignation
and removal of the Trustee and appointment of the successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Certificateholders of the related series as their names and addresses appear in
the Register. Each notice shall include the name of such successor Trustee and
the address of its Corporate Trust Office.
Section 7.09. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the retiring Trustee with respect to any or all Trusts an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee with respect to such Trusts shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on request of the Company or the successor Trustee, such retiring
Trustee shall execute and deliver an instrument transferring to such successor
Trustee all such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee in respect of such Trusts hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.06. Upon request of
any such successor Trustee, the Company, the retiring Trustee and such successor
Trustee shall execute and deliver any and all instruments containing such
provisions as shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee all such rights,
powers and trusts.
If a successor Trustee is appointed with respect to one or more (but not
all) Trusts, the Company, the predecessor Trustee and each successor Trustee
with respect to any Trust shall execute and deliver a supplemental agreement
hereto which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
predecessor Trustee with respect to the Trusts as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor Trustee,
and shall add to or change any of the provisions of this Basic Agreement and the
applicable Trust Supplements as shall be necessary to provide for or facilitate
the administration of the Trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such
<PAGE>
32
supplemental agreement shall constitute such Trustees co-Trustees of the same
Trust and that each such Trustee shall be Trustee of separate Trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 7.10. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been executed or
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such execution or authentication and deliver the Certificates so executed or
authenticated with the same effect as if such successor Trustee had itself
executed or authenticated such Certificates.
Section 7.11. Maintenance of Agencies.
(a) With respect to each series of Certificates, there shall at all times
be maintained in the Borough of Manhattan, The City of New York, an office or
agency where Certificates of such series may be presented or surrendered for
registration of transfer or for exchange, and for payment thereof and where
notices and demands to or upon the Trustee in respect of such Certificates or of
the related Trust Supplement may be served. Such office or agency shall be
initially at 61 Broadway, New York, New York 10006. Written notice of the
location of each such other office or agency and of any change of location
thereof shall be given by the Trustee to the Company, the Guarantor, any Owner
Trustees, the Loan Trustees and the Certificateholders of such series. In the
event that no such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations and demands may
be made and notices may be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent hereunder
with respect to the Certificates of each series. Each such Authorized Agent
shall be a bank or trust company, shall be a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or a corporation having a combined
capital and surplus in excess of $5,000,000 the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate trust
powers, subject to supervision by Federal or state authorities. The Trustee
shall initially be the Paying Agent and, as provided in Section 3.04, Registrar
hereunder with respect to the Certificates of each series. Each Registrar shall
furnish to the Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of the Register
maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor corporation is otherwise eligible under this Section, without the
execution or filing of any
<PAGE>
33
paper or any further act on the part of the parties hereto or such Authorized
Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by giving written notice
of resignation to the Trustee, the Company, any related Owner Trustees and the
related Loan Trustees. The Company may, and at the request of the Trustee shall,
at any time terminate the agency of any Authorized Agent by giving written
notice of termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at any time any
such Authorized Agent shall cease to be eligible under this Section (when in
either case, no other Authorized Agent performing the functions of such
Authorized Agent shall have been appointed), the Company shall promptly appoint
one or more qualified successor Authorized Agents, reasonably satisfactory to
the Trustee, to perform the functions of the Authorized Agent which has resigned
or whose agency has been terminated or who shall have ceased to be eligible
under this Section. The Company shall give written notice of any such
appointment made by it to the Trustee, any related Owner Trustees and the
related Loan Trustees; and in each case the Trustee shall mail notice of such
appointment to all Certificateholders of the related series as their names and
addresses appear on the Register for such series.
(e) The Company agrees to pay, or cause to be paid, from time to time to
each Authorized Agent reasonable compensation for its services and to reimburse
it for its reasonable expenses.
Section 7.12. Money for Certificate Payments to Be Held in Trust. All
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate trust
fund for the benefit of the Certificateholders with respect to which such money
was deposited.
The Trustee may at any time, for the purpose of obtaining the satisfaction
and discharge of this Agreement or for any other purpose, direct any Paying
Agent to pay to the Trustee all sums held in trust by such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Section 7.13. Registration of Equipment Notes in Trustee's Name. Subject
to the provisions of any Intercreditor Agreement, the Trustee agrees that all
Equipment Notes, and Permitted Investments, if any, shall be issued in the name
of the Trustee as trustee for the applicable Trust or its nominee and held by
the Trustee, or, if not so held, the Trustee or its nominee shall be reflected
as the owner of such Equipment Notes or Permitted Investments as the case may
be, in the register of the issuer of such Equipment Notes or Permitted
Investments.
Section 7.14. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a Massachusetts trust company organized and
validly existing, and in good standing under the laws of the State of
Massachusetts;
(b) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Agreement, any Intercreditor Agreement
and the Note Purchase Agreements and has taken all necessary action to
authorize the execution, delivery, and performance by it of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements;
<PAGE>
34
(c) the execution, delivery and performance by the Trustee of this
Agreement, any Intercreditor Agreement and the Note Purchase Agreements
(i) will not violate any provision of any United States federal law or the
law of the State of Massachusetts governing the banking and trust powers
of the Trustee or any order, writ, judgment, or decree of any court,
arbitrator, or governmental authority applicable to the Trustee or any of
its assets, (ii) will not violate any provision of the articles of
association or by-laws of the Trustee, and (iii) will not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions of,
any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement any Intercreditor Agreement and the Note Purchase Agreements
will not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency of the United
States or the State of Massachusetts regulating the banking and corporate
trust activities of the Trustee; and
(e) this Agreement, any Intercreditor Agreement and the Note
Purchase Agreements have been duly executed and delivered by the Trustee
and constitute the legal, valid, and binding agreements of the Trustee,
enforceable against it in accordance with their respective terms, provided
that enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and (ii) general principles of equity.
Section 7.15. Withholding Taxes; Information Reporting. As to the
Certificates of any series, the Trustee, as trustee of the related grantor trust
created by this Agreement, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due under this
Agreement or under the Certificates of such series any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any taxes or similar
charges are required to be withheld with respect to any amounts paid by or on
behalf of the Trustee in respect of the Certificates of such series, to withhold
such amounts and timely pay the same to the authority in the name of and on
behalf of the Certificateholders of such series, that it will file any necessary
withholding tax returns or statements when due, and that, as promptly as
possible after the payment thereof, it will deliver to each such
Certificateholder necessary documentation showing the payment thereof, together
with such additional documentary evidence as such Certificateholders of such
series may reasonably request from time to time. The Trustee agrees to file any
other information reports as it may be required to file under United States law.
Section 7.16. Trustee's Liens. The Trustee in its individual capacity
agrees that it will, in respect of each Trust created by this Agreement at its
own cost and expense promptly take any action as may be necessary to duly
discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance,
security interest or claim ("Trustee's Liens") on or with respect to the Trust
Property of such Trust which is attributable to the Trustee either (i) in its
individual capacity and which is unrelated to the transactions contemplated by
this Agreement, the related Note Purchase Agreements or the related Note
Documents, or (ii) as Trustee hereunder or in its individual capacity and which
arises out of acts or omissions which are not contemplated by this Agreement.
<PAGE>
35
Section 7.17. Preferential Collection of Claims. The Trustee shall comply
with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee
shall resign or be removed as Trustee, it shall be subject to Section 311(a) of
the Trust Indenture Act to the extent provided therein.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with Names and Addresses of
Certificateholders. The Company will furnish to the Trustee within 15 days after
each Record Date with respect to a Scheduled Payment, and at such other times as
the Trustee may request in writing, within 30 days after receipt by the Company
of any such request, a list, in such form as the Trustee may reasonably require,
of all information in the possession or control of the Company as to the names
and addresses of the Certificateholders of such series, in each case as of a
date not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee is the sole Registrar for such series, no
such list need be furnished; and provided further, however, that no such list
need be furnished for so long as a copy of the Register is being furnished to
the Trustee pursuant to Section 7.11.
Section 8.02. Preservation of Information; Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders of each
series contained in the most recent list furnished to the Trustee as provided in
Section 7.11 or Section 8.01, as the case may be, and the names and addresses of
Certificateholders of each series received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 7.11 or Section 8.01, as the case may be, upon receipt of a
new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of each year
commencing with the first full year following the issuance of any series of
Certificates, the Trustee shall transmit to the Certificateholders of each
series, as provided in Section 313(c) of the Trust Indenture Act, a brief report
dated as of such May 15, if required by Section 313(a) of the Trust Indenture
Act.
Section 8.04. Reports by the Guarantor and Company. The Guarantor and the
Company each shall:
(a) file with the Trustee, within 30 days after the Guarantor or the
Company is required to file the same with the SEC, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Guarantor or the Company is required to file
with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934, as amended; or, if the Guarantor or the Company is not required to
file information, documents or reports pursuant to either of such sections, then
to file with the Trustee and the SEC, in accordance with rules and regulations
prescribed by the SEC, such of the supplementary and periodic information,
documents and reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of a security listed and
registered on a national securities exchange as may be prescribed in such rules
and regulations;
(b) file with the Trustee and the SEC, in accordance with the rules and
regulations prescribed by the SEC, such additional information, documents and
reports with respect to compliance by the Guarantor and the Company with the
conditions and covenants of the Guarantor and the Company
<PAGE>
36
provided for in this Agreement, as may be required by such rules and
regulations, including, in the case of annual reports, if required by such rules
and regulations, certificates or opinions of independent public accountants,
conforming to the requirements of Section 1.02;
(c) transmit to all Certificateholders, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act such summaries of any
information, documents and reports required to be filed by the Guarantor and the
Company pursuant to subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC;
(d) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Guarantor's and
the Company's compliance with all conditions and covenants under this Agreement
(it being understood that for purposes of this paragraph (d), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Agreement); and
(e) make available to any Certificateholder upon request, the annual
audited and quarterly unaudited financial statements of the Guarantor which are
provided to the Trustee.
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Guarantor
and the Company may, and the Trustee (subject to Section 9.03) shall, at any
time and from time to time, enter into one or more agreements supplemental
hereto or, if applicable, to the Intercreditor Agreement or a Note Purchase
Agreement in form satisfactory to the Trustee, for any of the following
purposes:
(1) to provide for the formation of a Trust, the issuance of a
series of certificates and the other matters contemplated by Section 2.01(b); or
(2) to evidence the succession of another corporation to the Company
or the Guarantor and the assumption by any such successor of the covenants of
the Company or the Guarantor herein contained; or
(3) to add to the covenants of the Guarantor or the Company for the
benefit of the Certificateholders of any series, or to surrender any right or
power in this Agreement conferred upon the Guarantor or the Company; or
(4) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or in any Trust
Supplement or to make any other provisions with respect to matters or questions
arising under this Agreement, provided that any such action shall not adversely
affect the interests of the Certificateholders of any series; or to cure any
ambiguity or correct any mistake; or
(5) to modify, eliminate or add to the provisions of this Agreement
to such extent as shall be necessary to continue the qualification of this
Agreement (including any supplemental agreement) under the Trust Indenture Act,
or under any similar Federal statute hereafter enacted, and to add to this
Agreement such other provisions as may be expressly permitted by the Trust
Indenture Act,
<PAGE>
37
excluding, however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which this instrument was executed
or any corresponding provision in any similar Federal statute hereafter enacted;
or
(6) to evidence and provide for the acceptance of appointment under
this Agreement by a successor Trustee with respect to one or more Trusts and to
add to or change any of the provisions of this Agreement as shall be necessary
to provide for or facilitate the administration of the Trusts hereunder and
thereunder by more than one Trustee, pursuant to the requirements of Section
7.09; or
(7) to make any other amendments or modifications hereto, provided
such amendments or modifications shall only apply to Certificates of one or more
series to be thereafter issued.
Section 9.02. Supplemental Agreements with Consent of Certificateholders.
With respect to each separate Trust and the series of Certificates relating
thereto, with the consent of the Certificateholders holding Certificates of any
series evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in such Trust, by Act of said Certificateholders delivered
to the Guarantor, the Company and the Trustee, the Guarantor and the Company may
(with the consent of the Owner Trustee, if any, relating to such certificates,
which consent shall not be unreasonably withheld), and the Trustee (subject to
Section 9.03) shall, enter into an agreement or agreements supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, any Intercreditor Agreement
or any Note Purchase Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and obligations of
such Certificateholders under this Agreement; provided, however, that no such
supplemental agreement shall, without the consent of the Certificateholder of
each Outstanding Certificate affected thereby:
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Equipment Notes held in such Trust or
distributions that are required to be made herein on any Certificate of such
series, or change any date of payment of any Certificate of such series, or
change the place of payment where, or the coin or currency in which, any
Certificate of such series is payable, or impair the right to institute suit for
the enforcement of any such payment or distribution on or after the Regular
Distribution Date or Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note in the Trust
Property of such Trust except as permitted by this Agreement, or otherwise
deprive such Certificateholder of the benefit of the ownership of the Equipment
Notes in such Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement; or
(4) reduce the percentage of the aggregate Fractional Undivided
Interests of such Trust which is required for any such supplemental agreement,
or reduce such percentage required for any waiver (of compliance with certain
provisions of this Agreement or certain defaults hereunder and their
consequences) provided for in this Agreement; or
(5) modify any of the provisions of this Section or Section 6.05,
except to increase any such percentage or to provide that certain other
provisions of this Agreement cannot be modified or waived without the consent of
the Certificateholder of each Certificate or such series affected thereby.
<PAGE>
38
It shall not be necessary for any Act of such Certificateholders under
this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If in the opinion
of the Trustee any document required to be executed by it pursuant to the terms
of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity
in favor of the Trustee under this Basic Agreement or any Trust Supplement, the
Trustee may in its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution of any
supplemental agreement under this Article, this Basic Agreement shall be
modified in accordance therewith, and such supplemental agreement shall form a
part of this Basic Agreement for all purposes; and every Certificateholder of
each series theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby to the extent applicable to such series.
Section 9.06. Conformity with Trust Indenture Act. Every supplemental
agreement executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.
Section 9.07. Reference in Certificates to Supplemental Agreements.
Certificates of each series authenticated and delivered after the execution of
any supplemental agreement applicable to such series pursuant to this Article
may bear a notation in form approved by the Trustee as to any matter provided
for in such supplemental agreement; and, in such case, suitable notation may be
made upon Outstanding Certificates of such series after proper presentation and
demand.
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other Note
Documents. In the event that the Trustee, as holder of any Equipment Notes in
trust for the benefit of the Certificateholders of any series or as Controlling
Party, receives a request for a consent to any amendment, modification, waiver
or supplement under any Indenture or other Note Document the Trustee shall
forthwith send a notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder of such series registered on the Register
as of the date of such notice. The Trustee shall request from Certificateholders
of such series a Direction as to (a) whether or not to take or refrain from
taking any action which a holder of such Equipment Note has the option to
direct, (b) whether or not to give or execute any waivers, consents, amendments,
modifications or supplements as a holder of such Equipment Note and (c) how to
vote any Equipment Note if a vote has been called for with respect thereto.
Provided such a request for Certificateholder Direction shall have been made, in
directing any action or casting any vote or giving any consent as the holder of
any Equipment Note, the Trustee shall vote for or give consent to any such
action with respect to such Equipment Note in the same proportion as that of (i)
the aggregate face amounts of all Certificates of such series actually voted in
favor of or for giving consent to such action by Acts of Certificateholders to
(ii) the aggregate face amount of all
<PAGE>
39
Outstanding Certificates. For purposes of the immediately preceding sentence, a
Certificate shall have been "actually voted" if the Holder of such Certificate
has delivered to the Trustee an instrument evidencing such Holder's consent to
such Direction on or prior to the Business Day before the Trustee directs such
action or casts such vote or gives such consent. Notwithstanding the foregoing,
but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction consent and notify the relevant Loan
Trustee of such consent to any amendment, modification, waiver or supplement
under the relevant Indenture, Liquidity Facility, or any Note Document, if an
Event of Default hereunder shall have occurred and be continuing, or if such
amendment, modification or waiver will not adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.01. Termination of the Trusts. In respect of each Trust created
by the Basic Agreement as supplemented by a related Trust Supplement, the
respective obligations and responsibilities of the Company, the Guarantor and
the Trustee created under this Agreement and the Trust created hereby and such
Trust shall terminate upon the distribution to all Holders of the Certificates
of the series of such Trust and the Trustee of all amounts required to be
distributed to them pursuant to this Agreement and the disposition of all
property held as part of the Trust Property of the related series of such Trust;
provided, however, that in no event shall such Trust continue beyond the final
expiration date determined as provided in this Agreement.
Notice of any termination of a Trust, specifying the applicable Regular
Distribution Date (or applicable Special Distribution Date, as the case may be)
upon which the Certificateholders of any series may surrender their Certificates
to the Trustee for payment of the final distribution and cancellation, shall be
mailed promptly by the Trustee to Certificateholders of such series not earlier
than the minimum number of days and not more than the maximum number of days
specified therefor in the related Trust Supplement preceding such final
distribution specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed final payment of
the Certificates of such series will be made upon presentation and surrender of
Certificates of such series at the office or agency of the Trustee therein
specified, (B) the amount of any such proposed final payment, and (C) that the
Record Date otherwise applicable to such Regular Distribution Date (or Special
Distribution Date, as the case may be) is not applicable, payments being made
only upon presentation and surrender of the Certificates of such series at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Registrar at the time such notice is given to Certificateholders
of such series. Upon presentation and surrender of the Certificates of such
series, the Trustee shall cause to be distributed to Certificateholders of such
series amounts distributable on such Regular Distribution Date (or Special
Distribution Date, as the case may be) pursuant to Section 4.02.
In the event that all of the Certificateholders of such series shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders of such series to surrender
their Certificates for cancellation and receive the final distribution with
respect thereto. In the event that any money held by the Trustee for the payment
of distributions on the Certificates of such series shall remain unclaimed for
two years (or such lesser time as the Trustee shall be satisfied, after sixty
days' notice from the Company, is one month prior to the escheat period provided
under applicable law) after the final distribution date with respect thereto,
the Trustee shall pay to each Loan Trustee the appropriate
<PAGE>
40
amount of money relating to such Loan Trustee and shall give written notice
thereof to the related Owner Trustees and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder of any series shall not operate to terminate
this Agreement, or the related Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.
Section 12.02. Liabilities of Certificateholders. Neither the existence of
the Trust nor any provision in this Agreement is intended to or shall limit the
liability the Certificateholders would otherwise incur if the Certificateholders
owned Trust Property as co-owners, or incurred any obligations of the Trust,
directly rather than through the Trust.
Section 12.03. Certificates Nonassessable and Fully Paid.
Certificateholders of each series shall not be personally liable for obligations
of the related Trust, the Fractional Undivided Interests represented by the
Certificates of such series shall be nonassessable for any losses or expenses of
such Trust or for any reason whatsoever, and Certificates of such series upon
authentication thereof by the Trustee pursuant to Section 3.02 are and shall be
deemed fully paid. No Certificateholder of such series shall have any right
(except as expressly provided herein) to vote or in any manner otherwise control
the operation and management of the related Trust Property, the related Trust,
or the obligations of the parties hereto, nor shall anything set forth herein,
or contained in the terms of the Certificates of such series, be construed so as
to constitute the Certificateholders of such series from time to time as
partners or members of an association.
Section 12.04. Registration of Equipment Notes in Name of Subordination
Agent. If a Trust is party to an Intercreditor Agreement, the Trustee agrees
that all Equipment Notes to be purchased by such Trust shall be issued in the
name of the Subordination Agent under such Intercreditor Agreement or its
nominee and held by such Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, such Subordination Agent or its nominee
shall be reflected as the owner of such Equipment Notes in the register of the
issuer of such Equipment Notes.
Section 12.05. Notices.
(a) Unless otherwise specifically provided herein or in the applicable
Trust Supplement with respect to any Trust, all notices required under the terms
and provisions of this Basic Agreement or such Trust Supplement with respect to
such Trust shall be in English and in writing, and any such notice may be given
by United States mail, courier service, telegram, telex, telemessage, telecopy,
telefax, cable or facsimile (confirmed by telephone or in writing in the case of
notice by telegram, telex, telemessage, telecopy, telefax, cable or facsimile)
or any other customary means of communication, and any such notice shall be
effective when delivered, or if mailed, three days after deposit in the United
States mail with proper postage for ordinary mail prepaid,
<PAGE>
41
if to the Company or the Guarantor, to:
Mail: Northwest Airlines, Inc.
5101 Northwest Drive
St. Paul, Minnesota 55111-3034
Courier: 2700 Lone Oak Parkway
Eagan, Minnesota 55121
Attention: Senior Vice President-Finance and Treasurer
Facsimile: (612) 726-0665
if to the Trustee, to:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
Telephone: (617) 664-5600
(b) The Company, the Guarantor or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders of any series shall
be mailed by first-class mail to the addresses for Certificateholders of such
series shown on the Register kept by the Registrar and to addresses filed with
the Trustee for Certificate Owners of such series. Failure so to mail a notice
or communication or any defect in such notice or communication shall not affect
its sufficiency with respect to other Certificateholders or Certificate Owners
of such series.
(d) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is conclusively presumed to have been duly given,
whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders of such series, it shall mail a copy to the Trustee and to
each Paying Agent for such series at the same time.
(f) Notwithstanding the foregoing, all communications or notices to the
Trustee shall be deemed to be given only when received by a Responsible Officer
of the Trustee.
(g) The Trustee shall promptly furnish the Company with a copy of any
demand, notice or written communication received by the Trustee hereunder from
any Certificateholder, Owner Trustee or Loan Trustee.
Section 12.06. Governing Law. THIS BASIC AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND
CERTIFICATES, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
<PAGE>
42
OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or any Trust, or of
the Certificates of any series or the rights of the Certificateholders thereof.
Section 12.08. Trust Indenture Act Controls. This Agreement is subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions.
Section 12.09. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 12.10. Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the Trustee, the Guarantor
and the Company shall bind and, to the extent permitted hereby, shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
Section 12.11. Benefits of Agreement. Nothing in this Agreement or in the
Certificates of any series, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the
Certificateholders of each series, any benefit or any legal or equitable right,
remedy or claim under this Agreement.
Section 12.12. Legal Holidays. In any case where any Regular Distribution
Date or Special Distribution Date relating to any Certificate of any series
shall not be a Business Day with respect to such series, then (notwithstanding
any other provision of this Agreement) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on such Regular Distribution Date or Special Distribution
Date, and no interest shall accrue during the intervening period.
Section 12.13. Counterparts. For the purpose of facilitating the execution
of this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
Section 12.14. Communication by Certificateholders with Other
Certificateholders. Certificateholders of any series may communicate with other
Certificateholders of such series with respect to their rights under this Basic
Agreement, the related Trust Supplement or the Certificates of such series
pursuant to Section 3.12(b) of the Trust Indenture Act. The Company, the
Guarantor, the Trustee and any and all other persons benefitted by this
Agreement shall have the protection afforded by Section 312(c) of the Trust
Indenture Act.
<PAGE>
43
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have caused
this Basic Agreement to be duly executed by their respective officers, all as of
the day and year first above written.
NORTHWEST AIRLINES CORPORATION
By ILLEGIBLE
-----------------------------------
Title:
-------------------------------
NORTHWEST AIRLINES, INC.
By ILLEGIBLE
-----------------------------------
Title:
-------------------------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By /s/ Donald Smith
-----------------------------------
Title: Vice President
-------------------------------
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
(1)[Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
NORTHWEST AIRLINES __________ PASS THROUGH TRUST
Pass Through
Certificate, Series __________
Final Distribution Date: __________, _____
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each
secured by Aircraft owned by or leased to Northwest Airlines,
Inc.
Certificate
No. __________ $__________ Fractional Undivided Interest representing ._____%
of the Trust per $1,000 face amount
THIS CERTIFIES THAT __________________________, for value received, is the
registered owner of a $_____________________ (______________ dollars) Fractional
Undivided Interest in the Northwest Airlines Pass Through Trust (the "Trust")
created by State Street Bank and Trust Company, as trustee (the "Trustee"),
pursuant to a Pass Through Trust Agreement dated as of ______, 1996 (the "Basic
Agreement"), as supplemented by Trust Supplement No. ___________ thereto dated
__________, 199___ (collectively, the "Agreement"), among the Trustee, Northwest
Airlines Corporation, a corporation incorporated under Delaware law (the
"Guarantor"), and Northwest Airlines, Inc., a corporation incorporated under
Minnesota law (the "Company"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series _____________" (herein called
the "Certificates"). This Certificate is issued under and is subject to the
terms, provisions, and conditions of the Agreement, to which Agreement the
Certificateholder of this Certificate by virtue of the acceptance hereof assents
and by which such Certificateholder is bound. The property of the Trust includes
certain Equipment Notes and all rights of the Trust to receive any payments
under any Intercreditor Agreement or Liquidity Facility (the "Trust Property").
- ----------
(1) This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company. One Certificate may be issued in a denomination of
less than $1,000 which shall not have this legend.
<PAGE>
2
Each issue of the Equipment Notes is secured by a security interest in aircraft
leased to or owned by the Company.
The Certificates represent fractional undivided interests in the Trust and
the Trust Property, and have no rights, benefits or interest in respect of any
other separate trust established pursuant to the terms of the Basic Agreement
for any other series of certificates issued pursuant thereto. [The undivided
percentage interest in the Trust represented by each of this Certificate (as
specified above) and the other Pass Through Certificates, Series 1996-[_____],
was determined on the basis of (x) the aggregate of the Reference Principal
Amount of this Certificate (as specified above) and of the other Pass Through
Certificates, Series 1996-[______] and (y) the aggregate original principal
amounts of the Equipment Notes constituting the Trust Property.]
Subject to and in accordance with the terms of the Agreement and any
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each ____________ and ________________ (a "Regular Distribution
Date"), commencing on _______________, 199__, to the Person in whose name this
Certificate is registered at the close of business on the 15th day preceding the
Regular Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding the Special Distribution Date, an amount in respect of such
Special Payments on the Equipment Notes, the receipt of which has been confirmed
by the Trustee, equal to the product of the percentage interest in the Trust
evidenced by this Certificate and an amount equal to the sum of such Special
Payments so received. If a Regular Distribution Date or Special Distribution
Date is not a Business Day, distribution shall be made on the immediately
following Business Day with the same force and effect as if made on such Regular
Distribution Date or Special Distribution Date and no interest shall accrue
during the intervening period. The Trustee shall mail notice of each Special
Payment and the Special Distribution Date therefor to the Certificateholder of
this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent a direct obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby.
<PAGE>
3
A copy of the Agreement may be examined during normal business hours at the
principal office of the Trustee, and at such other places, if any, designated by
the Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set forth,
the transfer of this Certificate is registrable in the Register upon surrender
of this Certificate for registration of transfer at the offices or agencies
maintained by the Trustee in its capacity as Registrar, or by any successor
Registrar duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Registrar, duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust will be
issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $1,000 Fractional Undivided Interest and
integral multiples thereof except that one Certificate may be in a denomination
of less than $1,000. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Trustee, the Registrar, nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by the
Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE>
4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
NORTHWEST AIRLINES PASS THROUGH TRUST
By: STATE STREET BANK AND TRUST COMPANY,
as Trustee
By
------------------------------------
Title:
--------------------------------
Dated:
--------------
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
Authorized Officer
SUPPLEMENTAL AGREEMENT
This Supplemental Agreement, dated as of November 20, 1998 (this
"Supplemental Agreement"), among Northwest Airlines Corporation (formerly known
as Newbridge Parent Corporation), a Delaware corporation (the "New Guarantor"),
Northwest Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation), a Delaware corporation (the "Original Guarantor"), Northwest
Airlines, Inc., a Delaware corporation (together with its successors and
assigns, the "Company"), and State Street Bank and Trust Company, a
Massachusetts trust company, as Trustee under the Basic Agreement referred to
below.
WITNESSETH:
WHEREAS, the Company, the Original Guarantor, and the Trustee have
heretofore executed and delivered the Pass Through Trust Agreement, dated as of
June 3,1996 (as amended, supplemented, waived or otherwise modified, the "Basic
Agreement");
WHEREAS, pursuant to the Basic Agreement from time to time the
Original Guarantor, the Company and the Trustee may enter into Trust Supplements
pursuant to which the Trustee shall declare the creation of a separate Trust for
the benefit of the Holders of the series of certificates to be issued in respect
of each such Trust;
WHEREAS, the Original Guarantor has undertaken certain obligations
pursuant to the Basic Agreement;
WHEREAS, as of the date of this Supplemental Agreement, Newbridge
Merger Corporation, a wholly owned subsidiary of the New Guarantor, will merge
with and into the Original Guarantor, with the Original Guarantor as the
surviving corporation, in accordance with Section 251(g) of the General
Corporation Law of the State of Delaware and pursuant to the Agreement and Plan
of Merger, dated as of January 25,1998 (as amended and restated as of October
30, 1998, the "Merger Agreement") among the Original Guarantor, the New
Guarantor and Newbridge Merger Corporation, and thereafter the Original
Guarantor shall be a wholly owned subsidiary of the New Guarantor; and
WHEREAS, pursuant to Section 9.01 of the Basic Agreement, the
Original Guarantor, the Company and the Trustee are authorized to execute and
deliver this Supplemental Agreement to amend the Basic Agreement, without the
consent of any Certificateholders; and
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Original Guarantor, the Company and the Trustee mutually covenant
and agree for the equal and ratable benefit of the Certificateholders as
follows:
<PAGE>
2
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Supplemental Agreement,
terms defined in the Basic Agreement or in the preamble or recitals hereto are
used herein as therein defined. The words "herein," "hereof" and "hereby" and
other words of similar import used in this Basic Agreement refer to this Basic
Agreement as a whole and not to any particular section hereof.
ARTICLE II
Modifications
SECTION 2.1 Definitions. Section 1.01 of the Basic Agreement is
hereby amended by adding thereto, in its proper alphabetical order, the
following definition:
"New Guarantor: Northwest Airlines Corporation (formerly known as
Newbridge Parent Corporation) for so long as it shall guarantee the
obligations of the Company under any Lease.
SECTION 2.2 Section 8.04. Section 8.04 of the Basic Agreement is
hereby amended by deleting such Section in its entirety and by substituting, in
lieu thereof, the following:
"Section 8.04. Reports by the Guarantor, New Guarantor and Company.
The Guarantor, the New Guarantor and the Company each shall:
(a) file with the Trustee, within 30 days after the Guarantor, the
New Guarantor or the Company is required to file the same with the SEC,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may
from time to time by rules and regulations prescribe) which the Guarantor,
the New Guarantor or the Company is required to file with the SEC pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934, as
amended; or, if the Guarantor, the New Guarantor or the Company is not
required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the SEC, in accordance
with rules and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the SEC, in accordance with the rules
and regulations prescribed by the SEC, such additional information,
documents and reports
<PAGE>
3
with respect to compliance by the Guarantor, the New Guarantor and the
Company with the conditions and covenants of the Guarantor, the New
Guarantor and the Company provided for in this Agreement, as may be
required by such rules and regulations, including, in the case of annual
reports, if required by such rules and regulations, certificates or
opinions of independent public accountants, conforming to the requirements
of Section 1.02;
(c) transmit to all Certificateholders, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act such
summaries of any information, documents and reports required to be filed
by the Guarantor, the New Guarantor and the Company pursuant to
subsections (a) and (b) of this Section 8.04 as may be required by rules
and regulations prescribed by the SEC;
(d) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Guarantor's, the New Guarantor's and the Company's compliance with all
conditions and covenants under this Agreement (it being understood that
for purposes of this paragraph (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided
under this Agreement); and
(e) make available to any Certificateholder upon request, the annual
audited and quarterly unaudited financial statements of the New Guarantor
which are provided to the Trustee."
SECTION 2.3 Section 11.01. Section 11.01 of the Basic Agreement is
hereby amended by adding in the first paragraph thereof, after the word
"Guarantor" the words and punctuation ", the New Guarantor".
ARTICLE III
Miscellaneous
SECTION 3.1 Governing Law; Successors. This Agreement shall be
governed by the laws of the State of New York. This Supplemental Agreement shall
be binding upon the Guarantor, the New Guarantor, the Company and their
respective successors and assigns and shall inure to the benefit of each of the
parties to the Basic Agreement
SECTION 3.2 Severability Clause. In case any provision in this
Supplemental Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
SECTION 3.3 Entire Agreement. This Supplemental Agreement is
intended by the parties to be a final expression of their agreement in respect
of the subject matter contained
<PAGE>
4
herein and, together with the Basic Agreement, supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
SECTION 3.4 Ratification of Basic Agreement; Supplemental Agreement
Part of Basic Agreement. Except as expressly amended hereby, the Basic Agreement
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Supplemental
Agreement shall form a part of the Basic Agreement for all purposes, and every
Certificateholder heretofore or hereafter authenticated and delivered shall be
bound hereby. The Trustee makes no representation or warranty as to the validity
or sufficiency of this Supplemental Agreement
SECTION 3.5 Counterparts. The parties hereto may sign one or more
copies of this Supplemental Agreement in counterparts, all of which together
shall constitute one and the same agreement.
SECTION 3.6 Headings. The headings of the Articles and the Sections
in this Supplemental Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of any provisions
hereof.
<PAGE>
5
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Agreement to be duly executed as of the date first above written.
NORTHWEST AIRLINES CORPORATION
By:
/s/ Douglas M. Steenland
----------------------------------------
Name: Douglas M. Steenland
Title: Executive Vice President, General
Counsel and Secretary
Address: 2700 Lone Oak Parkway
Eagan, MN 5512l
NORTHWEST AIRLINES, INC.
By:
/s/ Douglas M. Steenland
----------------------------------------
Name: Douglas M. Steenland
Title: Executive Vice President,
General Counsel and Secretary
NORTHWEST AIRLINES HOLDINGS
CORPORATION
By:
/s/ Douglas M. Steenland
----------------------------------------
Name: Douglas M. Steenland
Title: Executive Vice President, General
Counsel and Secretary
STATE STREET BANK AND TRUST
COMPANY as Trustee
By:
/s/ Donald E. Smith
----------------------------------------
Name: Donald E. Smith
Title: Vice President
This Trust Supplement No. 1999-1A, dated as of February 16, 1999
(herein called the "Trust Supplement"), by and among Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), Northwest Airlines
Holdings Corporation, a Delaware corporation (formerly known as Northwest
Airlines Corporation, "Holdings"), Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), and State Street Bank and Trust Company (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June 3, 1996, by
and among Holdings, the Company and the Trustee, as amended by the Supplemental
Agreement, dated as of November 20, 1998, among the Company, Holdings, the
Guarantor and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates which may be issued thereunder, has heretofore
been executed and delivered;
WHEREAS, unless otherwise specified herein, capitalized terms used
herein without definition having the respective meanings specified heretofore in
the Basic Agreement;
WHEREAS, the Company intends to finance the acquisition of four
Boeing 747- 400 aircraft either (i) through separate leveraged lease
transactions, in which case the Company will lease such aircraft (collectively,
the "Leased Aircraft") or (ii) through separate secured loan transactions, in
which case the Company will own such aircraft (collectively, the "Owned
Aircraft");
WHEREAS, in the case of each Owned Aircraft, each Owner Trustee,
acting on behalf of its respective Owner Participant, will issue, on a
non-recourse basis, Equipment Notes, among other things, to finance a portion of
the purchase price of such Leased Aircraft purchased or to be purchased by such
Owner Trustee and leased or to be leased to the Company pursuant to the related
Lease;
WHEREAS, in the case of an Owned Aircraft, the Company will issue
Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee or the Company, as
the case may be, having the same interest rate as, and final maturity dates not
later than the final Regular Distribution Date of, the Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1999-1A Trust" or the "Applicable Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-1A Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-1A Trust with the Trustee;
<PAGE>
2
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized; and
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions.
NOW THEREFORE, in consideration of the premises herein, it is agreed
by and among the Guarantor, Holdings, the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"Pass Through Certificates, Series 1999-1A" (hereinafter defined as the "Series
1999-1A Certificates" or the "Applicable Certificates"). Each Series 1999-1A
Certificate represents a Fractional Undivided Interest in the 1999-1A Trust
created hereby.
The terms and conditions applicable to the Series 1999-1A
Certificates are as follows:
(a) The aggregate principal amount of the Series 1999-1A
Certificates that shall be authenticated under the Agreement (except for
Series 1999-1A Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $235,505,000.
(b) The Cut-off Date is the earlier of (i) January 31, 2000 and (ii)
the day Equipment Notes with respect to all of the Aircraft (as defined
below) have been acquired by the Applicable Trust.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each August 1 and February 1, commencing on
August 1, 1999, until payment of all of the Scheduled Payments to be made
under the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the day
(which shall be a Business Day) on which such redemption or purchase is
scheduled to occur pursuant to the terms of the applicable Indenture and
(ii) when used with respect to a Special Payment other than as described
in clause (i) above, 15 days after the last date on which the Trustee must
give notice pursuant to Section 4.02(c) of the Basic Agreement (or the
next Business Day after such 15th day if such date is not a Business Day).
<PAGE>
3
(e) (i) The Series 1999-1A Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-1A
Certificates, by its acceptance of such Certificate or its interest
therein, will be deemed to represent and warrant to and for the benefit of
each Owner Participant and the Company that either (x) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
or of entities which may be deemed to hold such plans, have not been used
to purchase Series 1999-1A Certificates or (y) one or more prohibited
transaction statutory or administrative exemptions applies such that the
use of such plan assets to purchase and hold such Certificate will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975
of the Code.
(ii) The Series 1999-1A Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, Holdings, the Company and
the Clearing Agency (the "Clearing Agency") attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) The proceeds of the Series 1999-1A Certificates shall be
deposited in the Deposit Accounts and will be used in accordance with the
Escrow Agreement and the Deposit Agreement.
(h) When each Aircraft is delivered, either the Owner Trustee (in
the case of a Leased Aircraft), acting on behalf of its respective Owner
Participant, will issue on a non-recourse basis, or the Company (in the
case of an Owned Aircraft) will issue on a recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to finance
a portion of the purchase price to such Owner Trustee or the Company, as
the case may be, of the following Aircraft:
Expected
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
671US Boeing 747-400 PW4056
672US Boeing 747-400 PW4056
673US Boeing 747-400 PW4056
674US Boeing 747-400 PW4056
(i) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Series
1999-1A Certificate. In any event, any transfer or exchange of any Series
1999-1A Certificate shall also effect a transfer or exchange of the
related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or
exchange of any Series 1999-1A Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Series 1999-1A Certificate
to which an Escrow Receipt is attached,
<PAGE>
4
each Certificateholder of such a Series 1999-1A Certificate acknowledges
and accepts the restrictions on transfer of the Escrow Receipt set forth
herein and in the Escrow Agreement.
Section 1.02. Intercreditor Agreement. The Series 1999-1A
Certificates are subject to the Intercreditor Agreement, the Deposit Agreement
and the Escrow Agreement.
Section 1.03. Ranking of Series 1999-1A Certificates. The Series
1999-1A Certificates will be subject to the ranking and priority as set forth in
the Intercreditor Agreement.
Section 1.04. Liquidity Facility. Payments of interest on the Series
1999-1A Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. Ranking of Equipment Notes. The Equipment Notes will
be subject to the ranking and priority as set forth in the related Indenture.
Section 1.06. No Cross-Default or Cross- Collateralization of
Equipment Notes. As set forth in the related Indenture, there will not be any
cross-collateralization provisions or cross-default provisions in respect of the
Equipment Notes.
ARTICLE II
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. On the date hereof, the proceeds
from the issuance of the Applicable Certificates will be deposited in the
Deposit Accounts on behalf of the Escrow Agent. Pursuant to the terms of the
Deposit Agreement and the Note Purchase Agreement, a portion of the proceeds
from the issuance of the Applicable Certificates will be withdrawn from the
Deposit Account on any date on which an Owner Trustee (in the case of a Leased
Aircraft) or the Company (in the case of an Owned Aircraft) issues Equipment
Notes with respect to an Aircraft.
Section 2.02. Statement of Intent. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Code and not as a
trust or association taxable as a corporation or a partnership. Each of the
parties hereto and each Applicable Certificateholder, or beneficial owner of an
Applicable Certificate, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to treat for all U.S. federal, state and
local income tax purposes (i) the Applicable Trust as a grantor trust and (ii)
Equipment Notes to be issued (or assumed) by an Owner Trust (in the case of a
Leased Aircraft) as indebtedness of such Owner Trust, and Equipment Notes issued
by the Company (in the case of an Owned Aircraft) as indebtedness of the
Company.
<PAGE>
5
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. (a) For all purposes of the Basic
Agreement as supplemented by this Trust Supplement, the following capitalized
terms have the following meanings:
Aircraft: Means the four Boeing 747-400 aircraft which are expected
to be sold to the Owner Trustee or the Company during the period from
March, 1999 through October, 1999.
Applicable Certificateholder: Means the holder of an Applicable
Certificate.
Class D Certificateholder: Means the holder of a Class D
Certificate.
Class D Certificates: Has the meaning assigned in the Intercreditor
Agreement.
Clearing Agency: Has the meaning specified in Section 1.01(e)
hereof.
Clearing Agency Participant: Means any of the participants in the
Clearing Agency.
Closing Notice: Has the meaning specified in the Note Purchase
Agreement.
Cut-off Date: Has the meaning specified in Section 1.01(b).
Deposit Account: Means an account established under Section 1.2 of
the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of February
16, 1999 relating to the Applicable Certificates between the Depositary
and the Escrow Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Deposit Make-Whole Amount: Has the meaning specified in the Note
Purchase Agreement.
Depositary: Means ABN AMRO Bank N.V., acting through its Chicago
branch.
Deposits: Has the meaning specified in the Note Purchase Agreement.
Distribution Date: Means any Regular Distribution Date or Special
Distribution Date.
<PAGE>
6
Escrow Agent: Means initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of February 16, 1999 relating to the Applicable Certificates, among the
Escrow Agent, the Paying Agent, the Trustee and the Underwriters, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in the Paying Agent Account (as defined in the Escrow
Agreement)..
Final Withdrawal: With respect to the Escrow Agreement, has the
meaning set forth in Section 1.2 thereof.
Final Withdrawal Date: Means the date on which the Final Withdrawal
occurs.
Intercreditor Agreement: Means the Intercreditor Agreement, dated as
of the date hereof, by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company,
as Subordination Agent.
Leased Aircraft: Has the meaning specified in the recitals hereto.
Liquidity Facility: Has the meaning specified in the Note Purchase
Agreement.
Note Documents: With respect to any Equipment Note, means the Note
Purchase Agreement, the related Indenture, the related Participation
Agreement, and, if the related Aircraft is leased to the Company, the
related Lease.
Note Purchase Agreement: Means the Note Purchase Agreement, dated as
of the date hereof, among the Company, the Trustee, the Other Trustees,
State Street Bank and Trust Company, as Subordination Agent, the Escrow
Agent and the Paying Agent.
Notice of Purchase Withdrawal: Has the meaning specified in the Note
Purchase Agreement.
Other Agreements: Means the Basic Agreement as supplemented by Trust
Supplement No. 1999-1B (the "1999-1B Trust Supplement") dated the date
hereof relating to Northwest Airlines 1999-1B Pass Through Trust and by
Trust Supplement No. 1999-1C (the "1999-1C Trust Supplement") dated the
date hereof relating to the Northwest Airlines 1999-1C Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and
any successor or other trustee appointed as provided therein.
Owned Aircraft: Has the meaning specified in the recitals hereto.
<PAGE>
7
Participation Agreement: Has the meaning specified in the Note
Purchase Agreement.
Paying Agent: Means State Street Bank and Trust Company.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Applicable Certificates less (ii) the aggregate amount of
all payments made in respect of such Applicable Certificates or in respect
of Deposits relating to the Applicable Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs or
expenses incurred in connection therewith. The Pool Balance as of any
Distribution Date will be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property and the
distribution thereof to be made on that date.
Prospectus Supplement: Means the Prospectus Supplement dated
February 4, 1999, relating to the offering of the Class A Certificates,
the Class B Certificates and the Class C Certificates (each as defined in
the Intercreditor Agreement).
Pool Factor: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the Applicable
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, payment of principal of the Equipment Notes or other
Trust Property and the distribution thereof to be made on that date.
Record Date: Means the date preceding any Distribution Date on which
the Applicable Certificateholders are determined for purposes of the
distribution which will occur on such Distribution Date.
Scheduled Closing Date: Has the meaning specified in the Note
Purchase Agreement.
Special Payment: Means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note.
Special Redemption Premium: Means the Deposit Make-Whole Amount
payable by the Company in respect of the Final Withdrawal pursuant to the
Note Purchase Agreement.
Trust Property: Means (i) the Equipment Notes held as the property
of the Trust and, subject to the Intercreditor Agreement, all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) the rights of the Trust under the Escrow Agreement to request the
Escrow Agent to withdraw from the Deposit Accounts funds sufficient to
enable the Trust to purchase Equipment Notes on the delivery of an
Aircraft, (iii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iv) all rights of the Trust
and the Trustee, on behalf of the Trust, under the Intercreditor
Agreement, the Note Purchase Agreement and the Liquidity
<PAGE>
8
Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the
Trust pursuant to the Intercreditor Agreement or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1999 Pass
Through Trusts to be formed pursuant to the Basic Agreement, as
supplemented by this Trust Supplement and the Other Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
February 4, 1999 by and among the Company, the Guarantor, Morgan Stanley &
Co. Incorporated, Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Chase Securities Inc. and Salomon Smith Barney Inc.
ARTICLE IV
THE TRUSTEE
Section 4.01. Delivery of Documents; Delivery Dates. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement, each in the form delivered to
the Trustee by the Company and (ii) subject to the respective terms thereof, to
perform its obligations thereunder. Upon request of the Company and the
satisfaction or waiver of the closing conditions specified in the Underwriting
Agreement, the Trustee shall execute, deliver, authenticate, issue and sell
Applicable Certificates in authorized denominations equaling in the aggregate
the amount set forth, with respect to the Applicable Trust, in Schedule I to the
Underwriting Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.03, 3.04, 3.05 and 3.09 of the Basic Agreement,
the Trustee shall not execute, authenticate or deliver Applicable Certificates
in excess of the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date the Company may deliver from time
to time to the Trustee a Closing Notice relating to one or more Equipment Notes.
After receipt of a Closing Notice and in any case no later than two Business
Days prior to a Scheduled Closing Date as to which such Closing Notice relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Closing Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Closing Notice. The Trustee shall (as
and when specified in such Closing Notice), subject to the conditions set forth
in Section 3 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation
<PAGE>
9
Agreement specified in such Closing Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary (with a copy to
the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal
relating to such Deposit or Deposits on such Applicable Delivery Date. Upon
satisfaction of the conditions specified in the Note Purchase Agreement and the
Applicable Participation Agreement, the Trustee shall purchase the applicable
Equipment Notes with the proceeds of the withdrawals of one or more Deposits
made on the Applicable Delivery Date in accordance with the terms of the Deposit
Agreement and the Escrow Agreement. The purchase price of such Equipment Notes
shall equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 4.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (ii) the Trustee will make a demand upon the
Company for an amount equal to the Special Redemption Premium, such payment to
be made on the Final Withdrawal Date.
Section 4.03. The Trustee. (a) Subject to Section 4.04 of this Trust
Supplement and Section 7.14 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
(b) Except as herein otherwise provided, no duties, responsibilities
or liabilities are assumed, or shall be construed to be assumed by the Trustee
by reason of this Trust Supplement other than as set forth in the Basic
Agreement, and this Trust Supplement is executed and accepted on behalf of the
Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
Section 4.04. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to
execute, deliver and perform this Trust Supplement, the
Intercreditor Agreement, the Escrow Agreement and the Note Documents
to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance by it of
<PAGE>
10
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party;
(b) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party (i) will not
violate any provision of any United States federal law or the law of
the state of the United States where it is located governing the
banking and trust powers of the Trustee or any order, writ,
judgment, or decree of any court, arbitrator or governmental
authority applicable to the Trustee or any of its assets, (ii) will
not violate any provision of the articles of association or by-laws
of the Trustee, and (iii) will not violate any provision of, or
constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions
of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could
reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder
or on the transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party will not
require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency of
the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the
Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents to which it is a party have
been, or will be, as applicable, duly executed and delivered by the
Trustee and constitute, or will constitute, as applicable, the
legal, valid and binding agreements of the Trustee, enforceable
against it in accordance with their respective terms; provided,
however, that enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general
principles of equity.
Section 4.05. Trustee Liens. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.16 of the Basic
Agreement, that it will, at its own cost and expense, promptly take any action
as may be necessary to duly discharge and satisfy in full any Trustee's liens on
or with respect to the Trust Property which is attributable to the Trustee in
its individual capacity and which is unrelated to the transactions contemplated
by the Intercreditor Agreement or the Note Purchase Agreement.
<PAGE>
11
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. Supplemental Agreements Without Consent of
Certificateholders.
(a) Under the terms of, and subject to the limitations contained in,
Section 9.01 of the Basic Agreement, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at
the Company's request, at any time and from time to time, enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (1) through
(7) of such Section 9.01, except that (a) clause (3) of such Section 9.01 shall
be deemed to include the Company's rights and powers conferred by the Note
Purchase Agreement and (b) clause (4) of such Section 9.01 shall be deemed to
include corrections or supplements to provisions of the Escrow Agreement or the
Deposit Agreement which may be defective or inconsistent with any other
provision of this Agreement or contained in any agreement referred to in such
clause (4) and the curing of any ambiguity or the modification of any other
provision with respect to matters or questions arising under the Escrow
Agreement or the Deposit Agreement.
(b) If Class D Certificates are issued, the Company, the Guarantor,
Holdings and the Trustee, without the consent of the Applicable
Certificateholders, may enter into an agreement supplemental to this Trust
Supplement whereby Class D Certificateholders shall be granted purchase rights
similiar to those set forth in Section 7.01 hereof.
(c) Any supplemental agreement entered into pursuant to Sections
5.01(a) and (b) may not adversely affect the status of the Trust for U.S.
federal income tax purposes, as either (i) a grantor trust under Subpart E, Part
I of Subchapter J of Chapter 1 of Subtitle A of the Code or (ii) subject to no
resulting adverse Massachusetts state or local tax consequences, a partnership.
Section 5.02. Supplement Agreements with Consent of
Certificateholders. The provisions of Section 9.02 of the Basic Agreement shall
apply to agreements or amendments for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Escrow
Agreement, the Deposit Agreement or the Note Purchase Agreement to the extent
applicable to the Certificateholders approving such agreement or amendment or
modifying in any manner the rights and obligations of such Certificateholders
under the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement; provided that the provisions of Section 9.02(1) of the Basic
Agreement shall be deemed to include reductions in any manner of, or delay in
the timing of, any receipt by the Certificateholders of payments upon the
Deposits.
ARTICLE VI
DISTRIBUTIONS; STATEMENT TO CERTIFICATEHOLDERS
Section 6.01. Additions to Article IV of the Basic Agreement. In
addition to the provisions of Article IV of the Basic Agreement, the following
provisions shall apply to the Trust:
<PAGE>
12
(a) Upon the payment of Special Redemption Premium to the Trustee
under the Note Purchase Agreement, the Trustee, upon receipt thereof,
shall immediately deposit the aggregate amount of such Special Redemption
Premium in the Special Payments account;
(b) The distribution of amounts of Special Redemption Premium as
provided for in Section 4.02(b) of the Basic Agreement shall be on the
Special Distribution Date with respect to such Special Payment or as soon
thereafter as the Trustee has confirmed receipt of the related Special
Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by
the Company to the Trustee under the Note Purchase Agreement, the notice
provided for in Section 4.02(c) of the Basic Agreement shall be mailed,
together with the notice by the Paying Agent under Section 2.6 of the
Escrow Agreement, not less that 15 days prior to the Special Distribution
Date for such amount, which Special Distribution Date shall be the Final
Withdrawal Date: and
(d) The last sentence of the first paragraph of Section 4.02(c) of
the Basic Agreement shall apply equally if the amount of Special
Redemption Premium, if any, has not been calculated at the time the
Trustee mails notice of a Special Payment.
Section 6.02. Statements to Applicable Certificateholders. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, including any Special Redemption Premium, reflecting
in part the information provided by the Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Applicable
Certificate as to (ii), (iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
<PAGE>
13
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily available to
the Trustee and which an Applicable Certificateholder shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's preparation
of its federal income tax returns. Such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Applicable Certificates in the
manner described in Section 6.02(a) hereof.
(c) Promptly following (i) the Cut-off Date, if there has been any
change in the information set forth in clauses (x) and (y) below from that set
forth in page S-36 of the Prospectus Supplement, and (ii) any early redemption
or purchase of, or any default in the payment of principal or interest in
respect of, any of the Equipment Notes held in the Applicable Trust, or any
Final Withdrawal, the Trustee shall furnish to Applicable Certificateholders of
record on such date a statement setting forth (x) the expected Pool Factors for
each subsequent Regular Distribution Date following the Cut-off Date and (y) the
expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Applicable Certificates registered in the name of a Clearing Agency, on the
Cut-off Date, the Trustee will request from such Clearing Agency a securities
position listing setting forth the names of all Clearing Agency Participants
reflected on such Clearing Agency's books as holding interests in the Applicable
Certificates on such date. The Trustee will mail to each such Clearing Agency
Participant the statement described above and will make available additional
copies as requested by such Clearing Agency Participant for forwarding to
holders of interests in the Applicable Certificates.
(d) This Section 6.02 supersedes and replaces Section 4.03 of the
Basic Agreement.
<PAGE>
14
ARTICLE VII
DEFAULT
Section 7.01. Purchase Rights of Certificateholders. By acceptance
of its Applicable Certificate, each Applicable Certificateholder agrees that at
any time after the occurrence and during the continuation of a Triggering Event,
(a) each Class B Certificateholder shall have the right to purchase
all, but not less than all, of the Applicable Certificates upon ten days'
written notice to the Trustee and each other Class B Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class B Certificateholder notifies such purchasing Class B
Certificateholder that such other Class B Certificateholder wants to
participate in such purchase, then such other Class B Certificateholder
may join with the purchasing Class B Certificateholder to purchase all,
but not less than all, of the Applicable Certificates pro rata based on
the fractional undivided interest in the Class B Trust held by each such
Class B Certificateholder and (B) if prior to the end of such ten-day
period any other Class B Certificateholder fails to notify the purchasing
Class B Certificateholder of such other Class B Certificateholder's desire
to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Applicable
Certificates pursuant to this Section 7.01(a); and
(b) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Applicable Certificates pursuant to
paragraph (a) above) to purchase all, but not less than all, of the
Applicable Certificates and the Class B Certificates upon ten days'
written notice to the Trustee, the Class B Trustee and each other Class C
Certificateholder, provided that (A) if prior to the end of such ten-day
period any other Class C Certificateholder notifies such purchasing Class
C Certificateholder that such other Class C Certificateholder wants to
participate in such purchase, then such other Class C Certificateholder
may join with the purchasing Class C Certificateholder to purchase all,
but not less than all, of the Applicable Certificates and the Class B
Certificates pro rata based on the fractional undivided interest in the
Class C Trust held by each such Class C Certificateholder and (B) if prior
to the end of such ten-day period any other Class C Certificateholder
fails to notify the purchasing Class C Certificateholder of such other
Class C Certificateholder's desire to participate in such a purchase, then
such other Class C Certificateholder shall lose its right to purchase the
Applicable Certificates pursuant to this Section 7.01(b).
The purchase price with respect to the Applicable Certificates shall
be equal to the Pool Balance of the Applicable Certificates, together with
accrued and unpaid interest thereon to the date of such purchase, without
premium, but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; provided, however, that (i) if such purchase occurs after the
record date specified in Section 2.3(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate amount of unused Deposits and
interest to be distributed under the Escrow Agreement (which deducted amounts
shall remain distributable to, and may be retained by, the Applicable
Certificateholder
<PAGE>
15
as of such record date) and (ii) if such purchase occurs after a Record Date,
such purchase price shall be reduced by the amount to be distributed hereunder
on the related Distribution Date (which deducted amounts shall remain
distributable to, and may be retained by, the Applicable Certificateholder as of
such Record Date); provided further that no such purchase of Applicable
Certificates shall be effective unless the purchaser(s) shall certify to the
Trustee that contemporaneously with such purchase, such purchaser(s) is
purchasing, pursuant to the terms of this Agreement and the Other Agreements,
the Applicable Certificates and the Class B Certificates which are senior to the
securities held by such purchaser(s). Each payment of the purchase price of the
Applicable Certificates referred to in the first sentence hereof shall be made
to an account or accounts designated by the Trustee and each such purchase shall
be subject to the terms of this Section 7.01. Each Applicable Certificateholder
agrees by its acceptance of its Applicable Certificate that it will, subject to
Section 3.04 of the Basic Agreement, upon payment from such Class B
Certificateholder(s) or Class C Certificateholder(s), as the case may be, of the
purchase price set forth in the first sentence of this paragraph, forthwith
sell, assign, transfer and convey to the purchaser(s) thereof (without recourse,
representation or warranty of any kind except for its own acts), all of the
right, title, interest and obligation of such Applicable Certificateholder in
this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor
Agreement, the Liquidity Facility, the Note Documents and all Applicable
Certificates and Escrow Receipts held by such Applicable Certificateholder
(excluding all right, title and interest under any of the foregoing to the
extent such right, title or interest is with respect to an obligation not then
due and payable as respects any action or inaction or state of affairs occurring
prior to such sale) and the purchaser shall assume all of such Applicable
Certificateholder's obligations under this Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Documents and all such Applicable Certificates and Escrow Receipts. The
Applicable Certificates will be deemed to be purchased on the date payment of
the purchase price is made notwithstanding the failure of the Applicable
Certificateholders to deliver any Applicable Certificates and, upon such a
purchase, (i) the only rights of the Applicable Certificateholders will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable Certificates and (ii) if the purchaser(s) shall so
request, such Applicable Certificateholder will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable Certificates to
be issued to the purchaser in such denominations as it shall request. All
charges and expenses in connection with the issuance of any such new Applicable
Certificates shall be borne by the purchaser thereof.
As used in this Section 7.01, the terms "Class B Certificateholder",
"Class B Trust", "Class B Certificate", "Class B Trustee", "Class C
Certificateholder", "Class C Trust", "Class C Certificate" and "Class C Trustee"
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
(c) This Section 7.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
<PAGE>
16
Section 8.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1999-1A CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 8.03. Execution in Counterparts. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
17
IN WITNESS WHEREOF, the Guarantor, Holdings, the Company and the
Trustee have caused this Trust Supplement to be duly executed by their
respective officers thereto duly authorized, as of the day and year first
written above.
NORTHWEST AIRLINES, INC.
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES HOLDINGS
CORPORATION
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald Smith
----------------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or
its interest herein, will be deemed to represent and warrant to and for the
benefit of each Owner Participant and the Company that either (i) the assets of
an employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1999-1A PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-1A
Issuance Date: February 16, 1999
Final Legal Distribution Date: August 1, 2021
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-1A Pass Through Trust, The Property Of Which Includes Certain
Equipment Notes Each Secured By An Aircraft Leased To Or Owned By
Northwest Airlines, Inc.
Certificate
No. _____ $________ Fractional undivided interest representing 0.__%
of the Trust per $1,000 of Reference Principal Amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a Fractional Undivided Interest in the amount of $_______
(the "Reference Principal Amount") in the Northwest Airlines 1999-1A Pass
Through Trust (the "Trust") created by State Street Bank and Trust Company, as
trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of
June 3, 1996 (as amended or supplemented, the "Basic Agreement"), by and among
the Trustee, Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), and Northwest
Airlines, Inc., a
<PAGE>
2
Minnesota corporation (the "Company"), as amended by the Supplemental Agreement,
dated as of November 20, 1998 among the Company, Holdings, Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor") and the Trustee, as
supplemented by Trust Supplement No. 1999-1A thereto, dated as of February 16,
1999 (collectively, the "Agreement"), by and among the Trustee, the Guarantor,
Holdings and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1999-1A" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Intercreditor Agreement, to
which Agreement the Certificateholder of this Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and the Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by
a security interest in the Aircraft leased to or owned by the Company.
Each of the Certificates represents a Fractional Undivided Interest
in the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each February 1 and August 1 (a "Regular Distribution Date"),
commencing August 1, 1999 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon, except that
with respect to Certificates registered on the Record Date in the name of a
Clearing Agency (or its nominee), such distribution shall be made by wire
transfer.
<PAGE>
3
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, Holdings, the Company or the
Trustee or any affiliate thereof. The Certificates are limited in right or
payment, all as more specifically set forth herein and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor, Holdings or the Company and the rights of the Certificateholders
under the Agreement at any time by the Guarantor, Holdings, the Company and the
Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided
Interests and integral multiples thereof. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same
<PAGE>
4
aggregate Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder or beneficial owner of a Certificate, by its
acceptance of this Certificate or a beneficial interest herein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORTHWEST AIRLINES 1999-1A
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as
Trustee
By:
-------------------------
Name:
Title:
<PAGE>
5
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
<PAGE>
EXHIBIT C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
February 1, 2000 $3,531,150.00
August 1, 2000 3,534,000.00
February 1, 2001 7,065,150.00
February 1, 2002 7,065,150.00
February 1, 2003 7,065,150.00
February 1, 2004 7,065,150.00
February 1, 2005 7,065,150.00
February 1, 2006 7,065,150.00
February 1, 2007 7,065,150.00
February 1, 2008 7,065,150.00
February 1, 2009 7,065,150.00
February 1, 2010 7,065,150.00
February 1, 2011 7,065,150.00
February 1, 2012 7,065,150.00
August 1, 2013 7,065,150.00
February 1, 2014 7,065,150.00
February 1, 2015 9,420,200.00
February 1, 2016 9,420,200.00
February 1, 2017 27,687,486.92
February 1, 2018 39,771,418.36
February 1, 2019 42,481,019.21
February 1, 2020 747,425.51
This Trust Supplement No. 1999-1B, dated as of February 16, 1999
(herein called the "Trust Supplement"), by and among Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), Northwest Airlines
Holdings Corporation, a Delaware corporation (formerly known as Northwest
Airlines Corporation, "Holdings"), Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), and State Street Bank and Trust Company (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June 3, 1996, by
and among Holdings, the Company and the Trustee, as amended by the Supplemental
Agreement, dated as of November 20, 1998, among the Company, Holdings, the
Guarantor and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates which may be issued thereunder, has heretofore
been executed and delivered;
WHEREAS, unless otherwise specified herein, capitalized terms used
herein without definition having the respective meanings specified heretofore in
the Basic Agreement;
WHEREAS, the Company intends to finance the acquisition of four
Boeing 747- 400 aircraft either (i) through separate leveraged lease
transactions, in which case the Company will lease such aircraft (collectively,
the "Leased Aircraft") or (ii) through separate secured loan transactions, in
which case the Company will own such aircraft (collectively, the "Owned
Aircraft");
WHEREAS, in the case of each Owned Aircraft, each Owner Trustee,
acting on behalf of its respective Owner Participant, will issue, on a
non-recourse basis, Equipment Notes, among other things, to finance a portion of
the purchase price of such Leased Aircraft purchased or to be purchased by such
Owner Trustee and leased or to be leased to the Company pursuant to the related
Lease;
WHEREAS, in the case of an Owned Aircraft, the Company will issue
Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee or the Company, as
the case may be, having the same interest rate as, and final maturity dates not
later than the final Regular Distribution Date of, the Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1999-1B Trust" or the "Applicable Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-1B Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-1B Trust with the Trustee;
<PAGE>
2
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized; and
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions.
NOW THEREFORE, in consideration of the premises herein, it is agreed
by and among the Guarantor, Holdings, the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"Pass Through Certificates, Series 1999-1B" (hereinafter defined as the "Series
1999-1B Certificates" or the "Applicable Certificates"). Each Series 1999-1B
Certificate represents a Fractional Undivided Interest in the 1999-1B Trust
created hereby.
The terms and conditions applicable to the Series 1999-1B
Certificates are as follows:
(a) The aggregate principal amount of the Series 1999-1B
Certificates that shall be authenticated under the Agreement (except for
Series 1999-1B Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $111,555,000.
(b) The Cut-off Date is the earlier of (i) January 31, 2000 and (ii)
the day Equipment Notes with respect to all of the Aircraft (as defined
below) have been acquired by the Applicable Trust.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each August 1 and February 1, commencing on
August 1, 1999, until payment of all of the Scheduled Payments to be made
under the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the day
(which shall be a Business Day) on which such redemption or purchase is
scheduled to occur pursuant to the terms of the applicable Indenture and
(ii) when used with respect to a Special Payment other than as described
in clause (i) above, 15 days after the last date on which the Trustee must
give notice pursuant to Section 4.02(c) of the Basic Agreement (or the
next Business Day after such 15th day if such date is not a Business Day).
<PAGE>
3
(e) (i) The Series 1999-1B Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-1B
Certificates, by its acceptance of such Certificate or its interest
therein, will be deemed to represent and warrant to and for the benefit of
each Owner Participant and the Company that either (x) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
or of entities which may be deemed to hold such plans, have not been used
to purchase Series 1999-1B Certificates or (y) one or more prohibited
transaction statutory or administrative exemptions applies such that the
use of such plan assets to purchase and hold such Certificate will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975
of the Code.
(ii) The Series 1999-1B Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, Holdings, the Company and
the Clearing Agency (the "Clearing Agency") attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) The proceeds of the Series 1999-1B Certificates shall be
deposited in the Deposit Accounts and will be used in accordance with the
Escrow Agreement and the Deposit Agreement.
(h) When each Aircraft is delivered, either the Owner Trustee (in
the case of a Leased Aircraft), acting on behalf of its respective Owner
Participant, will issue on a non-recourse basis, or the Company (in the
case of an Owned Aircraft) will issue on a recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to finance
a portion of the purchase price to such Owner Trustee or the Company, as
the case may be, of the following Aircraft:
Expected
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
671US Boeing 747-400 PW4056
672US Boeing 747-400 PW4056
673US Boeing 747-400 PW4056
674US Boeing 747-400 PW4056
(i) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Series
1999-1B Certificate. In any event, any transfer or exchange of any Series
1999-1B Certificate shall also effect a transfer or exchange of the
related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or
exchange of any Series 1999-1B Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Series 1999-1B Certificate
to which an Escrow Receipt is attached,
<PAGE>
4
each Certificateholder of such a Series 1999-1B Certificate acknowledges
and accepts the restrictions on transfer of the Escrow Receipt set forth
herein and in the Escrow Agreement.
Section 1.02. Intercreditor Agreement. The Series 1999-1B
Certificates are subject to the Intercreditor Agreement, the Deposit Agreement
and the Escrow Agreement.
Section 1.03. Ranking of Series 1999-1B Certificates. The Series
1999-1B Certificates will be subject to the ranking and priority as set forth in
the Intercreditor Agreement.
Section 1.04. Liquidity Facility. Payments of interest on the Series
1999-1B Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. Ranking of Equipment Notes. The Equipment Notes will
be subject to the ranking and priority as set forth in the related Indenture.
Section 1.06. No Cross-Default or Cross- Collateralization of
Equipment Notes. As set forth in the related Indenture, there will not be any
cross-collateralization provisions or cross-default provisions in respect of the
Equipment Notes.
ARTICLE II
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. On the date hereof, the proceeds
from the issuance of the Applicable Certificates will be deposited in the
Deposit Accounts on behalf of the Escrow Agent. Pursuant to the terms of the
Deposit Agreement and the Note Purchase Agreement, a portion of the proceeds
from the issuance of the Applicable Certificates will be withdrawn from the
Deposit Account on any date on which an Owner Trustee (in the case of a Leased
Aircraft) or the Company (in the case of an Owned Aircraft) issues Equipment
Notes with respect to an Aircraft.
Section 2.02. Statement of Intent. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Code and not as a
trust or association taxable as a corporation or a partnership. Each of the
parties hereto and each Applicable Certificateholder, or beneficial owner of an
Applicable Certificate, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to treat for all U.S. federal, state and
local income tax purposes (i) the Applicable Trust as a grantor trust and (ii)
Equipment Notes to be issued (or assumed) by an Owner Trust (in the case of a
Leased Aircraft) as indebtedness of such Owner Trust, and Equipment Notes issued
by the Company (in the case of an Owned Aircraft) as indebtedness of the
Company.
<PAGE>
5
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. (a) For all purposes of the Basic
Agreement as supplemented by this Trust Supplement, the following capitalized
terms have the following meanings:
Aircraft: Means the four Boeing 747-400 aircraft which are expected
to be sold to the Owner Trustee or the Company during the period from
March, 1999 through October, 1999.
Applicable Certificateholder: Means the holder of an Applicable
Certificate.
Class D Certificateholder: Means the holder of a Class D
Certificate.
Class D Certificates: Has the meaning assigned in the Intercreditor
Agreement.
Clearing Agency: Has the meaning specified in Section 1.01(e)
hereof.
Clearing Agency Participant: Means any of the participants in the
Clearing Agency.
Closing Notice: Has the meaning specified in the Note Purchase
Agreement.
Cut-off Date: Has the meaning specified in Section 1.01(b).
Deposit Account: Means an account established under Section 1.2 of
the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of February
16, 1999 relating to the Applicable Certificates between the Depositary
and the Escrow Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Deposit Make-Whole Amount: Has the meaning specified in the Note
Purchase Agreement.
Depositary: Means ABN AMRO Bank N.V., acting through its Chicago
branch.
Deposits: Has the meaning specified in the Note Purchase Agreement.
Distribution Date: Means any Regular Distribution Date or Special
Distribution Date.
<PAGE>
6
Escrow Agent: Means initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of February 16, 1999 relating to the Applicable Certificates, among the
Escrow Agent, the Paying Agent, the Trustee and the Underwriters, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in the Paying Agent Account (as defined in the Escrow
Agreement)..
Final Withdrawal: With respect to the Escrow Agreement, has the
meaning set forth in Section 1.2 thereof.
Final Withdrawal Date: Means the date on which the Final Withdrawal
occurs.
Intercreditor Agreement: Means the Intercreditor Agreement, dated as
of the date hereof, by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company,
as Subordination Agent.
Leased Aircraft: Has the meaning specified in the recitals hereto.
Liquidity Facility: Has the meaning specified in the Note Purchase
Agreement.
Note Documents: With respect to any Equipment Note, means the Note
Purchase Agreement, the related Indenture, the related Participation
Agreement, and, if the related Aircraft is leased to the Company, the
related Lease.
Note Purchase Agreement: Means the Note Purchase Agreement, dated as
of the date hereof, among the Company, the Trustee, the Other Trustees,
State Street Bank and Trust Company, as Subordination Agent, the Escrow
Agent and the Paying Agent.
Notice of Purchase Withdrawal: Has the meaning specified in the Note
Purchase Agreement.
Other Agreements: Means the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A (the "1999-1A Trust Supplement") dated the date
hereof relating to Northwest Airlines 1999-1A Pass Through Trust and by
Trust Supplement No. 1999-1C (the "1999-1C Trust Supplement") dated the
date hereof relating to the Northwest Airlines 1999-1C Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and
any successor or other trustee appointed as provided therein.
Owned Aircraft: Has the meaning specified in the recitals hereto.
<PAGE>
7
Participation Agreement: Has the meaning specified in the Note
Purchase Agreement.
Paying Agent: Means State Street Bank and Trust Company.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Applicable Certificates less (ii) the aggregate amount of
all payments made in respect of such Applicable Certificates or in respect
of Deposits relating to the Applicable Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs or
expenses incurred in connection therewith. The Pool Balance as of any
Distribution Date will be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property and the
distribution thereof to be made on that date.
Prospectus Supplement: Means the Prospectus Supplement dated
February 4, 1999, relating to the offering of the Class A Certificates,
the Class B Certificates and the Class C Certificates (each as defined in
the Intercreditor Agreement).
Pool Factor: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the Applicable
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, payment of principal of the Equipment Notes or other
Trust Property and the distribution thereof to be made on that date.
Record Date: Means the date preceding any Distribution Date on which
the Applicable Certificateholders are determined for purposes of the
distribution which will occur on such Distribution Date.
Scheduled Closing Date: Has the meaning specified in the Note
Purchase Agreement.
Special Payment: Means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note.
Special Redemption Premium: Means the Deposit Make-Whole Amount
payable by the Company in respect of the Final Withdrawal pursuant to the
Note Purchase Agreement.
Trust Property: Means (i) the Equipment Notes held as the property
of the Trust and, subject to the Intercreditor Agreement, all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) the rights of the Trust under the Escrow Agreement to request the
Escrow Agent to withdraw from the Deposit Accounts funds sufficient to
enable the Trust to purchase Equipment Notes on the delivery of an
Aircraft, (iii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iv) all rights of the Trust
and the Trustee, on behalf of the Trust, under the Intercreditor
Agreement, the Note Purchase Agreement and the Liquidity
<PAGE>
8
Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the
Trust pursuant to the Intercreditor Agreement or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1999 Pass
Through Trusts to be formed pursuant to the Basic Agreement, as
supplemented by this Trust Supplement and the Other Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
February 4, 1999 by and among the Company, the Guarantor, Morgan Stanley &
Co. Incorporated, Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Chase Securities Inc. and Salomon Smith Barney Inc.
ARTICLE IV
THE TRUSTEE
Section 4.01. Delivery of Documents; Delivery Dates. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement, each in the form delivered to
the Trustee by the Company and (ii) subject to the respective terms thereof, to
perform its obligations thereunder. Upon request of the Company and the
satisfaction or waiver of the closing conditions specified in the Underwriting
Agreement, the Trustee shall execute, deliver, authenticate, issue and sell
Applicable Certificates in authorized denominations equaling in the aggregate
the amount set forth, with respect to the Applicable Trust, in Schedule I to the
Underwriting Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.03, 3.04, 3.05 and 3.09 of the Basic Agreement,
the Trustee shall not execute, authenticate or deliver Applicable Certificates
in excess of the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date the Company may deliver from time
to time to the Trustee a Closing Notice relating to one or more Equipment Notes.
After receipt of a Closing Notice and in any case no later than two Business
Days prior to a Scheduled Closing Date as to which such Closing Notice relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Closing Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Closing Notice. The Trustee shall (as
and when specified in such Closing Notice), subject to the conditions set forth
in Section 3 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation
<PAGE>
9
Agreement specified in such Closing Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary (with a copy to
the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal
relating to such Deposit or Deposits on such Applicable Delivery Date. Upon
satisfaction of the conditions specified in the Note Purchase Agreement and the
Applicable Participation Agreement, the Trustee shall purchase the applicable
Equipment Notes with the proceeds of the withdrawals of one or more Deposits
made on the Applicable Delivery Date in accordance with the terms of the Deposit
Agreement and the Escrow Agreement. The purchase price of such Equipment Notes
shall equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 4.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (ii) the Trustee will make a demand upon the
Company for an amount equal to the Special Redemption Premium, such payment to
be made on the Final Withdrawal Date.
Section 4.03. The Trustee. (a) Subject to Section 4.04 of this Trust
Supplement and Section 7.14 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
(b) Except as herein otherwise provided, no duties, responsibilities
or liabilities are assumed, or shall be construed to be assumed by the Trustee
by reason of this Trust Supplement other than as set forth in the Basic
Agreement, and this Trust Supplement is executed and accepted on behalf of the
Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
Section 4.04. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to
execute, deliver and perform this Trust Supplement, the
Intercreditor Agreement, the Escrow Agreement and the Note Documents
to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance by it of
<PAGE>
10
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party;
(b) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party (i) will not
violate any provision of any United States federal law or the law of
the state of the United States where it is located governing the
banking and trust powers of the Trustee or any order, writ,
judgment, or decree of any court, arbitrator or governmental
authority applicable to the Trustee or any of its assets, (ii) will
not violate any provision of the articles of association or by-laws
of the Trustee, and (iii) will not violate any provision of, or
constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions
of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could
reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder
or on the transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party will not
require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency of
the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the
Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents to which it is a party have
been, or will be, as applicable, duly executed and delivered by the
Trustee and constitute, or will constitute, as applicable, the
legal, valid and binding agreements of the Trustee, enforceable
against it in accordance with their respective terms; provided,
however, that enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general
principles of equity.
Section 4.05. Trustee Liens. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.16 of the Basic
Agreement, that it will, at its own cost and expense, promptly take any action
as may be necessary to duly discharge and satisfy in full any Trustee's liens on
or with respect to the Trust Property which is attributable to the Trustee in
its individual capacity and which is unrelated to the transactions contemplated
by the Intercreditor Agreement or the Note Purchase Agreement.
<PAGE>
11
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. Supplemental Agreements Without Consent of
Certificateholders.
(a) Under the terms of, and subject to the limitations contained in,
Section 9.01 of the Basic Agreement, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at
the Company's request, at any time and from time to time, enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (1) through
(7) of such Section 9.01, except that (a) clause (3) of such Section 9.01 shall
be deemed to include the Company's rights and powers conferred by the Note
Purchase Agreement and (b) clause (4) of such Section 9.01 shall be deemed to
include corrections or supplements to provisions of the Escrow Agreement or the
Deposit Agreement which may be defective or inconsistent with any other
provision of this Agreement or contained in any agreement referred to in such
clause (4) and the curing of any ambiguity or the modification of any other
provision with respect to matters or questions arising under the Escrow
Agreement or the Deposit Agreement.
(b) If Class D Certificates are issued, the Company, the Guarantor,
Holdings and the Trustee, without the consent of the Applicable
Certificateholders, may enter into an agreement supplemental to this Trust
Supplement whereby Class D Certificateholders shall be granted purchase rights
similiar to those set forth in Section 7.01 hereof.
(c) Any supplemental agreement entered into pursuant to Sections
5.01(a) and (b) may not adversely affect the status of the Trust for U.S.
federal income tax purposes, as either (i) a grantor trust under Subpart E, Part
I of Subchapter J of Chapter 1 of Subtitle A of the Code or (ii) subject to no
resulting adverse Massachusetts state or local tax consequences, a partnership.
Section 5.02. Supplement Agreements with Consent of
Certificateholders. The provisions of Section 9.02 of the Basic Agreement shall
apply to agreements or amendments for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Escrow
Agreement, the Deposit Agreement or the Note Purchase Agreement to the extent
applicable to the Certificateholders approving such agreement or amendment or
modifying in any manner the rights and obligations of such Certificateholders
under the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement; provided that the provisions of Section 9.02(1) of the Basic
Agreement shall be deemed to include reductions in any manner of, or delay in
the timing of, any receipt by the Certificateholders of payments upon the
Deposits.
ARTICLE VI
DISTRIBUTIONS; STATEMENT TO CERTIFICATEHOLDERS
Section 6.01. Additions to Article IV of the Basic Agreement. In
addition to the provisions of Article IV of the Basic Agreement, the following
provisions shall apply to the Trust:
<PAGE>
12
(a) Upon the payment of Special Redemption Premium to the Trustee
under the Note Purchase Agreement, the Trustee, upon receipt thereof,
shall immediately deposit the aggregate amount of such Special Redemption
Premium in the Special Payments account;
(b) The distribution of amounts of Special Redemption Premium as
provided for in Section 4.02(b) of the Basic Agreement shall be on the
Special Distribution Date with respect to such Special Payment or as soon
thereafter as the Trustee has confirmed receipt of the related Special
Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by
the Company to the Trustee under the Note Purchase Agreement, the notice
provided for in Section 4.02(c) of the Basic Agreement shall be mailed,
together with the notice by the Paying Agent under Section 2.6 of the
Escrow Agreement, not less that 15 days prior to the Special Distribution
Date for such amount, which Special Distribution Date shall be the Final
Withdrawal Date: and
(d) The last sentence of the first paragraph of Section 4.02(c) of
the Basic Agreement shall apply equally if the amount of Special
Redemption Premium, if any, has not been calculated at the time the
Trustee mails notice of a Special Payment.
Section 6.02. Statements to Applicable Certificateholders. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, including any Special Redemption Premium, reflecting
in part the information provided by the Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Applicable
Certificate as to (ii), (iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
<PAGE>
13
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily available to
the Trustee and which an Applicable Certificateholder shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's preparation
of its federal income tax returns. Such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Applicable Certificates in the
manner described in Section 6.02(a) hereof.
(c) Promptly following (i) the Cut-off Date, if there has been any
change in the information set forth in clauses (x) and (y) below from that set
forth in page S-36 of the Prospectus Supplement, and (ii) any early redemption
or purchase of, or any default in the payment of principal or interest in
respect of, any of the Equipment Notes held in the Applicable Trust, or any
Final Withdrawal, the Trustee shall furnish to Applicable Certificateholders of
record on such date a statement setting forth (x) the expected Pool Factors for
each subsequent Regular Distribution Date following the Cut-off Date and (y) the
expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Applicable Certificates registered in the name of a Clearing Agency, on the
Cut-off Date, the Trustee will request from such Clearing Agency a securities
position listing setting forth the names of all Clearing Agency Participants
reflected on such Clearing Agency's books as holding interests in the Applicable
Certificates on such date. The Trustee will mail to each such Clearing Agency
Participant the statement described above and will make available additional
copies as requested by such Clearing Agency Participant for forwarding to
holders of interests in the Applicable Certificates.
(d) This Section 6.02 supersedes and replaces Section 4.03 of the
Basic Agreement.
<PAGE>
14
ARTICLE VII
DEFAULT
Section 7.01. Purchase Rights of Certificateholders. (a) At any time
after the occurrence and during the continuance of a Triggering Event, each
Applicable Certificateholder shall have the right to purchase, for the purchase
price set forth in Section 7.01 of the Other Agreement relating to the Class A
Certificates, all, but not less than all, of the Class A Certificates upon ten
days' written notice to the Class A Trustee and each other Applicable
Certificateholder, provided that (i) if prior to the end of such ten-day period
any other Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A Certificates pro rata based on the Fractional
Undivided Interest in the Applicable Trust held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A Certificates pursuant to this
Section 7.01(a).
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, each Class C Certificateholder shall have
the right to purchase all, but not less than all, of the Class A Certificates
and the Applicable Certificates upon ten days' written notice to the Class A
Trustee, the Trustee and each other Class C Certificateholder, provided that (A)
if prior to the end of such ten-day period any other Class C Certificateholder
notifies such purchasing Class C Certificateholder that such other Class C
Certificateholder wants to participate in such purchase, then such other Class C
Certificateholder may join with the purchasing Class C Certificateholder to
purchase all, but not less than all, of the Class A Certificates and the
Applicable Certificates pro rata based on the fractional undivided interest in
the Class C Trust held by each such Class C Certificateholder and (B) if prior
to the end of such ten-day period any other Class C Certificateholder fails to
notify the purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then such other
Class C Certificateholder shall lose its right to purchase the Applicable
Certificates pursuant to this Section 7.01(b).
The purchase price with respect to the Applicable Certificates shall
be equal to the Pool Balance of the Applicable Certificates, together with
accrued and unpaid interest thereon to the date of such purchase, without
premium, but including any other amounts then due and payable to the Applicable
Certificateholders under this Agreement, the Intercreditor Agreement, the Escrow
Agreement or any Note Document or on or in respect of the Applicable
Certificates; provided, however, that (i) if such purchase occurs after the
record date specified in Section 2.3(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate amount of unused Deposits and
interest to be distributed under the Escrow Agreement (which deducted amounts
shall remain distributable to, and may be retained by, the Applicable
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution Date
<PAGE>
15
(which deducted amounts shall remain distributable to, and may be retained by,
the Applicable Certificateholder as of such Record Date); provided further that
no such purchase of Applicable Certificates shall be effective unless the
purchaser(s) shall certify to the Trustee that contemporaneously with such
purchase, such purchaser(s) is purchasing, pursuant to the terms of this
Agreement and the Other Agreements, the Class A Certificates and the Applicable
Certificates which are senior to the securities held by such purchaser(s). Each
payment of the purchase price of the Applicable Certificates referred to in the
first sentence hereof shall be made to an account or accounts designated by the
Trustee and each such purchase shall be subject to the terms of this Section
7.01. Each Applicable Certificateholder agrees by its acceptance of its
Applicable Certificate that it will, subject to Section 3.04 of the Basic
Agreement, upon payment from such Class C Certificateholder(s) of the purchase
price set forth in the first sentence of this paragraph, forthwith sell, assign,
transfer and convey to the purchaser(s) thereof (without recourse,
representation or warranty of any kind except for its own acts), all of the
right, title, interest and obligation of such Applicable Certificateholder in
this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor
Agreement, the Liquidity Facility, the Note Documents and all Applicable
Certificates and Escrow Receipts held by such Applicable Certificateholder
(excluding all right, title and interest under any of the foregoing to the
extent such right, title or interest is with respect to an obligation not then
due and payable as respects any action or inaction or state of affairs occurring
prior to such sale) and the purchaser shall assume all of such Applicable
Certificateholder's obligations under this Agreement, the Escrow Agreement, the
Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Documents and all such Applicable Certificates and Escrow Receipts. The
Applicable Certificates will be deemed to be purchased on the date payment of
the purchase price is made notwithstanding the failure of the Applicable
Certificateholders to deliver any Applicable Certificates and, upon such a
purchase, (i) the only rights of the Applicable Certificateholders will be to
deliver the Applicable Certificates to the purchaser(s) and receive the purchase
price for such Applicable Certificates and (ii) if the purchaser(s) shall so
request, such Applicable Certificateholder will comply with all the provisions
of Section 3.04 of the Basic Agreement to enable new Applicable Certificates to
be issued to the purchaser in such denominations as it shall request. All
charges and expenses in connection with the issuance of any such new Applicable
Certificates shall be borne by the purchaser thereof.
(c) As used in this Section 7.01, the terms "Class A
Certificateholder", "Class A Certificate", "Class A Trustee", "Class C
Certificateholder", "Class C Trust", "Class C Certificate" and "Class C Trustee"
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.
(d) This Section 7.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects
<PAGE>
16
ratified and confirmed; and the Basic Agreement and this Trust Supplement shall
be taken, read and construed as one and the same instrument.
Section 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1999-1B CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 8.03. Execution in Counterparts. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
17
IN WITNESS WHEREOF, the Guarantor, Holdings, the Company and the
Trustee have caused this Trust Supplement to be duly executed by their
respective officers thereto duly authorized, as of the day and year first
written above.
NORTHWEST AIRLINES, INC.
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES HOLDINGS
CORPORATION
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald Smith
----------------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or
its interest herein, will be deemed to represent and warrant to and for the
benefit of each Owner Participant and the Company that either (i) the assets of
an employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1999-1B PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-1B
Issuance Date: February 16, 1999
Final Legal Distribution Date: August 1, 2021
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-1B Pass Through Trust, The Property Of Which Includes Certain
Equipment Notes Each Secured By An Aircraft Leased To Or Owned By
Northwest Airlines, Inc.
Certificate
No. _____ $________ Fractional undivided interest representing 0.__%
of the Trust per $1,000 of Reference Principal Amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a Fractional Undivided Interest in the amount of $_______
(the "Reference Principal Amount") in the Northwest Airlines 1999-1B Pass
Through Trust (the "Trust") created by State Street Bank and Trust Company, as
trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of
June 3, 1996 (as amended or supplemented, the "Basic Agreement"), by and among
the Trustee, Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), and Northwest
Airlines, Inc., a
<PAGE>
2
Minnesota corporation (the "Company"), as amended by the Supplemental Agreement,
dated as of November 20, 1998 among the Company, Holdings, Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor") and the Trustee, as
supplemented by Trust Supplement No. 1999-1B thereto, dated as of February 16,
1999 (collectively, the "Agreement"), by and among the Trustee, the Guarantor,
Holdings and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1999-1B" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Intercreditor Agreement, to
which Agreement the Certificateholder of this Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and the Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by
a security interest in the Aircraft leased to or owned by the Company.
Each of the Certificates represents a Fractional Undivided Interest
in the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each February 1 and August 1 (a "Regular Distribution Date"),
commencing August 1, 1999 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon, except that
with respect to Certificates registered on the Record Date in the name of a
Clearing Agency (or its nominee), such distribution shall be made by wire
transfer.
<PAGE>
3
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, Holdings, the Company or the
Trustee or any affiliate thereof. The Certificates are limited in right or
payment, all as more specifically set forth herein and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor, Holdings or the Company and the rights of the Certificateholders
under the Agreement at any time by the Guarantor, Holdings, the Company and the
Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided
Interests and integral multiples thereof. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same
<PAGE>
4
aggregate Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder or beneficial owner of a Certificate, by its
acceptance of this Certificate or a beneficial interest herein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORTHWEST AIRLINES 1999-1A
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as
Trustee
By:
-------------------------
Name:
Title:
<PAGE>
5
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
<PAGE>
EXHIBIT C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
February 1, 2000 $3,573,121.53
August 1, 2000 1,465,247.96
February 1, 2001 1,654,930.52
February 1, 2002 3,346,650.00
February 1, 2003 3,346,650.00
February 1, 2004 3,346,650.00
February 1, 2005 3,458,688.01
February 1, 2006 3,234,611.99
February 1, 2007 3,346,650.00
February 1, 2008 3,346,650.00
February 1, 2009 3,346,650.00
February 1, 2010 3,346,650.00
February 1, 2011 4,171,446.76
February 1, 2012 5,427,375.94
August 1, 2013 441,127.29
February 1, 2014 3,346,650.00
February 1, 2015 20,288,422.66
February 1, 2016 25,186,137.50
February 1, 2017 9,449,819.78
February 1, 2018 0.00
February 1, 2019 78,113.13
February 1, 2020 6,352,756.93
This Trust Supplement No. 1999-1C, dated as of February 16, 1999
(herein called the "Trust Supplement"), by and among Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor"), Northwest Airlines
Holdings Corporation, a Delaware corporation (formerly known as Northwest
Airlines Corporation, "Holdings"), Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), and State Street Bank and Trust Company (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June 3, 1996, by
and among Holdings, the Company and the Trustee, as amended by the Supplemental
Agreement, dated as of November 20, 1998, among the Company, Holdings, the
Guarantor and the Trustee (the "Basic Agreement").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates which may be issued thereunder, has heretofore
been executed and delivered;
WHEREAS, unless otherwise specified herein, capitalized terms used
herein without definition having the respective meanings specified heretofore in
the Basic Agreement;
WHEREAS, the Company intends to finance the acquisition of four
Boeing 747- 400 aircraft either (i) through separate leveraged lease
transactions, in which case the Company will lease such aircraft (collectively,
the "Leased Aircraft") or (ii) through separate secured loan transactions, in
which case the Company will own such aircraft (collectively, the "Owned
Aircraft");
WHEREAS, in the case of each Owned Aircraft, each Owner Trustee,
acting on behalf of its respective Owner Participant, will issue, on a
non-recourse basis, Equipment Notes, among other things, to finance a portion of
the purchase price of such Leased Aircraft purchased or to be purchased by such
Owner Trustee and leased or to be leased to the Company pursuant to the related
Lease;
WHEREAS, in the case of an Owned Aircraft, the Company will issue
Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
purchase such Equipment Notes issued by each Owner Trustee or the Company, as
the case may be, having the same interest rate as, and final maturity dates not
later than the final Regular Distribution Date of, the Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, the Trustee hereby declares the creation of this Trust (the
"1999-1C Trust" or the "Applicable Trust") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-1C Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-1C Trust with the Trustee;
<PAGE>
2
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized; and
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions.
NOW THEREFORE, in consideration of the premises herein, it is agreed
by and among the Guarantor, Holdings, the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"Pass Through Certificates, Series 1999-1C" (hereinafter defined as the "Series
1999-1C Certificates" or the "Applicable Certificates"). Each Series 1999-1C
Certificate represents a Fractional Undivided Interest in the 1999-1C Trust
created hereby.
The terms and conditions applicable to the Series 1999-1C
Certificates are as follows:
(a) The aggregate principal amount of the Series 1999-1C
Certificates that shall be authenticated under the Agreement (except for
Series 1999-1C Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $74,140,000.
(b) The Cut-off Date is the earlier of (i) January 31, 2000 and (ii)
the day Equipment Notes with respect to all of the Aircraft (as defined
below) have been acquired by the Applicable Trust.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each August 1 and February 1, commencing on
August 1, 1999, until payment of all of the Scheduled Payments to be made
under the Equipment Notes has been made.
(d) The Special Distribution Dates are as follows: (i) when used
with respect to the redemption or purchase of any Equipment Notes, the day
(which shall be a Business Day) on which such redemption or purchase is
scheduled to occur pursuant to the terms of the applicable Indenture and
(ii) when used with respect to a Special Payment other than as described
in clause (i) above, 15 days after the last date on which the Trustee must
give notice pursuant to Section 4.02(c) of the Basic Agreement (or the
next Business Day after such 15th day if such date is not a Business Day).
<PAGE>
3
(e) (i) The Series 1999-1C Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-1C
Certificates, by its acceptance of such Certificate or its interest
therein, will be deemed to represent and warrant to and for the benefit of
each Owner Participant and the Company that either (x) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
or of entities which may be deemed to hold such plans, have not been used
to purchase Series 1999-1C Certificates or (y) one or more prohibited
transaction statutory or administrative exemptions applies such that the
use of such plan assets to purchase and hold such Certificate will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975
of the Code.
(ii) The Series 1999-1C Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, Holdings, the Company and
the Clearing Agency (the "Clearing Agency") attached hereto as Exhibit B.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
(g) The proceeds of the Series 1999-1C Certificates shall be
deposited in the Deposit Accounts and will be used in accordance with the
Escrow Agreement and the Deposit Agreement.
(h) When each Aircraft is delivered, either the Owner Trustee (in
the case of a Leased Aircraft), acting on behalf of its respective Owner
Participant, will issue on a non-recourse basis, or the Company (in the
case of an Owned Aircraft) will issue on a recourse basis, the Equipment
Notes, the proceeds of which shall be used, among other things, to finance
a portion of the purchase price to such Owner Trustee or the Company, as
the case may be, of the following Aircraft:
Expected
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
671US Boeing 747-400 PW4056
672US Boeing 747-400 PW4056
673US Boeing 747-400 PW4056
674US Boeing 747-400 PW4056
(i) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Series
1999-1C Certificate. In any event, any transfer or exchange of any Series
1999-1C Certificate shall also effect a transfer or exchange of the
related Escrow Receipt. Prior to the Final Withdrawal Date, no transfer or
exchange of any Series 1999-1C Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Series 1999-1C Certificate
to which an Escrow Receipt is attached,
<PAGE>
4
each Certificateholder of such a Series 1999-1C Certificate acknowledges
and accepts the restrictions on transfer of the Escrow Receipt set forth
herein and in the Escrow Agreement.
Section 1.02. Intercreditor Agreement. The Series 1999-1C
Certificates are subject to the Intercreditor Agreement, the Deposit Agreement
and the Escrow Agreement.
Section 1.03. Ranking of Series 1999-1C Certificates. The Series
1999-1C Certificates will be subject to the ranking and priority as set forth in
the Intercreditor Agreement.
Section 1.04. Liquidity Facility. Payments of interest on the Series
1999-1C Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. Ranking of Equipment Notes. The Equipment Notes will
be subject to the ranking and priority as set forth in the related Indenture.
Section 1.06. No Cross-Default or Cross- Collateralization of
Equipment Notes. As set forth in the related Indenture, there will not be any
cross-collateralization provisions or cross-default provisions in respect of the
Equipment Notes.
ARTICLE II
PREDELIVERY FUNDING AND
STATEMENT OF INTENT
Section 2.01. Predelivery Funding. On the date hereof, the proceeds
from the issuance of the Applicable Certificates will be deposited in the
Deposit Accounts on behalf of the Escrow Agent. Pursuant to the terms of the
Deposit Agreement and the Note Purchase Agreement, a portion of the proceeds
from the issuance of the Applicable Certificates will be withdrawn from the
Deposit Account on any date on which an Owner Trustee (in the case of a Leased
Aircraft) or the Company (in the case of an Owned Aircraft) issues Equipment
Notes with respect to an Aircraft.
Section 2.02. Statement of Intent. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Code and not as a
trust or association taxable as a corporation or a partnership. Each of the
parties hereto and each Applicable Certificateholder, or beneficial owner of an
Applicable Certificate, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to treat for all U.S. federal, state and
local income tax purposes (i) the Applicable Trust as a grantor trust and (ii)
Equipment Notes to be issued (or assumed) by an Owner Trust (in the case of a
Leased Aircraft) as indebtedness of such Owner Trust, and Equipment Notes issued
by the Company (in the case of an Owned Aircraft) as indebtedness of the
Company.
<PAGE>
5
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. (a) For all purposes of the Basic
Agreement as supplemented by this Trust Supplement, the following capitalized
terms have the following meanings:
Aircraft: Means the four Boeing 747-400 aircraft which are expected
to be sold to the Owner Trustee or the Company during the period from
March, 1999 through October, 1999.
Applicable Certificateholder: Means the holder of an Applicable
Certificate.
Class D Certificateholder: Means the holder of a Class D
Certificate.
Class D Certificates: Has the meaning assigned in the Intercreditor
Agreement.
Clearing Agency: Has the meaning specified in Section 1.01(e)
hereof.
Clearing Agency Participant: Means any of the participants in the
Clearing Agency.
Closing Notice: Has the meaning specified in the Note Purchase
Agreement.
Cut-off Date: Has the meaning specified in Section 1.01(b).
Deposit Account: Means an account established under Section 1.2 of
the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of February
16, 1999 relating to the Applicable Certificates between the Depositary
and the Escrow Agent, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Deposit Make-Whole Amount: Has the meaning specified in the Note
Purchase Agreement.
Depositary: Means ABN AMRO Bank N.V., acting through its Chicago
branch.
Deposits: Has the meaning specified in the Note Purchase Agreement.
Distribution Date: Means any Regular Distribution Date or Special
Distribution Date.
<PAGE>
6
Escrow Agent: Means initially, First Security Bank, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of February 16, 1999 relating to the Applicable Certificates, among the
Escrow Agent, the Paying Agent, the Trustee and the Underwriters, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in the Paying Agent Account (as defined in the Escrow
Agreement)..
Final Withdrawal: With respect to the Escrow Agreement, has the
meaning set forth in Section 1.2 thereof.
Final Withdrawal Date: Means the date on which the Final Withdrawal
occurs.
Intercreditor Agreement: Means the Intercreditor Agreement, dated as
of the date hereof, by and among the Trustee, the Other Trustees, the
Liquidity Providers named therein and State Street Bank and Trust Company,
as Subordination Agent.
Leased Aircraft: Has the meaning specified in the recitals hereto.
Liquidity Facility: Has the meaning specified in the Note Purchase
Agreement.
Note Documents: With respect to any Equipment Note, means the Note
Purchase Agreement, the related Indenture, the related Participation
Agreement, and, if the related Aircraft is leased to the Company, the
related Lease.
Note Purchase Agreement: Means the Note Purchase Agreement, dated as
of the date hereof, among the Company, the Trustee, the Other Trustees,
State Street Bank and Trust Company, as Subordination Agent, the Escrow
Agent and the Paying Agent.
Notice of Purchase Withdrawal: Has the meaning specified in the Note
Purchase Agreement.
Other Agreements: Means the Basic Agreement as supplemented by Trust
Supplement No. 1999-1A (the "1999-1A Trust Supplement") dated the date
hereof relating to Northwest Airlines 1999-1A Pass Through Trust and by
Trust Supplement No. 1999-1B (the "1999-1B Trust Supplement") dated the
date hereof relating to the Northwest Airlines 1999-1B Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and
any successor or other trustee appointed as provided therein.
Owned Aircraft: Has the meaning specified in the recitals hereto.
<PAGE>
7
Participation Agreement: Has the meaning specified in the Note
Purchase Agreement.
Paying Agent: Means State Street Bank and Trust Company.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Applicable Certificates less (ii) the aggregate amount of
all payments made in respect of such Applicable Certificates or in respect
of Deposits relating to the Applicable Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs or
expenses incurred in connection therewith. The Pool Balance as of any
Distribution Date will be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property and the
distribution thereof to be made on that date.
Prospectus Supplement: Means the Prospectus Supplement dated
February 4, 1999, relating to the offering of the Class A Certificates,
the Class B Certificates and the Class C Certificates (each as defined in
the Intercreditor Agreement).
Pool Factor: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the Applicable
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, payment of principal of the Equipment Notes or other
Trust Property and the distribution thereof to be made on that date.
Record Date: Means the date preceding any Distribution Date on which
the Applicable Certificateholders are determined for purposes of the
distribution which will occur on such Distribution Date.
Scheduled Closing Date: Has the meaning specified in the Note
Purchase Agreement.
Special Payment: Means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note.
Special Redemption Premium: Means the Deposit Make-Whole Amount
payable by the Company in respect of the Final Withdrawal pursuant to the
Note Purchase Agreement.
Trust Property: Means (i) the Equipment Notes held as the property
of the Trust and, subject to the Intercreditor Agreement, all monies at
any time paid thereon and all monies due and to become due thereunder,
(ii) the rights of the Trust under the Escrow Agreement to request the
Escrow Agent to withdraw from the Deposit Accounts funds sufficient to
enable the Trust to purchase Equipment Notes on the delivery of an
Aircraft, (iii) funds from time to time deposited in the Certificate
Account and the Special Payments Account, and (iv) all rights of the Trust
and the Trustee, on behalf of the Trust, under the Intercreditor
Agreement, the Note Purchase Agreement and the Liquidity
<PAGE>
8
Facility, including, without limitation, all rights to receive certain
payments thereunder, and all monies paid to the Trustee on behalf of the
Trust pursuant to the Intercreditor Agreement or the Liquidity Facility.
Trusts: Means, collectively, the Northwest Airlines 1999 Pass
Through Trusts to be formed pursuant to the Basic Agreement, as
supplemented by this Trust Supplement and the Other Agreements.
Underwriters: Means the several Underwriters named in and who are
parties to the Underwriting Agreement.
Underwriting Agreement: Means the Underwriting Agreement dated as of
February 4, 1999 by and among the Company, the Guarantor, Morgan Stanley &
Co. Incorporated, Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Chase Securities Inc. and Salomon Smith Barney Inc.
ARTICLE IV
THE TRUSTEE
Section 4.01. Delivery of Documents; Delivery Dates. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement, each in the form delivered to
the Trustee by the Company and (ii) subject to the respective terms thereof, to
perform its obligations thereunder. Upon request of the Company and the
satisfaction or waiver of the closing conditions specified in the Underwriting
Agreement, the Trustee shall execute, deliver, authenticate, issue and sell
Applicable Certificates in authorized denominations equaling in the aggregate
the amount set forth, with respect to the Applicable Trust, in Schedule I to the
Underwriting Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.03, 3.04, 3.05 and 3.09 of the Basic Agreement,
the Trustee shall not execute, authenticate or deliver Applicable Certificates
in excess of the aggregate amount specified in this paragraph.
(b) On or after the Issuance Date the Company may deliver from time
to time to the Trustee a Closing Notice relating to one or more Equipment Notes.
After receipt of a Closing Notice and in any case no later than two Business
Days prior to a Scheduled Closing Date as to which such Closing Notice relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Closing Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Closing Notice. The Trustee shall (as
and when specified in such Closing Notice), subject to the conditions set forth
in Section 3 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation
<PAGE>
9
Agreement specified in such Closing Notice (the "Applicable Participation
Agreement") and cause such certificates, documents and legal opinions relating
to the Trustee to be duly delivered as required by the Applicable Participation
Agreement. If at any time prior to the Applicable Delivery Date, the Trustee
receives a notice of postponement pursuant to Section 2(e) or 2(f) of the Note
Purchase Agreement, then the Trustee shall give the Depositary (with a copy to
the Escrow Agent) a notice of cancellation of such Notice of Purchase Withdrawal
relating to such Deposit or Deposits on such Applicable Delivery Date. Upon
satisfaction of the conditions specified in the Note Purchase Agreement and the
Applicable Participation Agreement, the Trustee shall purchase the applicable
Equipment Notes with the proceeds of the withdrawals of one or more Deposits
made on the Applicable Delivery Date in accordance with the terms of the Deposit
Agreement and the Escrow Agreement. The purchase price of such Equipment Notes
shall equal the principal amount of such Equipment Notes. Amounts withdrawn from
such Deposit or Deposits in excess of the purchase price of the Equipment Notes
or to the extent not applied on the Applicable Delivery Date to the purchase
price of the Equipment Notes, shall be re-deposited by the Trustee with the
Depositary on the Applicable Delivery Date in accordance with the terms of the
Deposit Agreement.
Section 4.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (ii) the Trustee will make a demand upon the
Company for an amount equal to the Special Redemption Premium, such payment to
be made on the Final Withdrawal Date.
Section 4.03. The Trustee. (a) Subject to Section 4.04 of this Trust
Supplement and Section 7.14 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
(b) Except as herein otherwise provided, no duties, responsibilities
or liabilities are assumed, or shall be construed to be assumed by the Trustee
by reason of this Trust Supplement other than as set forth in the Basic
Agreement, and this Trust Supplement is executed and accepted on behalf of the
Trustee, subject to all the terms and conditions set forth in the Basic
Agreement, upon the effectiveness thereof, as fully to all intents as if the
same were herein set forth at length.
Section 4.04. Representations and Warranties of the Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to
execute, deliver and perform this Trust Supplement, the
Intercreditor Agreement, the Escrow Agreement and the Note Documents
to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance by it of
<PAGE>
10
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party;
(b) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party (i) will not
violate any provision of any United States federal law or the law of
the state of the United States where it is located governing the
banking and trust powers of the Trustee or any order, writ,
judgment, or decree of any court, arbitrator or governmental
authority applicable to the Trustee or any of its assets, (ii) will
not violate any provision of the articles of association or by-laws
of the Trustee, and (iii) will not violate any provision of, or
constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions
of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or lien could
reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder
or on the transactions contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of
this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement and the Note Documents to which it is a party will not
require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency of
the United States or the state of the United States where it is
located regulating the banking and corporate trust activities of the
Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents to which it is a party have
been, or will be, as applicable, duly executed and delivered by the
Trustee and constitute, or will constitute, as applicable, the
legal, valid and binding agreements of the Trustee, enforceable
against it in accordance with their respective terms; provided,
however, that enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general
principles of equity.
Section 4.05. Trustee Liens. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.16 of the Basic
Agreement, that it will, at its own cost and expense, promptly take any action
as may be necessary to duly discharge and satisfy in full any Trustee's liens on
or with respect to the Trust Property which is attributable to the Trustee in
its individual capacity and which is unrelated to the transactions contemplated
by the Intercreditor Agreement or the Note Purchase Agreement.
<PAGE>
11
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. Supplemental Agreements Without Consent of
Certificateholders.
(a) Under the terms of, and subject to the limitations contained in,
Section 9.01 of the Basic Agreement, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03 of the Basic Agreement) shall, at
the Company's request, at any time and from time to time, enter into one or more
agreements supplemental to the Escrow Agreement, the Note Purchase Agreement or
the Deposit Agreement, for any of the purposes set forth in clauses (1) through
(7) of such Section 9.01, except that (a) clause (3) of such Section 9.01 shall
be deemed to include the Company's rights and powers conferred by the Note
Purchase Agreement and (b) clause (4) of such Section 9.01 shall be deemed to
include corrections or supplements to provisions of the Escrow Agreement or the
Deposit Agreement which may be defective or inconsistent with any other
provision of this Agreement or contained in any agreement referred to in such
clause (4) and the curing of any ambiguity or the modification of any other
provision with respect to matters or questions arising under the Escrow
Agreement or the Deposit Agreement.
(b) If Class D Certificates are issued, the Company, the Guarantor,
Holdings and the Trustee, without the consent of the Applicable
Certificateholders, may enter into an agreement supplemental to this Trust
Supplement whereby Class D Certificateholders shall be granted purchase rights
similiar to those set forth in Section 7.01 hereof.
(c) Any supplemental agreement entered into pursuant to Sections
5.01(a) and (b) may not adversely affect the status of the Trust for U.S.
federal income tax purposes, as either (i) a grantor trust under Subpart E, Part
I of Subchapter J of Chapter 1 of Subtitle A of the Code or (ii) subject to no
resulting adverse Massachusetts state or local tax consequences, a partnership.
Section 5.02. Supplement Agreements with Consent of
Certificateholders. The provisions of Section 9.02 of the Basic Agreement shall
apply to agreements or amendments for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Escrow
Agreement, the Deposit Agreement or the Note Purchase Agreement to the extent
applicable to the Certificateholders approving such agreement or amendment or
modifying in any manner the rights and obligations of such Certificateholders
under the Escrow Agreement, the Deposit Agreement or the Note Purchase
Agreement; provided that the provisions of Section 9.02(1) of the Basic
Agreement shall be deemed to include reductions in any manner of, or delay in
the timing of, any receipt by the Certificateholders of payments upon the
Deposits.
ARTICLE VI
DISTRIBUTIONS; STATEMENT TO CERTIFICATEHOLDERS
Section 6.01. Additions to Article IV of the Basic Agreement. In
addition to the provisions of Article IV of the Basic Agreement, the following
provisions shall apply to the Trust:
<PAGE>
12
(a) Upon the payment of Special Redemption Premium to the Trustee
under the Note Purchase Agreement, the Trustee, upon receipt thereof,
shall immediately deposit the aggregate amount of such Special Redemption
Premium in the Special Payments account;
(b) The distribution of amounts of Special Redemption Premium as
provided for in Section 4.02(b) of the Basic Agreement shall be on the
Special Distribution Date with respect to such Special Payment or as soon
thereafter as the Trustee has confirmed receipt of the related Special
Redemption Premium;
(c) In the event of the payment of a Special Redemption Premium by
the Company to the Trustee under the Note Purchase Agreement, the notice
provided for in Section 4.02(c) of the Basic Agreement shall be mailed,
together with the notice by the Paying Agent under Section 2.6 of the
Escrow Agreement, not less that 15 days prior to the Special Distribution
Date for such amount, which Special Distribution Date shall be the Final
Withdrawal Date: and
(d) The last sentence of the first paragraph of Section 4.02(c) of
the Basic Agreement shall apply equally if the amount of Special
Redemption Premium, if any, has not been calculated at the time the
Trustee mails notice of a Special Payment.
Section 6.02. Statements to Applicable Certificateholders. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, including any Special Redemption Premium, reflecting
in part the information provided by the Paying Agent under the Escrow
Agreement). Such statement shall set forth (per $1,000 face amount Applicable
Certificate as to (ii), (iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
<PAGE>
13
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such year, and such other items as are readily available to
the Trustee and which an Applicable Certificateholder shall reasonably request
as necessary for the purpose of such Applicable Certificateholder's preparation
of its federal income tax returns. Such statement and such other items shall be
prepared on the basis of information supplied to the Trustee by the Clearing
Agency Participants and shall be delivered by the Trustee to such Clearing
Agency Participants to be available for forwarding by such Clearing Agency
Participants to the holders of interests in the Applicable Certificates in the
manner described in Section 6.02(a) hereof.
(c) Promptly following (i) the Cut-off Date, if there has been any
change in the information set forth in clauses (x) and (y) below from that set
forth in page S-36 of the Prospectus Supplement, and (ii) any early redemption
or purchase of, or any default in the payment of principal or interest in
respect of, any of the Equipment Notes held in the Applicable Trust, or any
Final Withdrawal, the Trustee shall furnish to Applicable Certificateholders of
record on such date a statement setting forth (x) the expected Pool Factors for
each subsequent Regular Distribution Date following the Cut-off Date and (y) the
expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Applicable Certificates registered in the name of a Clearing Agency, on the
Cut-off Date, the Trustee will request from such Clearing Agency a securities
position listing setting forth the names of all Clearing Agency Participants
reflected on such Clearing Agency's books as holding interests in the Applicable
Certificates on such date. The Trustee will mail to each such Clearing Agency
Participant the statement described above and will make available additional
copies as requested by such Clearing Agency Participant for forwarding to
holders of interests in the Applicable Certificates.
(d) This Section 6.02 supersedes and replaces Section 4.03 of the
Basic Agreement.
<PAGE>
14
ARTICLE VII
DEFAULT
Section 7.01. Purchase Rights of Certificateholders. (a) At any time
after the occurrence and during the continuance of a Triggering Event, each
Applicable Certificateholder shall have the right (which shall not expire upon
any purchase of the Class A Certificates by the Class B Certificateholders) to
purchase, for the purchase price set forth in Section 7.01 of the Other
Agreement relating to the Class A Certificates, all, but not less than all, of
the Class A Certificates and the Class B Certificates upon ten days' written
notice to the Class A Trustee, the Class B Trustee and each other Applicable
Certificateholder, provided that (i) if prior to the end of such ten-day period
any other Applicable Certificateholder notifies such purchasing Applicable
Certificateholder that such other Applicable Certificateholder wants to
participate in such purchase, then such other Applicable Certificateholder may
join with the purchasing Applicable Certificateholder to purchase all, but not
less than all, of the Class A Certificates and the Class B Certificates pro rata
based on the Fractional Undivided Interest in the Applicable Trust held by each
such Applicable Certificateholder and (ii) if prior to the end of such ten-day
period any other Applicable Certificateholder fails to notify the purchasing
Applicable Certificateholder of such other Applicable Certificateholder's desire
to participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A Certificates and the Class B
Certificates pursuant to this Section 7.01(a).
(b) As used in this Section 7.01, the terms "Class A Certificate",
"Class A Trustee", "Class B Certificate", "Class B Trustee" and "Class B
Certificateholder" shall have the respective meanings assigned to such terms in
the Intercreditor Agreement.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1999-1C CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 8.03. Execution in Counterparts. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
<PAGE>
15
IN WITNESS WHEREOF, the Guarantor, Holdings, the Company and the
Trustee have caused this Trust Supplement to be duly executed by their
respective officers thereto duly authorized, as of the day and year first
written above.
NORTHWEST AIRLINES, INC.
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
NORTHWEST AIRLINES HOLDINGS
CORPORATION
By: /s/ Mickey P. Foret
----------------------------------
Name: Mickey P. Foret
Title: Executive Vice President
and Chief Financial Officer
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ Donald Smith
----------------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or
its interest herein, will be deemed to represent and warrant to and for the
benefit of each Owner Participant and the Company that either (i) the assets of
an employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1999-1C PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-1C
Issuance Date: February 16, 1999
Final Legal Distribution Date: August 1, 2015
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-1C Pass Through Trust, The Property Of Which Includes Certain
Equipment Notes Each Secured By An Aircraft Leased To Or Owned By
Northwest Airlines, Inc.
Certificate
No. _____ $________ Fractional undivided interest representing 0.__%
of the Trust per $1,000 of Reference Principal Amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a Fractional Undivided Interest in the amount of $_______
(the "Reference Principal Amount") in the Northwest Airlines 1999-1C Pass
Through Trust (the "Trust") created by State Street Bank and Trust Company, as
trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as of
June 3, 1996 (as amended or supplemented, the "Basic Agreement"), by and among
the Trustee, Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), and Northwest
Airlines, Inc., a
<PAGE>
2
Minnesota corporation (the "Company"), as amended by the Supplemental Agreement,
dated as of November 20, 1998 among the Company, Holdings, Northwest Airlines
Corporation, a Delaware corporation (the "Guarantor") and the Trustee, as
supplemented by Trust Supplement No. 1999-1C thereto, dated as of February 16,
1999 (collectively, the "Agreement"), by and among the Trustee, the Guarantor,
Holdings and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1999-1C" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Intercreditor Agreement, to
which Agreement the Certificateholder of this Certificate by virtue of the
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and the Liquidity
Facility (the "Trust Property"). Each issue of the Equipment Notes is secured by
a security interest in the Aircraft leased to or owned by the Company.
Each of the Certificates represents a Fractional Undivided Interest
in the Trust and the Trust Property and has no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on each February 1 and August 1 (a "Regular Distribution Date"),
commencing August 1, 1999 to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon, except that
with respect to Certificates registered on the Record Date in the name of a
Clearing Agency (or its nominee), such distribution shall be made by wire
transfer.
<PAGE>
3
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, Holdings, the Company or the
Trustee or any affiliate thereof. The Certificates are limited in right or
payment, all as more specifically set forth herein and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor, Holdings or the Company and the rights of the Certificateholders
under the Agreement at any time by the Guarantor, Holdings, the Company and the
Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided
Interests and integral multiples thereof. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same
<PAGE>
4
aggregate Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder or beneficial owner of a Certificate, by its
acceptance of this Certificate or a beneficial interest herein, agrees to treat
the Trust as a grantor trust for all U.S. federal, state and local income tax
purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
NORTHWEST AIRLINES 1999-1A
PASS THROUGH TRUST
By: STATE STREET BANK AND
TRUST COMPANY, as
Trustee
By:
-------------------------
Name:
Title:
<PAGE>
5
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
------------------------
Name:
Title:
<PAGE>
EXHIBIT B
DTC Letter of Representations
<PAGE>
EXHIBIT C
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
- ------------------------- -----------------
August 1, 1999 $ 70,000.00
February 1, 2000 4,638,132.40
August 1, 2000 0.00
February 1, 2001 557,100.00
February 1, 2002 1,423,502.46
February 1, 2003 2,005,665.14
February 1, 2004 2,234,318.65
February 1, 2005 6,503,983.77
February 1, 2006 169,409.68
February 1, 2007 12,343,977.17
February 1, 2008 5,540,634.20
February 1, 2009 1,584,866.62
February 1, 2010 4,780,180.40
February 1, 2011 4,621,865.62
February 1, 2012 0.00
August 1, 2013 24,957,437.71
February 1, 2014 2,708,926.18
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1999-1A)
Dated as of February 16, 1999
between
STATE STREET BANK and TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Northwest Airlines Pass Through Trust 1999-1A
as Borrower
and
CITIBANK, N.A.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Northwest Airlines Pass Through Trust 1999-1A
6.81% Northwest Airlines Pass Through Certificates,
Series 1999-1A
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms....................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances.............................................7
Section 2.02 Making the Advances......................................7
Section 2.03 Fees.....................................................9
Section 2.04 Reduction or Termination of the Maximum Commitment.......9
Section 2.05 Repayments of Interest Advances or the Final Advance....10
Section 2.06 Repayments of Provider Advances.........................10
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement ................................11
Section 2.08 Book Entries............................................11
Section 2.09 Payments from Available Funds Only......................12
Section 2.10 Extension of the Expiry Date; Non-Extension Advance.....12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs.........................................12
Section 3.02 Capital Adequacy........................................13
Section 3.03 Payments Free of Deductions.............................14
Section 3.04 Payments................................................15
Section 3.05 Computations............................................15
Section 3.06 Payment on Non-Business Days............................15
Section 3.07 Interest................................................15
Section 3.08 Replacement of Borrower.................................17
Section 3.09 Funding Loss Indemnification............................17
Section 3.10 Illegality..............................................17
ARTICLE IV
i
<PAGE>
Page
----
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01...17
Section 4.02 Conditions Precedent to Borrowing.......................19
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower...................19
Section 5.02 Negative Covenants of the Borrower......................20
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default.............................20
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc.........................................21
Section 7.02 Notices, Etc............................................21
Section 7.03 No Waiver; Remedies.....................................22
Section 7.04 Further Assurances......................................22
Section 7.05 Indemnification; Survival of Certain Provisions.........22
Section 7.06 Liability of the Liquidity Provider.....................22
Section 7.07 Costs, Expenses and Taxes...............................23
Section 7.08 Binding Effect; Participations..........................23
Section 7.09 Severability............................................25
Section 7.10 GOVERNING LAW...........................................25
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity .....................................25
Section 7.12 Execution in Counterparts...............................26
Section 7.13 Entirety................................................26
Section 7.14 Headings................................................26
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........26
ii
<PAGE>
ANNEXES
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of February 16, 1999,
between STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company, not
in its individual capacity but solely as Subordination Agent under the
Intercreditor Agreement (each as defined below), as agent and trustee for the
Class A Trust (as defined below) (the "Borrower"), and CITIBANK, N.A., a
national banking association organized under the laws of the United States (the
"Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class A Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class A Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(g).
"Applicable Margin" means with respect to any Unpaid Advance or
Applied Provider Advance, 2.0%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
<PAGE>
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate"means a fluctuating interest rate per annum in effect
from time to time, which rate per annum is at all times equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Liquidity Provider from three Federal funds brokers of recognized
standing selected by the Liquidity Provider, plus (b) one quarter of one
percent (0.25%) per annum.
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in New
York, New York, Minneapolis, Minnesota, Chicago, Illinois, Boston,
Massachusetts and Salt Lake City, Utah, or, so long as any Class A
Certificate is outstanding, the city and state in which the Class A
Trustee, the Borrower or any Loan Trustee maintains its Corporate Trust
Office or receives or disburses funds, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR
Rate, on which dealings are carried on in the London interbank market.
"Delivery Period" means the period from the date hereof through
January 31, 2000.
"Deposit Agreement" means the Deposit Agreement, dated February 16,
1999, between First Security Bank, National Association, as Escrow Agent
and ABN AMRO Bank N.V., acting through its Chicago Branch, as Depositary,
pertaining to the Class A Certificates, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
2
<PAGE>
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) Taxes imposed on the overall net income
of the Liquidity Provider and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from "change in applicable law" for this purpose, a change in an
applicable treaty or other change in law affecting the applicability of a
treaty) after the date hereof, or in the case of a successor Liquidity
Provider (including a transferee of an Advance) or Lending Office, after
the date on which such successor Liquidity Provider obtains its interest
or on which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means February 14, 2000, initially, or any date to
which the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to Section
2.02(a).
3
<PAGE>
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning either (x) on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) or (y) the
date of the withdrawal of funds from the Class A Cash
Collateral Account for the purpose of paying interest on the
Class A Certificates as contemplated by Section 2.06(a) hereof
and, in each case, ending on the next Regular Distribution
Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date;
provided, however, that if (x) the Final Advance shall have been made, or
(y) other outstanding Advances shall have been converted into the Final
Advance, then the Interest Periods shall be successive periods of one
month beginning on the date such Final Advance is made (in the case of
clause (x) above) or the Regular Distribution Date following such
conversion (in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located in New York, New York, or such other lending office as
the Liquidity Provider from time to time shall notify the Borrower as its
lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the
rate per annum appearing on display page 3750 (British Bankers
Association--LIBOR) of the Dow Jones Markets Service (or any successor or
substitute therefor) at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period, as the rate
for dollar deposits with a maturity comparable to such Interest Period, or
(ii) if the rate calculated pursuant to clause (i) above is not available,
the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the
rates per annum at which deposits in dollars are offered for the relevant
Interest Period by three banks of recognized standing selected by the
Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two business days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
LIBOR Advance to which such Interest Period is to apply and for a period
comparable to such Interest Period.
"Liquidity Event of Default" means the occurrence of the following:
(i) all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity; provided that, if an acceleration of the Equipment Notes occurs
during the Delivery Period, a Liquidity Event of Default shall
4
<PAGE>
occur only if the aggregate principal amount of the Equipment Notes
exceeds $300 million, or (ii) a Northwest Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" shall mean, subject to the proviso
contained in the third sentence of Section 2.02(a), at any time of
determination, (a) the Maximum Commitment at such time less (b) the
aggregate amount of each Interest Advance outstanding at such time;
provided that following a Provider Advance or a Final Advance, the Maximum
Available Commitment shall be zero.
"Maximum Commitment" means, for any day, the lesser of (x)
$23,696,129 and (y) the Required Amount on such day.
"Non-Excluded Tax" has the meaning specified in Section 3.03(a).
"Non-Extension Advance" means an Advance made pursuant to Section
2.02(b).
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Prospectus Supplement" means the Prospectus Supplement dated
February 4, 1999, relating to the Class A Certificates, the Class B
Certificates and the Class C Certificates, as such Prospectus Supplement
may be amended or supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension
Advance.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.06(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class A Certificates, that would be payable on the
Class A Certificates on each of the three
5
<PAGE>
successive semiannual Regular Distribution Dates immediately following
such day or, if such day is a Regular Distribution Date, on such day and
the succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class A Certificates on
such day and without regard to expected future payments of principal on
the Class A Certificates.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth
Business Day following the receipt by the Borrower of a Termination Notice
from the Liquidity Provider pursuant to Section 6.01 hereof; and (v) the
date on which no Advance is or may (including by reason of reinstatement
as herein provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of Termination substantially
in the form of Annex V to this Agreement.
"Transferee" has the meaning assigned to such term in Section
7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than
an Applied Downgrade Advance.
"Unapplied Provider Advance" means any Provider Advance other than
an Applied Provider Advance.
"Unpaid Advance" has the meaning assigned to such term in Section
2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"Acceleration", "Certificates", "Class A Cash Collateral Account", "Class
A Certificates", "Class A Certificateholders", "Class A Trust", "Class A
Trust Agreement", "Class A Trustee", "Class B Certificates", "Class C
Certificates", "Closing Date", "Controlling Party", "Corporate Trust
Office", "Delivery Period Expiry Date", "Distribution Date", "Downgraded
Facility", "Equipment Notes", "Final Legal Distribution Date", "Financing
Agreement", "Indenture", "Interest Payment Date", "Investment Earnings",
"Liquidity Facility", "Liquidity Obligations", "Loan Trustee",
6
<PAGE>
"Moody's", "Non-Extended Facility", "Northwest", "Northwest Bankruptcy
Event", "Note Purchase Agreement", "Operative Agreements", "Performing
Equipment Note", "Person", "Pool Balance", "Rating Agency", "Ratings
Confirmation", "Regular Distribution Date", "Replacement Liquidity
Facility", "Responsible Officer", "Scheduled Payment", "Special Payment",
"Standard & Poor's", "Stated Interest Rate", "Subordination Agent",
"Taxes", "Threshold Rating", "Trust Agreements", "Trustee",
"Underwriters", "Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.
Section 2.02 Making the Advances. (a) Interest Advances shall be
made in one or more Borrowings by delivery to the Liquidity Provider of one or
more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Maximum Available Commitment at such time and shall be
used solely for the payment when due of interest on the Class A Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower as contemplated by said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex II attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Maximum Available Commitment
at such time, and shall be
7
<PAGE>
used to fund the Class A Cash Collateral Account in accordance with said Section
3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been previously delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex III attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the Class A Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex IV
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the Class A Cash Collateral Account in accordance with Section 3.6(i) and
Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day,
upon satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in
such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower
in respect of any Borrowing after 1:00 p.m. (New York City time) on a Business
Day, upon satisfaction of the conditions precedent set forth in Section 4.02
with respect to a requested Borrowing, the Liquidity Provider shall make
available to the Borrower, in accordance with its payment instructions, the
amount of such Borrowing in U.S. dollars and immediately available funds, before
12:00 Noon (New York City time) on the first Business Day next following the day
of receipt of such Notice of Borrowing or on such later Business Day specified
by the Borrower in such Notice of Borrowing. Payments of proceeds of a Borrowing
shall be made by wire transfer of immediately available funds to the Borrower in
accordance with such wire transfer instructions as the Borrower shall furnish
from time to time to the Liquidity Provider for such purpose. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower.
8
<PAGE>
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other Person. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class A Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class A Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03 Fees. (a) The Borrower agrees to pay to the Liquidity
Provider on the effective date a non-refundable fee equal to $158,919 in
aggregate with respect to this Agreement, the Revolving Credit Agreement
(1999-1B) dated as of February 16, 1999, by and between State Street Bank and
Trust Company and Citibank, N.A., and the Revolving Credit Agreement (1999-1C)
dated as of February 16, 1999, by and between State Street Bank and Trust
Company and Citibank, N.A.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.35% per annum on the average Maximum
Available Commitment from the Effective Date to the earlier of the date on which
a Downgrade Advance or Non-Extension Advance is made and the date on which the
Maximum Commitment terminates. Such fee shall be payable in arrears on each
Regular Distribution Date. In addition, the Borrower shall pay, or shall cause
to be paid, to the Liquidity Provider, a fee equal to 0.35% per annum on the
unpaid principal amount of each Downgrade Advance or Non-Extension Advance
(other than an Applied Downgrade Advance or an Applied Non-Extension Advance)
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full. Such fee shall be payable in arrears on
each Regular Distribution Date and, in the event of the payment of principal of
such Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.03(b) shall require the Borrower to pay any amount under this Section
2.03(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.04 Reduction or Termination of the Maximum Commitment.
(a) Automatic Reduction. Promptly following each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class A Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such
9
<PAGE>
reduced Required Amount (as calculated by the Borrower). The Borrower shall give
notice of any such automatic reduction of the Maximum Commitment to the
Liquidity Provider within two Business Days thereof. The failure by the Borrower
to furnish any such notice shall not affect such automatic reduction of the
Maximum Commitment.
(b) Termination. Upon the making of any Provider Advance or Final
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05 Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum Available Commitment to zero, then such Interest Advances
shall cease to constitute Unpaid Advances and shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied Non-Extension Advance,
as the case may be, for all purposes of this Agreement (including, without
limitation, for the purpose of determining when such Interest Advance is
required to be repaid to the Liquidity Provider in accordance with Section 2.06
and for the purposes of Section 2.06(b)). The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest Advance and Final
Advance on the date such Advance is made is intended to be a contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.
Section 2.06 Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class A
Cash Collateral Account, invested and withdrawn from the Class A Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; provided, however, that amounts in
respect of a Provider Advance withdrawn from the Class A Cash Collateral Account
for the purpose of paying interest on the Class A Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (y) in the case of a Downgrade Advance, an "Applied Downgrade
Advance" and (z) in the case of a Non-Extension Advance, an "Applied
Non-Extension Advance" and, together with an Applied Downgrade Advance, an
"Applied Provider Advance") shall thereafter (subject to Section 2.06(b)) be
treated as an Interest Advance
10
<PAGE>
under this Agreement for purposes of determining the Applicable Liquidity Rate
for interest payable thereon; provided further, however, that if, following the
making of a Provider Advance, the Liquidity Provider delivers a Termination
Notice to the Borrower pursuant to Section 6.01 hereof, such Provider Advance
shall thereafter be treated as a Final Advance under this Agreement for purposes
of determining the Applicable Liquidity Rate for interest payable thereon.
Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any
amounts from the Class A Cash Collateral Account on account of a reduction in
the Required Amount, the Borrower shall repay to the Liquidity Provider a
portion of the Provider Advances in a principal amount equal to such reduction,
plus interest on the principal amount prepaid as provided in Section 3.07
hereof.
(b) At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the Class A Cash Collateral Account
of any amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such amount
being a "Replenishment Amount") for the purpose of replenishing or increasing
the balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Provider Advances (and of Provider
Advances treated as an Interest Advance for purposes of determining the
Applicable Liquidity Rate for interest payable thereon) shall be automatically
reduced by the amount of such Replenishment Amount and (ii) the aggregate
outstanding principal amount of all Unapplied Provider Advances shall be
automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the Class A Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
or, if not provided for in the Intercreditor Agreement, then in such manner as
the Liquidity Provider shall deem appropriate.
Section 2.08 Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest
11
<PAGE>
payable hereunder and paid from time to time in respect thereof; provided,
however, that the failure by the Liquidity Provider to maintain such account or
accounts shall not affect the obligations of the Borrower in respect of
Advances.
Section 2.09 Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section
7(c) of the Participation Agreements and Section 7 of the Note Purchase
Agreement and only to the extent that the Borrower shall have sufficient income
or proceeds therefrom to enable the Borrower to make payments in accordance with
the terms hereof after giving effect to the priority of payments provisions set
forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will
look solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class A Cash Collateral Account shall be available to
the Borrower to make payments under this Agreement only to the extent and for
the purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class A Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect that such Expiry Date shall be
so extended (and, in each case, if the Liquidity Provider shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement), the
Borrower shall be entitled on and after such 25th day (but prior to the then
effective Expiry Date) to request a Non-Extension Advance in accordance with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
12
<PAGE>
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider
any other condition regarding this Agreement or any Advance, or (iii) subject
the Liquidity Provider to any Taxes with respect to amounts payable or paid or
change the basis of taxation of any amounts payable to the Liquidity Provider
(other than Excluded Taxes) and (b) the result of any event referred to in the
preceding clauses (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, upon demand by the Liquidity
Provider (such demand to be made not later than 180 days after a Responsible
Officer of the Liquidity Provider obtains actual knowledge of any event referred
to in clause (i), (ii) or (iii) above), the Borrower shall pay, or cause to be
paid, to the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such increased cost; provided that if such demand for
payment is made after such 180-day period, the Borrower shall be obligated to
pay such additional amounts only with respect to such increased cost actually
incurred or effected on or after the 180th day prior to the date of such demand.
A certificate as to such increased cost incurred by the Liquidity Provider as a
result of any event mentioned in clauses (i), (ii) or (iii) above, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower, shall
be conclusive evidence of the amount owed under this Section, absent manifest
error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.01 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.02 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital adequacy) by an amount deemed by the Liquidity Provider to be
material, then, upon demand by the Liquidity Provider, the Borrower shall pay to
the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such reduction in respect of issuing or maintaining its
commitment hereunder or its funding or
13
<PAGE>
maintaining Advances. A certificate as to any such additional amount describing
the event which has the effect of reducing the rate of return on the Liquidity
Provider's capital, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive evidence of the amount owed under
this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.02 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.03 Payments Free of Deductions. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest
or any other such amounts payable under this Agreement at the rates or in the
amounts specified in this Agreement. The Liquidity Provider agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if making such
change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise disadvantageous to the Liquidity Provider.
From time to time upon the reasonable request of the Borrower, the Liquidity
Provider agrees to provide to the Borrower, to the extent that the Liquidity
Provider is legally entitled to do so, two original Internal Revenue Service
Forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that the Liquidity Provider is exempt
from or entitled to a reduced rate of United States withholding tax on payments
pursuant to this Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
14
<PAGE>
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04 Payments. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to Citibank, N.A., New York, N.Y.,
ABA #021000089, Account No. 4063287, Reference: Northwest Airlines Liquidity
Facility 1999-1A, Attention: Tim Smith, Global Loans.
Section 3.05 Computations. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
Section 3.06 Payment on Non-Business Days. Whenever any payment to
be made hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
Section 3.07 Interest. (a) Subject to Section 2.09, the Borrower
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the Class A Cash Collateral
Account to pay interest on the Class A Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class A Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to
15
<PAGE>
this Section 3.07 below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest that would have
accrued if such otherwise applicable interest rate as set forth in this Section
3.07 had at all times been in effect.
(b) Each Advance (other than any Unapplied Provider Advance) will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each
such Advance will be a Base Rate Advance for the period from the date of its
borrowing to (but excluding) the third Business Day following the Liquidity
Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR Advance; provided that (i) an Applied Provider Advance
shall always be a LIBOR Advance unless the Borrower elects otherwise and (ii)
the Borrower (at the direction of the Controlling Party, so long as the
Liquidity Provider is not the Controlling Party) may (x) convert the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days' prior
written notice of such election or (y) elect to maintain the Final Advance as a
Base Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made, without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 A.M. on the
first Business Day immediately following the Borrower's receipt of the
applicable Termination Notice, that such Final Advance not be converted from a
Base Rate Advance to a LIBOR Advance).
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) Each Unapplied Provider Advance shall bear interest in an amount
equal to the Investment Earnings on amounts on deposit in the Class A Cash
Collateral Account, payable in arrears on each Distribution Date.
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 2.0% until paid.
16
<PAGE>
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08 Replacement of Borrower. From time to time and subject
to the successor Borrower's meeting the eligibility requirements set forth in
Section 6.9 of the Intercreditor Agreement applicable to the Subordination
Agent, upon the effective date and time specified in a written and completed
Notice of Replacement Subordination Agent in substantially the form of Annex VI
attached hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(1) Any repayment of a LIBOR Advance on a date other than the last
day of the Interest Period for such Advance; or
(2) Any failure by the Borrower to borrow a LIBOR Advance on the
date for borrowing specified in the relevant notice under Section 2.02.
Section 3.10 Illegality. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
been satisfied or waived:
17
<PAGE>
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies
of the Class A Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class A Trust Agreement, the Intercreditor Agreement and the other
Operative Agreements (in the case of each such opinion, other than
the opinion of counsel for the Underwriters, either addressed to the
Liquidity Provider or accompanied by a letter from the counsel
rendering such opinion to the effect that the Liquidity Provider is
entitled to rely on such opinion as of its date as if it were
addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees, the Borrower and the
Liquidity Provider created by the Operative Agreements executed and
delivered on or prior to the Closing Date;
(vii) A letter from Northwest Airlines Corporation, pursuant
to which (i) Northwest Airlines Corporation agrees to provide copies
of quarterly financial statements and audited annual financial
statements to the Liquidity Provider, and such other information as
the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case,
only to the extent that Northwest Airlines Corporation is obligated
to provide such information pursuant to Section 16 of the Leases
(related to Leased Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties thereto; and
18
<PAGE>
(viii) Such other documents, instruments, opinions and
approvals pertaining to the transactions contemplated hereby or by
the other Operative Agreements as the Liquidity Provider shall have
reasonably requested.
(b) The following statement shall be true on and as of the Effective
Date: no event has occurred and is continuing, or would result from the
entering into of this Agreement or the making of any Advance, which
constitutes a Liquidity Event of Default.
(c) The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied or waived, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied or waived, and all conditions
precedent to the purchase of the Class A Certificates, Class B
Certificates and Class C Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (unless any of such
conditions precedent shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.01 have been satisfied or waived.
Section 4.02 Conditions Precedent to Borrowing. The obligation of
the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and
19
<PAGE>
requirements applicable to it contained in this Agreement and the other
Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will not appoint or permit or
suffer to be appointed any successor Borrower without the prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default. If (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(i) of the Intercreditor
Agreement, (iii) all other outstanding Advances to be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iv) subject to Sections 2.07 and 2.09 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
20
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment or of a
waiver by the Borrower, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7.02 Notices, Etc. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: STATE STREET BANK AND TRUST COMPANY
Two International Place
4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Telecopy: (617) 664-5151
Liquidity Provider: CITIBANK, N.A.
Two Penns' Way, Suite 200
New Castle, DE 19720
Attention: Tim Smith, Global Loans
Telecopy: (302) 894-6120
with a copy to:
CITIBANK, N.A.
Global Aviation
399 Park Avenue, 12th Floor
New York, New York 10043
Attention: Tom Boyle
Telecopy: (212) 793-1246
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be
21
<PAGE>
delivered to each of the parties to the Participation Agreements at their
respective addresses set forth therein.
Section 7.03 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05 Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7(c) of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof (regardless of whether
indemnified against pursuant to said Sections)), that may be imposed, incurred
by or asserted against any Liquidity Indemnitee, in any way relating to,
resulting from, or arising out of or in connection with any action, suit or
proceeding by any third party against such Liquidity Indemnitee and relating to
this Agreement, the Intercreditor Agreement or any Financing Agreement;
provided, however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in respect of any
Expense of such Liquidity Indemnitee to the extent such Expense is (i)
attributable to the gross negligence or willful misconduct of such Liquidity
Indemnitee or any other Liquidity Indemnitee, (ii) ordinary and usual operating
overhead expense, or (iii) attributable to the failure by such Liquidity
Indemnitee or any other Liquidity Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in this
Agreement, the Intercreditor Agreement or any other Operative Agreement to which
it is a party. The indemnities contained in Section 7(c) of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.
Section 7.06 Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or omissions of the Borrower or any beneficiary or
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; or (iii) the making of Advances by the Liquidity Provider against
delivery of a Notice of Borrowing and other documents which do not
22
<PAGE>
comply with the terms hereof; provided, however, that the Borrower shall have a
claim against the Liquidity Provider, and the Liquidity Provider shall be liable
to the Borrower, to the extent of any damages suffered by the Borrower which
were the result of (A) the Liquidity Provider's willful misconduct or negligence
in determining whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) Neither the Liquidity Provider nor any of its officers,
employees, directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider's
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07 Costs, Expenses and Taxes. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider in connection with (i) the enforcement
of this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class A Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(except as contemplated by Section 3.08) the Borrower shall have the
23
<PAGE>
right to assign its rights or obligations hereunder or any interest herein
without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts, additional amounts due pursuant
to Section 3.03(a) and the like as they pertain to the Liquidity Provider shall
be deemed also to include those of each of its participants (subject, in each
case, to the maximum amount that would have been incurred by or attributable to
the Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee's entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
24
<PAGE>
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
25
<PAGE>
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement, the Intercreditor Agreement
and the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(End of Page)
26
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity but solely as
Subordination Agent, as agent and trustee
for the Class A Trust, as Borrower
By: /s/ Donald Smith
---------------------------------
Name: Donald Smith
Title: Vice President
CITIBANK, N.A., as Liquidity Provider
By: /s/ Thomas Boyle
---------------------------------
Name: Thomas Boyle
Title: Managing Director
27
<PAGE>
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1A) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used,
subject to clause (3)(v) below, for the payment of the interest on the
Class A Certificates which was payable on ____________, ____ (the
"Distribution Date") in accordance with the terms and provisions of the
Class A Trust Agreement and the Class A Certificates, which Advance is
requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
interest which was due and payable on the Class A Certificates on the
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates or the Class C Certificates, or interest on the Class
B Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the Class A Trust
Agreement and the Intercreditor Agreement (a copy of which computation is
attached hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of interest
which was due and payable on the Class A Certificates on such Distribution
Date but which remains unpaid due to the failure of the Depositary to pay
any amount of accrued interest on the Deposits on such Distribution Date
and (vi) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically
I-1
<PAGE>
reduce, subject to reinstatement in accordance with the terms of the Liquidity
Agreement, the Maximum Available Commitment by an amount equal to the amount of
the Interest Advance requested to be made hereby as set forth in clause (i) of
paragraph (3) of this Notice of Borrowing and such reduction shall automatically
result in corresponding reductions in the amounts available to be borrowed
pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
I-2
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
I-3
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1A) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on __________, ____.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(d) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class A Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Non-Extension Advance requested by this Notice of
II-1
<PAGE>
Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
II-2
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
II-3
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1A) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class A Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity
III-1
<PAGE>
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
III-2
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
III-3
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1A) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Final Advance by the Liquidity Provider to be used for the
funding of the Class A Cash Collateral Account in accordance with Section
3.6(i) of the Intercreditor Agreement by reason of the receipt by the
Borrower of a Termination Notice from the Liquidity Provider with respect
to the Liquidity Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the
Class A Cash Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class A Certificates, or
principal of, or interest or premium on, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
IV-1
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance [and that such Base Rate Advance be converted into
a LIBOR Advance on the third Business Day following your receipt of this
notice](1).
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Final Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Final Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
- --------
(1) Bracketed language may be included at Borrower's option.
IV-2
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
IV-3
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
State Street Bank and Trust Company,
as Subordination Agent, as Borrower
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Revolving Credit Agreement (1999-1A) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1A,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of Default
and the existence of a Performing Note Deficiency (each as defined therein), we
are giving this notice to you in order to cause (i) our obligations to make
Advances (as defined therein) under such Liquidity Agreement to terminate on the
fifth Business Day after the date on which you receive this notice and (ii) you
to request a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the Liquidity Agreement) as
a consequence of your receipt of this notice.
V-1
<PAGE>
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE
LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY
AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.
Very truly yours,
CITIBANK, N.A., as Liquidity Provider
By:
-------------------------------------
Name:
Title:
cc: State Street Bank and Trust Company,
as Class A Trustee
V-2
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-1A) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1A,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
VI-1
<PAGE>
We ask that this transfer be effective as of _______________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
VI-2
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1999-1B)
Dated as of February 16, 1999
between
STATE STREET BANK and TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Northwest Airlines Pass Through Trust 1999-1B
as Borrower
and
CITIBANK, N.A.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Northwest Airlines Pass Through Trust 1999-1B
7.36% Northwest Airlines Pass Through Certificates,
Series 1999-1B
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms....................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances.............................................7
Section 2.02 Making the Advances......................................7
Section 2.03 Fees.....................................................9
Section 2.04 Reduction or Termination of the Maximum Commitment.......9
Section 2.05 Repayments of Interest Advances or the Final Advance....10
Section 2.06 Repayments of Provider Advances.........................10
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement ................................11
Section 2.08 Book Entries............................................11
Section 2.09 Payments from Available Funds Only......................12
Section 2.10 Extension of the Expiry Date; Non-Extension Advance.....12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs.........................................12
Section 3.02 Capital Adequacy........................................13
Section 3.03 Payments Free of Deductions.............................14
Section 3.04 Payments................................................15
Section 3.05 Computations............................................15
Section 3.06 Payment on Non-Business Days............................15
Section 3.07 Interest................................................15
Section 3.08 Replacement of Borrower.................................17
Section 3.09 Funding Loss Indemnification............................17
Section 3.10 Illegality..............................................17
ARTICLE IV
i
<PAGE>
Page
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01...17
Section 4.02 Conditions Precedent to Borrowing.......................19
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower...................19
Section 5.02 Negative Covenants of the Borrower......................20
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default.............................20
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc.........................................21
Section 7.02 Notices, Etc............................................21
Section 7.03 No Waiver; Remedies.....................................22
Section 7.04 Further Assurances......................................22
Section 7.05 Indemnification; Survival of Certain Provisions.........22
Section 7.06 Liability of the Liquidity Provider.....................22
Section 7.07 Costs, Expenses and Taxes...............................23
Section 7.08 Binding Effect; Participations..........................23
Section 7.09 Severability............................................25
Section 7.10 GOVERNING LAW...........................................25
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity .....................................25
Section 7.12 Execution in Counterparts...............................26
Section 7.13 Entirety................................................26
Section 7.14 Headings................................................26
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........26
ii
<PAGE>
ANNEXES
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of February 16, 1999,
between STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company, not
in its individual capacity but solely as Subordination Agent under the
Intercreditor Agreement (each as defined below), as agent and trustee for the
Class B Trust (as defined below) (the "Borrower"), and CITIBANK, N.A., a
national banking association organized under the laws of the United States (the
"Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class B Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class B Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(g).
"Applicable Margin" means with respect to any Unpaid Advance or
Applied Provider Advance, 2.0%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
<PAGE>
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate"means a fluctuating interest rate per annum in effect
from time to time, which rate per annum is at all times equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Liquidity Provider from three Federal funds brokers of recognized
standing selected by the Liquidity Provider, plus (b) one quarter of one
percent (0.25%) per annum.
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in New
York, New York, Minneapolis, Minnesota, Chicago, Illinois, Boston,
Massachusetts and Salt Lake City, Utah, or, so long as any Class B
Certificate is outstanding, the city and state in which the Class B
Trustee, the Borrower or any Loan Trustee maintains its Corporate Trust
Office or receives or disburses funds, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR
Rate, on which dealings are carried on in the London interbank market.
"Delivery Period" means the period from the date hereof through
January 31, 2000.
"Deposit Agreement" means the Deposit Agreement, dated February 16,
1999, between First Security Bank, National Association, as Escrow Agent
and ABN AMRO Bank N.V., acting through its Chicago Branch, as Depositary,
pertaining to the Class B Certificates, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
2
<PAGE>
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) Taxes imposed on the overall net income
of the Liquidity Provider and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from "change in applicable law" for this purpose, a change in an
applicable treaty or other change in law affecting the applicability of a
treaty) after the date hereof, or in the case of a successor Liquidity
Provider (including a transferee of an Advance) or Lending Office, after
the date on which such successor Liquidity Provider obtains its interest
or on which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means February 14, 2000, initially, or any date to
which the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to Section
2.02(a).
3
<PAGE>
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning either (x) on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) or (y) the
date of the withdrawal of funds from the Class B Cash
Collateral Account for the purpose of paying interest on the
Class B Certificates as contemplated by Section 2.06(a) hereof
and, in each case, ending on the next Regular Distribution
Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date;
provided, however, that if (x) the Final Advance shall have been made, or
(y) other outstanding Advances shall have been converted into the Final
Advance, then the Interest Periods shall be successive periods of one
month beginning on the date such Final Advance is made (in the case of
clause (x) above) or the Regular Distribution Date following such
conversion (in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located in New York, New York, or such other lending office as
the Liquidity Provider from time to time shall notify the Borrower as its
lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the
rate per annum appearing on display page 3750 (British Bankers
Association--LIBOR) of the Dow Jones Markets Service (or any successor or
substitute therefor) at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period, as the rate
for dollar deposits with a maturity comparable to such Interest Period, or
(ii) if the rate calculated pursuant to clause (i) above is not available,
the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the
rates per annum at which deposits in dollars are offered for the relevant
Interest Period by three banks of recognized standing selected by the
Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two business days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
LIBOR Advance to which such Interest Period is to apply and for a period
comparable to such Interest Period.
"Liquidity Event of Default" means the occurrence of the following:
(i) all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity; provided that, if an acceleration of the Equipment Notes occurs
during the Delivery Period, a Liquidity Event of Default shall
4
<PAGE>
occur only if the aggregate principal amount of the Equipment Notes
exceeds $300 million, or (ii) a Northwest Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" shall mean, subject to the proviso
contained in the third sentence of Section 2.02(a), at any time of
determination, (a) the Maximum Commitment at such time less (b) the
aggregate amount of each Interest Advance outstanding at such time;
provided that following a Provider Advance or a Final Advance, the Maximum
Available Commitment shall be zero.
"Maximum Commitment" means, for any day, the lesser of (x)
$12,315,672 and (y) the Required Amount on such day.
"Non-Excluded Tax" has the meaning specified in Section 3.03(a).
"Non-Extension Advance" means an Advance made pursuant to Section
2.02(b).
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Prospectus Supplement" means the Prospectus Supplement dated
February 4, 1999, relating to the Class A Certificates, the Class B
Certificates and the Class C Certificates, as such Prospectus Supplement
may be amended or supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension
Advance.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.06(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates, that would be payable on the
Class B Certificates on each of the three
5
<PAGE>
successive semiannual Regular Distribution Dates immediately following
such day or, if such day is a Regular Distribution Date, on such day and
the succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class B Certificates on
such day and without regard to expected future payments of principal on
the Class B Certificates.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class B Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth
Business Day following the receipt by the Borrower of a Termination Notice
from the Liquidity Provider pursuant to Section 6.01 hereof; and (v) the
date on which no Advance is or may (including by reason of reinstatement
as herein provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of Termination substantially
in the form of Annex V to this Agreement.
"Transferee" has the meaning assigned to such term in Section
7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than
an Applied Downgrade Advance.
"Unapplied Provider Advance" means any Provider Advance other than
an Applied Provider Advance.
"Unpaid Advance" has the meaning assigned to such term in Section
2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"Acceleration", "Certificates", "Class A Certificates", "Class B Cash
Collateral Account", "Class B Certificateholders", "Class B Certificates",
"Class B Trust", "Class B Trust Agreement", "Class B Trustee", "Class C
Certificates", "Closing Date", "Controlling Party", "Corporate Trust
Office", "Delivery Period Expiry Date", "Distribution Date", "Downgraded
Facility", "Equipment Notes", "Final Legal Distribution Date", "Financing
Agreement", "Indenture", "Interest Payment Date", "Investment Earnings",
"Liquidity Facility", "Liquidity Obligations", "Loan Trustee",
6
<PAGE>
"Moody's", "Non-Extended Facility", "Northwest", "Northwest Bankruptcy
Event", "Note Purchase Agreement", "Operative Agreements", "Performing
Equipment Note", "Person", "Pool Balance", "Rating Agency", "Ratings
Confirmation", "Regular Distribution Date", "Replacement Liquidity
Facility", "Responsible Officer", "Scheduled Payment", "Special Payment",
"Standard & Poor's", "Stated Interest Rate", "Subordination Agent",
"Taxes", "Threshold Rating", "Trust Agreements", "Trustee",
"Underwriters", "Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.
Section 2.02 Making the Advances. (a) Interest Advances shall be
made in one or more Borrowings by delivery to the Liquidity Provider of one or
more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Maximum Available Commitment at such time and shall be
used solely for the payment when due of interest on the Class B Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower as contemplated by said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex II attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Maximum Available Commitment
at such time, and shall be
7
<PAGE>
used to fund the Class B Cash Collateral Account in accordance with said Section
3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been previously delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex III attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the Class B Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex IV
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the Class B Cash Collateral Account in accordance with Section 3.6(i) and
Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day,
upon satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in
such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower
in respect of any Borrowing after 1:00 p.m. (New York City time) on a Business
Day, upon satisfaction of the conditions precedent set forth in Section 4.02
with respect to a requested Borrowing, the Liquidity Provider shall make
available to the Borrower, in accordance with its payment instructions, the
amount of such Borrowing in U.S. dollars and immediately available funds, before
12:00 Noon (New York City time) on the first Business Day next following the day
of receipt of such Notice of Borrowing or on such later Business Day specified
by the Borrower in such Notice of Borrowing. Payments of proceeds of a Borrowing
shall be made by wire transfer of immediately available funds to the Borrower in
accordance with such wire transfer instructions as the Borrower shall furnish
from time to time to the Liquidity Provider for such purpose. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower.
8
<PAGE>
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other Person. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class B Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class B Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class B Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03 Fees. (a) The Borrower agrees to pay to the Liquidity
Provider on the effective date a non-refundable fee equal to $158,919 in
aggregate with respect to this Agreement, the Revolving Credit Agreement
(1999-1A) dated as of February 16, 1999, by and between State Street Bank and
Trust Company and Citibank, N.A., and the Revolving Credit Agreement (1999-1C)
dated as of February 16, 1999, by and between State Street Bank and Trust
Company and Citibank, N.A.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.35% per annum on the average Maximum
Available Commitment from the Effective Date to the earlier of the date on which
a Downgrade Advance or Non-Extension Advance is made and the date on which the
Maximum Commitment terminates. Such fee shall be payable in arrears on each
Regular Distribution Date. In addition, the Borrower shall pay, or shall cause
to be paid, to the Liquidity Provider, a fee equal to 0.35% per annum on the
unpaid principal amount of each Downgrade Advance or Non-Extension Advance
(other than an Applied Downgrade Advance or an Applied Non-Extension Advance)
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full. Such fee shall be payable in arrears on
each Regular Distribution Date and, in the event of the payment of principal of
such Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.03(b) shall require the Borrower to pay any amount under this Section
2.03(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.04 Reduction or Termination of the Maximum Commitment.
(a) Automatic Reduction. Promptly following each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class B Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such
9
<PAGE>
reduced Required Amount (as calculated by the Borrower). The Borrower shall give
notice of any such automatic reduction of the Maximum Commitment to the
Liquidity Provider within two Business Days thereof. The failure by the Borrower
to furnish any such notice shall not affect such automatic reduction of the
Maximum Commitment.
(b) Termination. Upon the making of any Provider Advance or Final
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05 Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum Available Commitment to zero, then such Interest Advances
shall cease to constitute Unpaid Advances and shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied Non-Extension Advance,
as the case may be, for all purposes of this Agreement (including, without
limitation, for the purpose of determining when such Interest Advance is
required to be repaid to the Liquidity Provider in accordance with Section 2.06
and for the purposes of Section 2.06(b)). The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest Advance and Final
Advance on the date such Advance is made is intended to be a contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.
Section 2.06 Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class B
Cash Collateral Account, invested and withdrawn from the Class B Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; provided, however, that amounts in
respect of a Provider Advance withdrawn from the Class B Cash Collateral Account
for the purpose of paying interest on the Class B Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (y) in the case of a Downgrade Advance, an "Applied Downgrade
Advance" and (z) in the case of a Non-Extension Advance, an "Applied
Non-Extension Advance" and, together with an Applied Downgrade Advance, an
"Applied Provider Advance") shall thereafter (subject to Section 2.06(b)) be
treated as an Interest Advance
10
<PAGE>
under this Agreement for purposes of determining the Applicable Liquidity Rate
for interest payable thereon; provided further, however, that if, following the
making of a Provider Advance, the Liquidity Provider delivers a Termination
Notice to the Borrower pursuant to Section 6.01 hereof, such Provider Advance
shall thereafter be treated as a Final Advance under this Agreement for purposes
of determining the Applicable Liquidity Rate for interest payable thereon.
Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any
amounts from the Class B Cash Collateral Account on account of a reduction in
the Required Amount, the Borrower shall repay to the Liquidity Provider a
portion of the Provider Advances in a principal amount equal to such reduction,
plus interest on the principal amount prepaid as provided in Section 3.07
hereof.
(b) At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the Class B Cash Collateral Account
of any amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such amount
being a "Replenishment Amount") for the purpose of replenishing or increasing
the balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Provider Advances (and of Provider
Advances treated as an Interest Advance for purposes of determining the
Applicable Liquidity Rate for interest payable thereon) shall be automatically
reduced by the amount of such Replenishment Amount and (ii) the aggregate
outstanding principal amount of all Unapplied Provider Advances shall be
automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the Class B Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
or, if not provided for in the Intercreditor Agreement, then in such manner as
the Liquidity Provider shall deem appropriate.
Section 2.08 Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest
11
<PAGE>
payable hereunder and paid from time to time in respect thereof; provided,
however, that the failure by the Liquidity Provider to maintain such account or
accounts shall not affect the obligations of the Borrower in respect of
Advances.
Section 2.09 Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section
7(c) of the Participation Agreements and Section 7 of the Note Purchase
Agreement and only to the extent that the Borrower shall have sufficient income
or proceeds therefrom to enable the Borrower to make payments in accordance with
the terms hereof after giving effect to the priority of payments provisions set
forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will
look solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class B Cash Collateral Account shall be available to
the Borrower to make payments under this Agreement only to the extent and for
the purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class B Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect that such Expiry Date shall be
so extended (and, in each case, if the Liquidity Provider shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement), the
Borrower shall be entitled on and after such 25th day (but prior to the then
effective Expiry Date) to request a Non-Extension Advance in accordance with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
12
<PAGE>
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider
any other condition regarding this Agreement or any Advance, or (iii) subject
the Liquidity Provider to any Taxes with respect to amounts payable or paid or
change the basis of taxation of any amounts payable to the Liquidity Provider
(other than Excluded Taxes) and (b) the result of any event referred to in the
preceding clauses (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, upon demand by the Liquidity
Provider (such demand to be made not later than 180 days after a Responsible
Officer of the Liquidity Provider obtains actual knowledge of any event referred
to in clause (i), (ii) or (iii) above), the Borrower shall pay, or cause to be
paid, to the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such increased cost; provided that if such demand for
payment is made after such 180-day period, the Borrower shall be obligated to
pay such additional amounts only with respect to such increased cost actually
incurred or effected on or after the 180th day prior to the date of such demand.
A certificate as to such increased cost incurred by the Liquidity Provider as a
result of any event mentioned in clauses (i), (ii) or (iii) above, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower, shall
be conclusive evidence of the amount owed under this Section, absent manifest
error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.01 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.02 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital adequacy) by an amount deemed by the Liquidity Provider to be
material, then, upon demand by the Liquidity Provider, the Borrower shall pay to
the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such reduction in respect of issuing or maintaining its
commitment hereunder or its funding or
13
<PAGE>
maintaining Advances. A certificate as to any such additional amount describing
the event which has the effect of reducing the rate of return on the Liquidity
Provider's capital, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive evidence of the amount owed under
this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.02 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.03 Payments Free of Deductions. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest
or any other such amounts payable under this Agreement at the rates or in the
amounts specified in this Agreement. The Liquidity Provider agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if making such
change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise disadvantageous to the Liquidity Provider.
From time to time upon the reasonable request of the Borrower, the Liquidity
Provider agrees to provide to the Borrower, to the extent that the Liquidity
Provider is legally entitled to do so, two original Internal Revenue Service
Forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that the Liquidity Provider is exempt
from or entitled to a reduced rate of United States withholding tax on payments
pursuant to this Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
14
<PAGE>
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04 Payments. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to Citibank, N.A., New York, N.Y.,
ABA #021000089, Account No. 4063287, Reference: Northwest Airlines Liquidity
Facility 1999-1B, Attention: Tim Smith, Global Loans.
Section 3.05 Computations. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
Section 3.06 Payment on Non-Business Days. Whenever any payment to
be made hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
Section 3.07 Interest. (a) Subject to Section 2.09, the Borrower
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the Class B Cash Collateral
Account to pay interest on the Class B Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class B Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to
15
<PAGE>
this Section 3.07 below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest that would have
accrued if such otherwise applicable interest rate as set forth in this Section
3.07 had at all times been in effect.
(b) Each Advance (other than any Unapplied Provider Advance) will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each
such Advance will be a Base Rate Advance for the period from the date of its
borrowing to (but excluding) the third Business Day following the Liquidity
Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR Advance; provided that (i) an Applied Provider Advance
shall always be a LIBOR Advance unless the Borrower elects otherwise and (ii)
the Borrower (at the direction of the Controlling Party, so long as the
Liquidity Provider is not the Controlling Party) may (x) convert the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days' prior
written notice of such election or (y) elect to maintain the Final Advance as a
Base Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made, without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 A.M. on the
first Business Day immediately following the Borrower's receipt of the
applicable Termination Notice, that such Final Advance not be converted from a
Base Rate Advance to a LIBOR Advance).
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) Each Unapplied Provider Advance shall bear interest in an amount
equal to the Investment Earnings on amounts on deposit in the Class B Cash
Collateral Account, payable in arrears on each Distribution Date.
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 2.0% until paid.
16
<PAGE>
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08 Replacement of Borrower. From time to time and subject
to the successor Borrower's meeting the eligibility requirements set forth in
Section 6.9 of the Intercreditor Agreement applicable to the Subordination
Agent, upon the effective date and time specified in a written and completed
Notice of Replacement Subordination Agent in substantially the form of Annex VI
attached hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(1) Any repayment of a LIBOR Advance on a date other than the last
day of the Interest Period for such Advance; or
(2) Any failure by the Borrower to borrow a LIBOR Advance on the
date for borrowing specified in the relevant notice under Section 2.02.
Section 3.10 Illegality. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
been satisfied or waived:
17
<PAGE>
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies
of the Class B Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class B Trust Agreement, the Intercreditor Agreement and the other
Operative Agreements (in the case of each such opinion, other than
the opinion of counsel for the Underwriters, either addressed to the
Liquidity Provider or accompanied by a letter from the counsel
rendering such opinion to the effect that the Liquidity Provider is
entitled to rely on such opinion as of its date as if it were
addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees, the Borrower and the
Liquidity Provider created by the Operative Agreements executed and
delivered on or prior to the Closing Date;
(vii) A letter from Northwest Airlines Corporation, pursuant
to which (i) Northwest Airlines Corporation agrees to provide copies
of quarterly financial statements and audited annual financial
statements to the Liquidity Provider, and such other information as
the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case,
only to the extent that Northwest Airlines Corporation is obligated
to provide such information pursuant to Section 16 of the Leases
(related to Leased Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties thereto; and
18
<PAGE>
(viii) Such other documents, instruments, opinions and
approvals pertaining to the transactions contemplated hereby or by
the other Operative Agreements as the Liquidity Provider shall have
reasonably requested.
(b) The following statement shall be true on and as of the Effective
Date: no event has occurred and is continuing, or would result from the
entering into of this Agreement or the making of any Advance, which
constitutes a Liquidity Event of Default.
(c) The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied or waived, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied or waived, and all conditions
precedent to the purchase of the Class A Certificates, Class B
Certificates and Class C Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (unless any of such
conditions precedent shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.01 have been satisfied or waived.
Section 4.02 Conditions Precedent to Borrowing. The obligation of
the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and
19
<PAGE>
requirements applicable to it contained in this Agreement and the other
Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will not appoint or permit or
suffer to be appointed any successor Borrower without the prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default. If (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(i) of the Intercreditor
Agreement, (iii) all other outstanding Advances to be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iv) subject to Sections 2.07 and 2.09 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
20
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment or of a
waiver by the Borrower, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7.02 Notices, Etc. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: STATE STREET BANK AND TRUST COMPANY
Two International Place
4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Telecopy: (617) 664-5151
Liquidity Provider: CITIBANK, N.A.
Two Penns' Way, Suite 200
New Castle, DE 19720
Attention: Tim Smith, Global Loans
Telecopy: (302) 894-6120
with a copy to:
CITIBANK, N.A.
Global Aviation
399 Park Avenue, 12th Floor
New York, New York 10043
Attention: Tom Boyle
Telecopy: (212) 793-1246
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be
21
<PAGE>
delivered to each of the parties to the Participation Agreements at their
respective addresses set forth therein.
Section 7.03 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05 Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7(c) of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof (regardless of whether
indemnified against pursuant to said Sections)), that may be imposed, incurred
by or asserted against any Liquidity Indemnitee, in any way relating to,
resulting from, or arising out of or in connection with any action, suit or
proceeding by any third party against such Liquidity Indemnitee and relating to
this Agreement, the Intercreditor Agreement or any Financing Agreement;
provided, however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in respect of any
Expense of such Liquidity Indemnitee to the extent such Expense is (i)
attributable to the gross negligence or willful misconduct of such Liquidity
Indemnitee or any other Liquidity Indemnitee, (ii) ordinary and usual operating
overhead expense, or (iii) attributable to the failure by such Liquidity
Indemnitee or any other Liquidity Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in this
Agreement, the Intercreditor Agreement or any other Operative Agreement to which
it is a party. The indemnities contained in Section 7(c) of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.
Section 7.06 Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or omissions of the Borrower or any beneficiary or
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; or (iii) the making of Advances by the Liquidity Provider against
delivery of a Notice of Borrowing and other documents which do not
22
<PAGE>
comply with the terms hereof; provided, however, that the Borrower shall have a
claim against the Liquidity Provider, and the Liquidity Provider shall be liable
to the Borrower, to the extent of any damages suffered by the Borrower which
were the result of (A) the Liquidity Provider's willful misconduct or negligence
in determining whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) Neither the Liquidity Provider nor any of its officers,
employees, directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider's
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07 Costs, Expenses and Taxes. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider in connection with (i) the enforcement
of this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class B Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(except as contemplated by Section 3.08) the Borrower shall have the
23
<PAGE>
right to assign its rights or obligations hereunder or any interest herein
without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts, additional amounts due pursuant
to Section 3.03(a) and the like as they pertain to the Liquidity Provider shall
be deemed also to include those of each of its participants (subject, in each
case, to the maximum amount that would have been incurred by or attributable to
the Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee's entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
24
<PAGE>
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
25
<PAGE>
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement, the Intercreditor Agreement
and the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(End of Page)
26
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Subordination Agent,
as agent and trustee for the
Class B Trust, as Borrower
By: /s/ Donald Smith
-----------------------------------
Name: Donald Smith
Title: Vice President
CITIBANK, N.A., as Liquidity Provider
By: /s/ Thomas Boyle
-----------------------------------
Name: Thomas Boyle
Title: Managing Director
27
<PAGE>
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1B) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used,
subject to clause (3)(v) below, for the payment of the interest on the
Class B Certificates which was payable on ____________, ____ (the
"Distribution Date") in accordance with the terms and provisions of the
Class B Trust Agreement and the Class B Certificates, which Advance is
requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
interest which was due and payable on the Class B Certificates on the
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates or the Class C Certificates, or interest on the Class
A Certificates or the Class C Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the Class B Trust
Agreement and the Intercreditor Agreement (a copy of which computation is
attached hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of interest
which was due and payable on the Class B Certificates on such Distribution
Date but which remains unpaid due to the failure of the Depositary to pay
any amount of accrued interest on the Deposits on such Distribution Date
and (vi) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically
I-1
<PAGE>
reduce, subject to reinstatement in accordance with the terms of the Liquidity
Agreement, the Maximum Available Commitment by an amount equal to the amount of
the Interest Advance requested to be made hereby as set forth in clause (i) of
paragraph (3) of this Notice of Borrowing and such reduction shall automatically
result in corresponding reductions in the amounts available to be borrowed
pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
------------------------------------
Name:
Title:
I-2
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
I-3
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1B) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on __________, ____.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(d) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class B Certificates,
or principal of, or interest or premium on, the Class A Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class B Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Non-Extension Advance requested by this Notice of
II-1
<PAGE>
Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Subordination
Agent, as Borrower
By:
--------------------------------
Name:
Title:
II-2
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Non-Extension Advance Notice of
Borrowing]
II-3
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1B) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class B Certificates,
or principal of, or interest or premium on, the Class A Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class B Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity
III-1
<PAGE>
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
------------------------------------
Name:
Title:
III-2
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance Notice of
Borrowing]
III-3
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1B) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Final Advance by the Liquidity Provider to be used for the
funding of the Class B Cash Collateral Account in accordance with Section
3.6(i) of the Intercreditor Agreement by reason of the receipt by the
Borrower of a Termination Notice from the Liquidity Provider with respect
to the Liquidity Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the
Class B Cash Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class B Certificates, or
principal of, or interest or premium on, the Class A Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
IV-1
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance [and that such Base Rate Advance be converted into
a LIBOR Advance on the third Business Day following your receipt of this
notice](1).
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Final Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Final Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
------------------------------------
Name:
Title:
- ----------
(1) Bracketed language may be included at Borrower's option.
IV-2
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Final Advance Notice of
Borrowing]
IV-3
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
State Street Bank and Trust Company,
as Subordination Agent, as Borrower
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Revolving Credit Agreement (1999-1B) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1B,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of Default
and the existence of a Performing Note Deficiency (each as defined therein), we
are giving this notice to you in order to cause (i) our obligations to make
Advances (as defined therein) under such Liquidity Agreement to terminate on the
fifth Business Day after the date on which you receive this notice and (ii) you
to request a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the Liquidity Agreement) as
a consequence of your receipt of this notice.
V-1
<PAGE>
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE
LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY
AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.
Very truly yours,
CITIBANK, N.A., as Liquidity Provider
By:
---------------------------------
Name:
Title:
cc: State Street Bank and Trust Company,
as Class B Trustee
V-2
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-1B) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1B,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
VI-1
<PAGE>
We ask that this transfer be effective as of _______________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual
capacity but solely as
Subordination Agent, as
Borrower
By:
-------------------------
Name:
Title:
VI-2
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1999-1C)
Dated as of February 16, 1999
between
STATE STREET BANK and TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Northwest Airlines Pass Through Trust 1999-1C
as Borrower
and
CITIBANK, N.A.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Northwest Airlines Pass Through Trust 1999-1C
8.13% Northwest Airlines Pass Through Certificates,
Series 1999-1C
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms ...................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances ............................................7
Section 2.02 Making the Advances .....................................7
Section 2.03 Fees ....................................................9
Section 2.04 Reduction or Termination of the Maximum Commitment ......9
Section 2.05 Repayments of Interest Advances or the Final Advance ...10
Section 2.06 Repayments of Provider Advances ........................10
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement ................................11
Section 2.08 Book Entries ...........................................11
Section 2.09 Payments from Available Funds Only .....................12
Section 2.10 Extension of the Expiry Date; Non-Extension Advance ....12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs ........................................12
Section 3.02 Capital Adequacy .......................................13
Section 3.03 Payments Free of Deductions ............................14
Section 3.04 Payments ...............................................15
Section 3.05 Computations ...........................................15
Section 3.06 Payment on Non-Business Days ...........................15
Section 3.07 Interest ...............................................15
Section 3.08 Replacement of Borrower ................................17
Section 3.09 Funding Loss Indemnification ...........................17
Section 3.10 Illegality .............................................17
ARTICLE IV
i
<PAGE>
Page
----
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of
Section 2.01 ...........................................17
Section 4.02 Conditions Precedent to Borrowing ......................19
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower ..................19
Section 5.02 Negative Covenants of the Borrower .....................20
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default ............................20
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc. .......................................21
Section 7.02 Notices, Etc. ..........................................21
Section 7.03 No Waiver; Remedies ....................................22
Section 7.04 Further Assurances .....................................22
Section 7.05 Indemnification; Survival of Certain Provisions ........22
Section 7.06 Liability of the Liquidity Provider ....................22
Section 7.07 Costs, Expenses and Taxes ..............................23
Section 7.08 Binding Effect; Participations .........................23
Section 7.09 Severability ...........................................25
Section 7.10 GOVERNING LAW ..........................................25
Section 7.11 Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity ..............................25
Section 7.12 Execution in Counterparts ..............................26
Section 7.13 Entirety ...............................................26
Section 7.14 Headings ...............................................26
Section 7.15 LIQUIDITY PROVIDER*S OBLIGATION TO MAKE ADVANCES .......26
ii
<PAGE>
ANNEXES
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Non-Extension Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
iii
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of February 16, 1999,
between STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company, not
in its individual capacity but solely as Subordination Agent under the
Intercreditor Agreement (each as defined below), as agent and trustee for the
Class C Trust (as defined below) (the "Borrower"), and CITIBANK, N.A., a
national banking association organized under the laws of the United States (the
"Liquidity Provider").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class C Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. (a) Definitions. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
Section 3.07(g).
"Applicable Margin" means with respect to any Unpaid Advance or
Applied Provider Advance, 2.0%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
<PAGE>
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.06(a).
"Applied Provider Advance" has the meaning assigned to such term in
Section 2.06(a).
"Base Rate"means a fluctuating interest rate per annum in effect
from time to time, which rate per annum is at all times equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Liquidity Provider from three Federal funds brokers of recognized
standing selected by the Liquidity Provider, plus (b) one quarter of one
percent (0.25%) per annum.
"Base Rate Advance" means an Advance that bears interest at a rate
based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the recital of
parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery of a
Notice of Borrowing.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in New
York, New York, Minneapolis, Minnesota, Chicago, Illinois, Boston,
Massachusetts and Salt Lake City, Utah, or, so long as any Class C
Certificate is outstanding, the city and state in which the Class C
Trustee, the Borrower or any Loan Trustee maintains its Corporate Trust
Office or receives or disburses funds, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR
Rate, on which dealings are carried on in the London interbank market.
"Delivery Period" means the period from the date hereof through
January 31, 2000.
"Deposit Agreement" means the Deposit Agreement, dated February 16,
1999, between First Security Bank, National Association, as Escrow Agent
and ABN AMRO Bank N.V., acting through its Chicago Branch, as Depositary,
pertaining to the Class C Certificates, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Depositary" has the meaning assigned to such term in the Deposit
Agreement.
2
<PAGE>
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
"Effective Date" has the meaning specified in Section 4.01. The
delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"Excluded Taxes" means (i) Taxes imposed on the overall net income
of the Liquidity Provider and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from "change in applicable law" for this purpose, a change in an
applicable treaty or other change in law affecting the applicability of a
treaty) after the date hereof, or in the case of a successor Liquidity
Provider (including a transferee of an Advance) or Lending Office, after
the date on which such successor Liquidity Provider obtains its interest
or on which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means February 14, 2000, initially, or any date to
which the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Interest Advance" means an Advance made pursuant to Section
2.02(a).
3
<PAGE>
"Interest Period" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning either (x) on the date such LIBOR Advance
is made (or is converted from a Base Rate Advance) or (y) the
date of the withdrawal of funds from the Class C Cash
Collateral Account for the purpose of paying interest on the
Class C Certificates as contemplated by Section 2.06(a) hereof
and, in each case, ending on the next Regular Distribution
Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date;
provided, however, that if (x) the Final Advance shall have been made, or
(y) other outstanding Advances shall have been converted into the Final
Advance, then the Interest Periods shall be successive periods of one
month beginning on the date such Final Advance is made (in the case of
clause (x) above) or the Regular Distribution Date following such
conversion (in the case of clause (y) above).
"Lending Office" means the lending office of the Liquidity Provider
presently located in New York, New York, or such other lending office as
the Liquidity Provider from time to time shall notify the Borrower as its
lending office hereunder.
"LIBOR Advance" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any Interest Period, (i) the
rate per annum appearing on display page 3750 (British Bankers
Association--LIBOR) of the Dow Jones Markets Service (or any successor or
substitute therefor) at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period, as the rate
for dollar deposits with a maturity comparable to such Interest Period, or
(ii) if the rate calculated pursuant to clause (i) above is not available,
the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the
rates per annum at which deposits in dollars are offered for the relevant
Interest Period by three banks of recognized standing selected by the
Liquidity Provider in the London interbank market at approximately 11:00
A.M. (London time) two business days before the first day of such Interest
Period in an amount approximately equal to the principal amount of the
LIBOR Advance to which such Interest Period is to apply and for a period
comparable to such Interest Period.
"Liquidity Event of Default" means the occurrence of the following:
(i) all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity; provided that, if an acceleration of the Equipment Notes occurs
during the Delivery Period, a Liquidity Event of Default shall
4
<PAGE>
occur only if the aggregate principal amount of the Equipment Notes
exceeds $300 million, or (ii) a Northwest Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Maximum Available Commitment" shall mean, subject to the proviso
contained in the third sentence of Section 2.02(a), at any time of
determination, (a) the Maximum Commitment at such time less (b) the
aggregate amount of each Interest Advance outstanding at such time;
provided that following a Provider Advance or a Final Advance, the Maximum
Available Commitment shall be zero.
"Maximum Commitment" means, for any day, the lesser of (x)
$9,032,837 and (y) the Required Amount on such day.
"Non-Excluded Tax" has the meaning specified in Section 3.03(a).
"Non-Extension Advance" means an Advance made pursuant to Section
2.02(b).
"Notice of Borrowing" has the meaning specified in Section 2.02(e).
"Notice of Replacement Subordination Agent" has the meaning
specified in Section 3.08.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Prospectus Supplement" means the Prospectus Supplement dated
February 4, 1999, relating to the Class A Certificates, the Class B
Certificates and the Class C Certificates, as such Prospectus Supplement
may be amended or supplemented.
"Provider Advance" means a Downgrade Advance or a Non-Extension
Advance.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.06(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates, that would be payable on the
Class C Certificates on each of the three
5
<PAGE>
successive semiannual Regular Distribution Dates immediately following
such day or, if such day is a Regular Distribution Date, on such day and
the succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class C Certificates on
such day and without regard to expected future payments of principal on
the Class C Certificates.
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth
Business Day following the receipt by the Borrower of a Termination Notice
from the Liquidity Provider pursuant to Section 6.01 hereof; and (v) the
date on which no Advance is or may (including by reason of reinstatement
as herein provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of Termination substantially
in the form of Annex V to this Agreement.
"Transferee" has the meaning assigned to such term in Section
7.08(b).
"Unapplied Downgrade Advance" means any Downgrade Advance other than
an Applied Downgrade Advance.
"Unapplied Provider Advance" means any Provider Advance other than
an Applied Provider Advance.
"Unpaid Advance" has the meaning assigned to such term in Section
2.05.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"Acceleration", "Certificates", "Class A Certificates", "Class B
Certificates", "Class C Cash Collateral Account", "Class C Certificates",
"Class C Certificateholders", "Class C Trust", "Class C Trust Agreement",
"Class C Trustee", "Closing Date", "Controlling Party", "Corporate Trust
Office", "Delivery Period Expiry Date", "Distribution Date", "Downgraded
Facility", "Equipment Notes", "Final Legal Distribution Date", "Financing
Agreement", "Indenture", "Interest Payment Date", "Investment Earnings",
"Liquidity Facility", "Liquidity Obligations", "Loan Trustee", "Moody*s",
"Non-Extended Facility",
6
<PAGE>
"Northwest", "Northwest Bankruptcy Event", "Note Purchase Agreement",
"Operative Agreements", "Performing Equipment Note", "Person", "Pool
Balance", "Rating Agency", "Ratings Confirmation", "Regular Distribution
Date", "Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor*s", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating", "Trust Agreements",
"Trustee", "Underwriters", "Underwriting Agreement" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.
Section 2.02 Making the Advances. (a) Interest Advances shall be
made in one or more Borrowings by delivery to the Liquidity Provider of one or
more written and completed Notices of Borrowing in substantially the form of
Annex I attached hereto, signed by a Responsible Officer of the Borrower, in an
amount not exceeding the Maximum Available Commitment at such time and shall be
used solely for the payment when due of interest on the Class C Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the Maximum Available Commitment and the amount available
to be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.02(a), together with accrued interest
thereon (as provided herein), the Maximum Available Commitment shall be
reinstated by the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; provided, however, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(b) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower as contemplated by said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex II attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Maximum Available Commitment
at such time, and shall be
7
<PAGE>
used to fund the Class C Cash Collateral Account in accordance with said Section
3.6(d) and Section 3.6(f) of the Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider*s short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement Liquidity
Facility to replace this Agreement shall have been previously delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex III attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the Class C Cash Collateral Account in accordance with
said Section 3.6(c) and Section 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex IV
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the Class C Cash Collateral Account in accordance with Section 3.6(i) and
Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "Notice of
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day,
upon satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in
such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower
in respect of any Borrowing after 1:00 p.m. (New York City time) on a Business
Day, upon satisfaction of the conditions precedent set forth in Section 4.02
with respect to a requested Borrowing, the Liquidity Provider shall make
available to the Borrower, in accordance with its payment instructions, the
amount of such Borrowing in U.S. dollars and immediately available funds, before
12:00 Noon (New York City time) on the first Business Day next following the day
of receipt of such Notice of Borrowing or on such later Business Day specified
by the Borrower in such Notice of Borrowing. Payments of proceeds of a Borrowing
shall be made by wire transfer of immediately available funds to the Borrower in
accordance with such wire transfer instructions as the Borrower shall furnish
from time to time to the Liquidity Provider for such purpose. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower.
8
<PAGE>
(f) Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower*s payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other Person. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class C Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class C Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class C Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03 Fees. (a) The Borrower agrees to pay to the Liquidity
Provider on the effective date a non-refundable fee equal to $158,919 in
aggregate with respect to this Agreement, the Revolving Credit Agreement
(1999-1A) dated as of February 16, 1999, by and between State Street Bank and
Trust Company and Citibank, N.A., and the Revolving Credit Agreement (1999-1B)
dated as of February 16, 1999, by and between State Street Bank and Trust
Company and Citibank, N.A.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.35% per annum on the average Maximum
Available Commitment from the Effective Date to the earlier of the date on which
a Downgrade Advance or Non-Extension Advance is made and the date on which the
Maximum Commitment terminates. Such fee shall be payable in arrears on each
Regular Distribution Date. In addition, the Borrower shall pay, or shall cause
to be paid, to the Liquidity Provider, a fee equal to 0.35% per annum on the
unpaid principal amount of each Downgrade Advance or Non-Extension Advance
(other than an Applied Downgrade Advance or an Applied Non-Extension Advance)
from and including the date of such Advance to but excluding the date such
principal amount shall be paid in full. Such fee shall be payable in arrears on
each Regular Distribution Date and, in the event of the payment of principal of
such Downgrade Advance or Non-Extension Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of the foregoing
fee accrued on the amount of principal repaid). Nothing contained in this
Section 2.03(b) shall require the Borrower to pay any amount under this Section
2.03(b) other than to the extent the Borrower shall have funds available
therefor, and, in all events, subject to the terms of the Intercreditor
Agreement.
Section 2.04 Reduction or Termination of the Maximum Commitment.
(a) Automatic Reduction. Promptly following each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class C Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such
9
<PAGE>
reduced Required Amount (as calculated by the Borrower). The Borrower shall give
notice of any such automatic reduction of the Maximum Commitment to the
Liquidity Provider within two Business Days thereof. The failure by the Borrower
to furnish any such notice shall not affect such automatic reduction of the
Maximum Commitment.
(b) Termination. Upon the making of any Provider Advance or Final
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05 Repayments of Interest Advances or the Final Advance.
Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum Available Commitment to zero, then such Interest Advances
shall cease to constitute Unpaid Advances and shall be deemed to have been
changed into an Applied Downgrade Advance or an Applied Non-Extension Advance,
as the case may be, for all purposes of this Agreement (including, without
limitation, for the purpose of determining when such Interest Advance is
required to be repaid to the Liquidity Provider in accordance with Section 2.06
and for the purposes of Section 2.06(b)). The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest Advance and Final
Advance on the date such Advance is made is intended to be a contemporaneous
exchange for new value given to the Borrower by the Liquidity Provider.
Section 2.06 Repayments of Provider Advances. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the Class C
Cash Collateral Account, invested and withdrawn from the Class C Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; provided, however, that amounts in
respect of a Provider Advance withdrawn from the Class C Cash Collateral Account
for the purpose of paying interest on the Class C Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (y) in the case of a Downgrade Advance, an "Applied Downgrade
Advance" and (z) in the case of a Non-Extension Advance, an "Applied
Non-Extension Advance" and, together with an Applied Downgrade Advance, an
"Applied Provider Advance") shall thereafter (subject to Section 2.06(b)) be
treated as an Interest Advance
10
<PAGE>
under this Agreement for purposes of determining the Applicable Liquidity Rate
for interest payable thereon; provided further, however, that if, following the
making of a Provider Advance, the Liquidity Provider delivers a Termination
Notice to the Borrower pursuant to Section 6.01 hereof, such Provider Advance
shall thereafter be treated as a Final Advance under this Agreement for purposes
of determining the Applicable Liquidity Rate for interest payable thereon.
Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any
amounts from the Class C Cash Collateral Account on account of a reduction in
the Required Amount, the Borrower shall repay to the Liquidity Provider a
portion of the Provider Advances in a principal amount equal to such reduction,
plus interest on the principal amount prepaid as provided in Section 3.07
hereof.
(b) At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the Class C Cash Collateral Account
of any amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such amount
being a "Replenishment Amount") for the purpose of replenishing or increasing
the balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Provider Advances (and of Provider
Advances treated as an Interest Advance for purposes of determining the
Applicable Liquidity Rate for interest payable thereon) shall be automatically
reduced by the amount of such Replenishment Amount and (ii) the aggregate
outstanding principal amount of all Unapplied Provider Advances shall be
automatically increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the Class C Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
or, if not provided for in the Intercreditor Agreement, then in such manner as
the Liquidity Provider shall deem appropriate.
Section 2.08 Book Entries. The Liquidity Provider shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest
11
<PAGE>
payable hereunder and paid from time to time in respect thereof; provided,
however, that the failure by the Liquidity Provider to maintain such account or
accounts shall not affect the obligations of the Borrower in respect of
Advances.
Section 2.09 Payments from Available Funds Only. All payments to be
made by the Borrower under this Agreement shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section
7(c) of the Participation Agreements and Section 7 of the Note Purchase
Agreement and only to the extent that the Borrower shall have sufficient income
or proceeds therefrom to enable the Borrower to make payments in accordance with
the terms hereof after giving effect to the priority of payments provisions set
forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will
look solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable or liability under this Agreement except as expressly provided
in this Agreement, the Intercreditor Agreement or any Participation Agreement.
Amounts on deposit in the Class C Cash Collateral Account shall be available to
the Borrower to make payments under this Agreement only to the extent and for
the purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class C Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect that such Expiry Date shall be
so extended (and, in each case, if the Liquidity Provider shall not have been
replaced in accordance with Section 3.6(e) of the Intercreditor Agreement), the
Borrower shall be entitled on and after such 25th day (but prior to the then
effective Expiry Date) to request a Non-Extension Advance in accordance with
Section 2.02(b) hereof and Section 3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01 Increased Costs. If the Liquidity Provider shall
determine that (a) any change after the date hereof in any law, regulation, rule
or directive or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider (or its head office) with any applicable
12
<PAGE>
direction, request or requirement (whether or not having the force of law) of
any central bank or competent governmental or other authority shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans made by, the Liquidity Provider, or (ii) impose on the Liquidity Provider
any other condition regarding this Agreement or any Advance, or (iii) subject
the Liquidity Provider to any Taxes with respect to amounts payable or paid or
change the basis of taxation of any amounts payable to the Liquidity Provider
(other than Excluded Taxes) and (b) the result of any event referred to in the
preceding clauses (i), (ii) or (iii) shall be to increase the cost to the
Liquidity Provider of issuing or maintaining its commitment or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event), then, upon demand by the Liquidity
Provider (such demand to be made not later than 180 days after a Responsible
Officer of the Liquidity Provider obtains actual knowledge of any event referred
to in clause (i), (ii) or (iii) above), the Borrower shall pay, or cause to be
paid, to the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such increased cost; provided that if such demand for
payment is made after such 180-day period, the Borrower shall be obligated to
pay such additional amounts only with respect to such increased cost actually
incurred or effected on or after the 180th day prior to the date of such demand.
A certificate as to such increased cost incurred by the Liquidity Provider as a
result of any event mentioned in clauses (i), (ii) or (iii) above, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower, shall
be conclusive evidence of the amount owed under this Section, absent manifest
error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.01 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.02 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, in each case after the date
hereof, has the effect of reducing the rate of return on the Liquidity
Provider's capital as a consequence of issuing or maintaining its commitment
hereunder or its funding or maintaining Advances to a level below that which the
Liquidity Provider could have achieved but for such adoption, change or
compliance (taking into consideration the Liquidity Provider's policies with
respect to capital adequacy) by an amount deemed by the Liquidity Provider to be
material, then, upon demand by the Liquidity Provider, the Borrower shall pay to
the Liquidity Provider, from time to time as specified by the Liquidity
Provider, additional amounts which shall be sufficient to compensate the
Liquidity Provider for such reduction in respect of issuing or maintaining its
commitment hereunder or its funding or
13
<PAGE>
maintaining Advances. A certificate as to any such additional amount describing
the event which has the effect of reducing the rate of return on the Liquidity
Provider's capital, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive evidence of the amount owed under
this Section, absent manifest error.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.02 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
Section 3.03 Payments Free of Deductions. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes and taxes imposed on the receipt of such increase) interest
or any other such amounts payable under this Agreement at the rates or in the
amounts specified in this Agreement. The Liquidity Provider agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if making such
change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise disadvantageous to the Liquidity Provider.
From time to time upon the reasonable request of the Borrower, the Liquidity
Provider agrees to provide to the Borrower, to the extent that the Liquidity
Provider is legally entitled to do so, two original Internal Revenue Service
Forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that the Liquidity Provider is exempt
from or entitled to a reduced rate of United States withholding tax on payments
pursuant to this Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
14
<PAGE>
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04 Payments. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to Citibank, N.A., New York, N.Y.,
ABA #021000089, Account No. 4063287, Reference: Northwest Airlines Liquidity
Facility 1999-1C, Attention: Tim Smith, Global Loans.
Section 3.05 Computations. All computations of interest based on the
Base Rate shall be made on the basis of a year of 365 or 366 days, as the case
may be, and all computations of interest based on the LIBOR Rate shall be made
on the basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
Section 3.06 Payment on Non-Business Days. Whenever any payment to
be made hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
Section 3.07 Interest. (a) Subject to Section 2.09, the Borrower
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the Class C Cash Collateral
Account to pay interest on the Class C Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class C Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to
15
<PAGE>
this Section 3.07 below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest that would have
accrued if such otherwise applicable interest rate as set forth in this Section
3.07 had at all times been in effect.
(b) Each Advance (other than any Unapplied Provider Advance) will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. Each
such Advance will be a Base Rate Advance for the period from the date of its
borrowing to (but excluding) the third Business Day following the Liquidity
Provider*s receipt of the Notice of Borrowing for such Advance. Thereafter, such
Advance shall be a LIBOR Advance; provided that (i) an Applied Provider Advance
shall always be a LIBOR Advance unless the Borrower elects otherwise and (ii)
the Borrower (at the direction of the Controlling Party, so long as the
Liquidity Provider is not the Controlling Party) may (x) convert the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days* prior
written notice of such election or (y) elect to maintain the Final Advance as a
Base Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made, without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 A.M. on the
first Business Day immediately following the Borrower*s receipt of the
applicable Termination Notice, that such Final Advance not be converted from a
Base Rate Advance to a LIBOR Advance).
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) Each Unapplied Provider Advance shall bear interest in an amount
equal to the Investment Earnings on amounts on deposit in the Class C Cash
Collateral Account, payable in arrears on each Distribution Date.
(f) Each amount not paid when due hereunder (whether fees,
commissions, expenses or other amounts or, to the extent permitted by applicable
law, installments of interest on Advances but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 2.0% until paid.
16
<PAGE>
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.08 Replacement of Borrower. From time to time and subject
to the successor Borrower*s meeting the eligibility requirements set forth in
Section 6.9 of the Intercreditor Agreement applicable to the Subordination
Agent, upon the effective date and time specified in a written and completed
Notice of Replacement Subordination Agent in substantially the form of Annex VI
attached hereto (a "Notice of Replacement Subordination Agent") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.
Section 3.09 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(1) Any repayment of a LIBOR Advance on a date other than the last
day of the Interest Period for such Advance; or
(2) Any failure by the Borrower to borrow a LIBOR Advance on the
date for borrowing specified in the relevant notice under Section 2.02.
Section 3.10 Illegality. Notwithstanding any other provision in this
Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
been satisfied or waived:
17
<PAGE>
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies
of the Class C Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class C Trust Agreement, the Intercreditor Agreement and the other
Operative Agreements (in the case of each such opinion, other than
the opinion of counsel for the Underwriters, either addressed to the
Liquidity Provider or accompanied by a letter from the counsel
rendering such opinion to the effect that the Liquidity Provider is
entitled to rely on such opinion as of its date as if it were
addressed to the Liquidity Provider);
(vi) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees, the Borrower and the
Liquidity Provider created by the Operative Agreements executed and
delivered on or prior to the Closing Date;
(vii) A letter from Northwest Airlines Corporation, pursuant
to which (i) Northwest Airlines Corporation agrees to provide copies
of quarterly financial statements and audited annual financial
statements to the Liquidity Provider, and such other information as
the Liquidity Provider shall reasonably request with respect to the
transactions contemplated by the Operative Agreements, in each case,
only to the extent that Northwest Airlines Corporation is obligated
to provide such information pursuant to Section 16 of the Leases
(related to Leased Aircraft) or the corresponding section of the
Indentures (related to Owned Aircraft) to the parties thereto; and
18
<PAGE>
(viii) Such other documents, instruments, opinions and
approvals pertaining to the transactions contemplated hereby or by
the other Operative Agreements as the Liquidity Provider shall have
reasonably requested.
(b) The following statement shall be true on and as of the Effective
Date: no event has occurred and is continuing, or would result from the
entering into of this Agreement or the making of any Advance, which
constitutes a Liquidity Event of Default.
(c) The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.
(d) All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied or waived, all
conditions precedent to the effectiveness of the other Liquidity
Facilities shall have been satisfied or waived, and all conditions
precedent to the purchase of the Class A Certificates, Class B
Certificates and Class C Certificates by the Underwriters under the
Underwriting Agreement shall have been satisfied (unless any of such
conditions precedent shall have been waived by the Underwriters).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.01 have been satisfied or waived.
Section 4.02 Conditions Precedent to Borrowing. The obligation of
the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01 Affirmative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and
19
<PAGE>
requirements applicable to it contained in this Agreement and the other
Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such other information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower*s
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
(c) Certain Operative Agreements. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after
the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will not appoint or permit or
suffer to be appointed any successor Borrower without the prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default. If (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(i) of the Intercreditor
Agreement, (iii) all other outstanding Advances to be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iv) subject to Sections 2.07 and 2.09 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
20
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment or of a
waiver by the Borrower, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 7.02 Notices, Etc. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):
Borrower: STATE STREET BANK AND TRUST COMPANY
Two International Place
4th Floor
Boston, MA 02110
Attention: Corporate Trust Department
Telecopy: (617) 664-5151
Liquidity Provider: CITIBANK, N.A.
Two Penns' Way, Suite 200
New Castle, DE 19720
Attention: Tim Smith, Global Loans
Telecopy: (302) 894-6120
with a copy to:
CITIBANK, N.A.
Global Aviation
399 Park Avenue, 12th Floor
New York, New York 10043
Attention: Tom Boyle
Telecopy: (212) 793-1246
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be
21
<PAGE>
delivered to each of the parties to the Participation Agreements at their
respective addresses set forth therein.
Section 7.03 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05 Indemnification; Survival of Certain Provisions. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7(c) of the Participation Agreements. In addition,
the Borrower agrees to indemnify, protect, defend and hold harmless the
Liquidity Provider from, against and in respect of, and shall pay on demand, all
Expenses of any kind or nature whatsoever (other than any Expenses of the nature
described in Sections 3.01, 3.02 or 7.07 hereof (regardless of whether
indemnified against pursuant to said Sections)), that may be imposed, incurred
by or asserted against any Liquidity Indemnitee, in any way relating to,
resulting from, or arising out of or in connection with any action, suit or
proceeding by any third party against such Liquidity Indemnitee and relating to
this Agreement, the Intercreditor Agreement or any Financing Agreement;
provided, however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in respect of any
Expense of such Liquidity Indemnitee to the extent such Expense is (i)
attributable to the gross negligence or willful misconduct of such Liquidity
Indemnitee or any other Liquidity Indemnitee, (ii) ordinary and usual operating
overhead expense, or (iii) attributable to the failure by such Liquidity
Indemnitee or any other Liquidity Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in this
Agreement, the Intercreditor Agreement or any other Operative Agreement to which
it is a party. The indemnities contained in Section 7(c) of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.
Section 7.06 Liability of the Liquidity Provider. (a) Neither the
Liquidity Provider nor any of its officers, employees, directors or affiliates
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or omissions of the Borrower or any beneficiary or
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; or (iii) the making of Advances by the Liquidity Provider against
delivery of a Notice of Borrowing and other documents which do not
22
<PAGE>
comply with the terms hereof; provided, however, that the Borrower shall have a
claim against the Liquidity Provider, and the Liquidity Provider shall be liable
to the Borrower, to the extent of any damages suffered by the Borrower which
were the result of (A) the Liquidity Provider*s willful misconduct or negligence
in determining whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider*s failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) Neither the Liquidity Provider nor any of its officers,
employees, directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider*s
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07 Costs, Expenses and Taxes. The Borrower agrees to pay,
or cause to be paid (A) on the Effective Date and on such later date or dates on
which the Liquidity Provider shall make demand, all reasonable out-of-pocket
costs and expenses (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) of the Liquidity
Provider in connection with the preparation, negotiation, execution, delivery,
filing and recording of this Agreement, any other Operative Agreement and any
other documents which may be delivered in connection with this Agreement and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider in connection with (i) the enforcement
of this Agreement or any other Operative Agreement, (ii) the modification or
amendment of, or supplement to, this Agreement or any other Operative Agreement
or such other documents which may be delivered in connection herewith or
therewith (whether or not the same shall become effective) or (iii) any action
or proceeding relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from paying any amount
under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class C Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08 Binding Effect; Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(except as contemplated by Section 3.08) the Borrower shall have
23
<PAGE>
the right to assign its rights or obligations hereunder or any interest herein
without the prior written consent of the other party, subject to the
requirements of Section 7.08(b). The Liquidity Provider may grant participations
herein or in any of its rights hereunder (including, without limitation, funded
participations and participations in rights to receive interest payments
hereunder) and under the other Operative Agreements to such Persons as the
Liquidity Provider may in its sole discretion select, subject to the
requirements of Section 7.08(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider*s source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts, additional amounts due pursuant
to Section 3.03(a) and the like as they pertain to the Liquidity Provider shall
be deemed also to include those of each of its participants (subject, in each
case, to the maximum amount that would have been incurred by or attributable to
the Liquidity Provider directly if the Liquidity Provider, rather than the
participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee*s entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
24
<PAGE>
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower*s obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
25
<PAGE>
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement, the Intercreditor Agreement
and the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.
Section 7.14 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 7.15 LIQUIDITY PROVIDER*S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER*S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(End of Page)
26
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Subordination
Agent, as agent and trustee for
the Class C Trust, as Borrower
By: /s/ Donald Smith
----------------------------------
Name: Donald Smith
Title: Vice President
CITIBANK, N.A., as Liquidity Provider
By: /s/ Thomas Boyle
----------------------------------
Name: Thomas Boyle
Title: Managing Director
27
<PAGE>
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1C) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used,
subject to clause (3)(v) below, for the payment of the interest on the
Class C Certificates which was payable on ____________, ____ (the
"Distribution Date") in accordance with the terms and provisions of the
Class C Trust Agreement and the Class C Certificates, which Advance is
requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of the
interest which was due and payable on the Class C Certificates on the
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates or the Class C Certificates, or interest on the Class
A Certificates or the Class B Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the Class C Trust
Agreement and the Intercreditor Agreement (a copy of which computation is
attached hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of interest
which was due and payable on the Class C Certificates on such Distribution
Date but which remains unpaid due to the failure of the Depositary to pay
any amount of accrued interest on the Deposits on such Distribution Date
and (vi) has not been and is not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
of such amount shall be applied by the Borrower for any other purpose and
(c) no portion of such amount until so applied shall be commingled with
other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically
I-1
<PAGE>
reduce, subject to reinstatement in accordance with the terms of the Liquidity
Agreement, the Maximum Available Commitment by an amount equal to the amount of
the Interest Advance requested to be made hereby as set forth in clause (i) of
paragraph (3) of this Notice of Borrowing and such reduction shall automatically
result in corresponding reductions in the amounts available to be borrowed
pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual
capacity but solely as
Subordination Agent, as
Borrower
By:
-------------------------
Name:
Title:
I-2
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance Notice of
Borrowing]
I-3
<PAGE>
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1C) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on __________, ____.
(3) The amount of the Non-Extension Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class C
Cash Collateral Account in accordance with Section 3.6(d) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class C Certificates,
or principal of, or interest or premium on, the Class A Certificates or
the Class B Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Non-Extension Advance requested by this Notice of
II-1
<PAGE>
Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Subordination Agent,
as Borrower
By:
------------------------------------
Name:
Title:
II-2
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Non-Extension Advance Notice of
Borrowing]
II-3
<PAGE>
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to CITIBANK, N.A. (the
"Liquidity Provider"), with reference to the Revolving Credit Agreement
(1999-1C) dated as of February 16, 1999, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the Threshold Rating, which Advance is
requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class C
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class C Certificates,
or principal of, or interest or premium on, the Class A Certificates or
the Class B Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity
III-1
<PAGE>
Provider of the Downgrade Advance requested by this Notice of Borrowing, the
Borrower shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual
capacity but solely as
Subordination Agent, as
Borrower
By:
-------------------------
Name:
Title:
III-2
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance Notice of
Borrowing]
III-3
<PAGE>
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to CITIBANK, N.A. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement (1999-1C) dated as
of February 16, 1999, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Final Advance by the Liquidity Provider to be used for the
funding of the Class C Cash Collateral Account in accordance with Section
3.6(i) of the Intercreditor Agreement by reason of the receipt by the
Borrower of a Termination Notice from the Liquidity Provider with respect
to the Liquidity Agreement, which Advance is requested to be made on
____________, ____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the
Class C Cash Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class C Certificates, or
principal of, or interest or premium on, the Class A Certificates or the
Class B Certificates, (iii) was computed in accordance with the provisions
of the Class C Certificates, the Class C Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
IV-1
<PAGE>
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance [and that such Base Rate Advance be converted into
a LIBOR Advance on the third Business Day following your receipt of this
notice]1.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Final Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Final Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual
capacity but solely as
Subordination Agent, as
Borrower
By:
-------------------------
Name:
Title:
- ----------
(1) Bracketed language may be included at Borrower's option.
IV-2
<PAGE>
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Final Advance Notice of
Borrowing]
IV-3
<PAGE>
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
State Street Bank and Trust Company,
as Subordination Agent, as Borrower
Two International Place, 4th Floor
Boston, MA 02110
Attention: Corporate Trust Administration
Revolving Credit Agreement (1999-1C) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1C,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
You are hereby notified that pursuant to Section 6.01 of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of Default
and the existence of a Performing Note Deficiency (each as defined therein), we
are giving this notice to you in order to cause (i) our obligations to make
Advances (as defined therein) under such Liquidity Agreement to terminate on the
fifth Business Day after the date on which you receive this notice and (ii) you
to request a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the Liquidity Agreement) as
a consequence of your receipt of this notice.
V-1
<PAGE>
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE
LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY
AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.
Very truly yours,
CITIBANK, N.A., as Liquidity Provider
By:
---------------------------------
Name:
Title:
cc: State Street Bank and Trust Company,
as Class C Trustee
V-2
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-1C) dated as of February 16, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
agent and trustee for the Northwest Airlines Pass Through Trust, 1999-1C,
as Borrower, and CITIBANK, N.A. (the "Liquidity Agreement")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.
By this transfer, all rights of the undersigned as Borrower under
the Liquidity Agreement are transferred to the transferee and the transferee
shall hereafter have the sole rights and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
VI-1
<PAGE>
We ask that this transfer be effective as of _______________, ____.
STATE STREET BANK AND TRUST
COMPANY,
not in its individual
capacity but solely as
Subordination Agent, as
Borrower
By:
-------------------------
Name:
Title:
VI-2
INTERCREDITOR AGREEMENT
Dated as of
February 16, 1999
BY AND AMONG
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Northwest Airlines Pass Through Trust 1999-1A,
Northwest Airlines Pass Through Trust 1999-1B
and
Northwest Airlines Pass Through Trust 1999-1C
CITIBANK, N.A.
as Class A Liquidity Provider
Class B Liquidity Provider
and
Class C Liquidity Provider,
AND
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...............................................2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only ....................................20
SECTION 2.2 Trust Accounts ..........................................21
SECTION 2.3 Deposits to the Collection Account and Special
Payments Account ........................................22
SECTION 2.4 Distributions of Special Payments........................22
SECTION 2.5 Designated Representatives...............................25
SECTION 2.6 Controlling Party........................................26
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution...........................27
SECTION 3.2 Distribution of Amounts on Deposit in the
Collection Account ......................................29
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event ........................................31
SECTION 3.4 Other Payments...........................................33
SECTION 3.5 Payments to the Trustees and the Liquidity Providers.....33
SECTION 3.6 Liquidity Facilities.....................................33
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party....................39
SECTION 4.2 Remedies Cumulative......................................40
SECTION 4.3 Discontinuance of Proceedings............................40
SECTION 4.4 Right of Certificateholders to Receive Payments
Not to Be Impaired ......................................41
SECTION 4.5 Undertaking for Costs....................................41
-i-
<PAGE>
Page
----
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event..........41
SECTION 5.2 Indemnification..........................................42
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement ...............................................42
SECTION 5.4 Notice from the Liquidity Providers and Trustees.........42
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties...........42
SECTION 6.2 Absence of Duties........................................43
SECTION 6.3 No Representations or Warranties as to Documents.........43
SECTION 6.4 No Segregation of Monies; No Interest....................43
SECTION 6.5 Reliance; Agents; Advice of Counsel......................43
SECTION 6.6 Capacity in Which Acting.................................44
SECTION 6.7 Compensation.............................................44
SECTION 6.8 May Become Certificateholder.............................44
SECTION 6.9 Subordination Agent Required; Eligibility................44
SECTION 6.10 Money to Be Held in Trust................................45
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification.................................45
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment
of Successor ............................................45
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc.................................47
SECTION 9.2 Subordination Agent Protected............................48
SECTION 9.3 Effect of Supplemental Agreements........................48
-ii-
<PAGE>
Page
----
SECTION 9.4 Notice to Rating Agencies................................48
SECTION 9.5 Addition of Class D Trustee..............................48
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement..................49
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent ............49
SECTION 10.3 Notices.................................................49
SECTION 10.4 Severability............................................50
SECTION 10.5 No Oral Modifications or Continuing Waivers.............50
SECTION 10.6 Successors and Assigns..................................50
SECTION 10.7 Headings................................................50
SECTION 10.8 Counterpart Form........................................51
SECTION 10.9 Subordination...........................................51
SECTION 10.10 Governing Law...........................................52
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity ..............................52
Schedule 1 Participation Agreements
-iii-
<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of February 16, 1999, by and among
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company ("State
Street"), not in its individual capacity but solely as Trustee of each Trust
(each as defined below), CITIBANK, N.A. ("Citibank"), as Class A Liquidity
Provider, Citibank, as Class B Liquidity Provider, Citibank, as Class C
Liquidity Provider, and State Street, not in its individual capacity except as
expressly set forth herein, but solely as Subordination Agent and trustee
hereunder (in such capacity, together with any successor appointed pursuant to
Article VIII hereof, the "Subordination Agent").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture (i) in the case of each Aircraft
that is owned by Northwest at the time such Indenture is entered into (the
"Owned Aircraft"), Northwest will issue on a recourse basis three series of
Equipment Notes to finance the purchase of such Aircraft, and (ii) in the case
of each Aircraft that is leased to Northwest pursuant to a related Lease at the
time such Indenture is entered into (the "Leased Aircraft"), the related Owner
Trustee will issue on a nonrecourse basis three series of Equipment Notes to
finance the purchase of such Aircraft;
WHEREAS, pursuant to the Financing Agreements, each Trust will
acquire Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "Class") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement (as defined below),
the Underwriters propose to purchase the Certificates issued by each Trust in
the aggregate face amount set forth opposite the name of such Trust on Schedule
I thereto on the terms and subject to the conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a revolving
credit agreement (each, a "Liquidity Facility") with the Subordination Agent, as
agent for the Trustee of each Trust, for the benefit of the Certificateholders
of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Providers, by
<PAGE>
entering into this Agreement, hereby acknowledge and agree to such terms of
subordination and the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(4) the term "including" shall mean "including without limitation".
"Acceleration" means, with respect to the amounts payable in respect
of the Equipment Notes issued under any Indenture, the declaration or
deemed declaration of such amounts to be immediately due and payable.
"Accelerate" and "Accelerated" have meanings correlative to the foregoing.
"Adjusted Expected Distributions" means with respect to the
Certificates of any Class on any Current Distribution Date the sum of (x)
the amount of accrued and unpaid interest on such Certificates (excluding
interest, if any, payable with respect to the Deposits related to such
Trust) plus (y) the greater of:
(A) the difference between (x) the Pool Balance of such
Certificates as of the immediately preceding Distribution Date (or
if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust)
and (y) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of
the Non-Performing Equipment Notes held in such Trust has been paid
in full and such payments have been distributed to the holders of
such Certificates, (ii) the
-2-
<PAGE>
principal of the Performing Equipment Notes has been paid when due
(but without giving effect to any Acceleration of Performing
Equipment Notes) and has been distributed to the holders of such
Certificates and (iii) the principal of any Equipment Notes formerly
held in such Trust which have been sold pursuant to the terms hereof
have been paid in full and such payments have been distributed to
the holders of such Certificates but without giving effect to any
reduction in the Pool Balance as a result of any distribution
attributable to Deposits occurring after the immediately preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, occurring after the initial issuance of the
Certificates of such Trust) and
(B) the amount of the excess, if any, by which (i) the Pool
Balance of such Class of Certificates as of the immediately
preceding Distribution Date (or if the Current Distribution Date is
the first Distribution Date, the original aggregate face amount of
the Certificates of such Trust) (less the aggregate principal amount
of the Equipment Notes relating to any Prefunded Aircraft (as
defined in the Trust Agreement) less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution
Date, the original aggregate amount of the Deposits for such Class
of Certificates) other than any portion of such Deposits thereafter
used to acquire Equipment Notes pursuant to the Note Purchase
Agreement, over (ii) the Aggregate LTV Collateral Amount for such
Class of Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B)
above shall not be applicable.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control
with such Person. For the purposes of this definition, "control" means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether through the ownership of
voting securities or by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" means for any Class of
Certificates for any Distribution Date the sum of the applicable LTV
Collateral Amounts for each Leased Aircraft and Owned Aircraft minus the
Pool Balance for each Class of Certificates, if any, senior to such Class
after giving effect to any distribution of principal on such Distribution
Date on such senior Class or Classes.
"Aircraft" means, with respect to any Indenture, the "Aircraft"
referred to therein.
"Appraised Current Market Value" of any Lease Aircraft or Owned
Aircraft means the lower of the average and the median of the most recent
three LTV Appraisals of such Aircraft.
-3-
<PAGE>
"Appraisers" means Avmark, Inc., BK Associates, Inc. and Morten
Beyer and Agnew, Inc.
"Available Amount" means, with respect to any Liquidity Facility on
any drawing date, an amount equal to (a) the Stated Amount of such
Liquidity Facility, less (b) the amount of each Interest Drawing honored
by the Liquidity Provider under such Liquidity Facility on or prior to
such date which has not been reimbursed or reinstated as of such date;
provided that, following a Downgrade Drawing, a Non-Extension Drawing or a
Final Drawing under such Liquidity Facility, the Available Amount of such
Liquidity Facility shall be zero.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in
Minneapolis, Minnesota, New York, New York, or the city and state in which
any Trustee, the Subordination Agent or any Loan Trustee maintains its
Corporate Trust Office or receives and disburses funds.
"Cash Collateral Account" means the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral Account
as applicable.
"Certificate" means a Class A Certificate, a Class B Certificate or
a Class C Certificate as applicable.
"Certificateholder" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"Class A Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts drawn under the Class A Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time, any holder of one or
more Class A Certificates.
"Class A Certificates" means the certificates issued by the Class A
Trust, substantially in the form of Exhibit A to the Class A Trust
Agreement, and authenticated by the Class A Trustee, representing
fractional undivided interests in the Class A Trust, and any certificates
issued in exchange therefor or replacement thereof pursuant to the terms
of the Class A Trust Agreement.
"Class A Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of February 16, 1999, by and between the Subordination
Agent, as agent and trustee of the Class A Trustee, and the Class A
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility
-4-
<PAGE>
therefor, if any, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class A Liquidity Provider" means Citibank, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class A Liquidity Facility pursuant to Section
3.6(e).
"Class A Trust" means Northwest Airlines 1999-1A Pass Through Trust
created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-1A thereto dated as of
February16, 1999, by and among Northwest, Holdings, NWA Corp. and the
Trustee, governing the creation and administration of the Class A Trust
and the issuance of the Class A Certificates, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
"Class A Trustee" means State Street, not in its individual capacity
except as expressly set forth in the Class A Trust Agreement, but solely
as trustee under the Class A Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class B Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts drawn under the Class B Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or
more Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust
Agreement, and authenticated by the Class B Trustee, representing
fractional undivided interests in the Class B Trust, and any certificates
issued in exchange therefor or replacement thereof pursuant to the terms
of the Class B Trust Agreement.
"Class B Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of February 16, 1999, by and between the Subordination
Agent, as agent and trustee of the Class B Trustee, and the Class B
Liquidity Provider, and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in
each case as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Class B Liquidity Provider" means Citibank, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class B Liquidity Facility pursuant to Section
3.6(e).
-5-
<PAGE>
"Class B Trust" means Northwest Airlines 1999-1B Pass Through Trust
created and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-1B thereto dated as of February
16, 1999, by and among Northwest, Holdings, NWA Corp. and the Trustee,
governing the creation and administration of the Class B Trust and the
issuance of the Class B Certificates, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
"Class B Trustee" means State Street, not in its individual capacity
except as expressly set forth in the Class B Trust Agreement, but solely
as trustee under the Class B Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class C Cash Collateral Account" means an Eligible Deposit Account
in the name of the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so
qualify, into which all amounts drawn under the Class C Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of one or
more Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust
Agreement, and authenticated by the Class C Trustee, representing
fractional undivided interests in the Class C Trust, and any certificates
issued in exchange therefor or in replacement thereof pursuant to the
terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of February 16, 1999, by and between the Subordination
Agent, as agent and trustee of the Class C Trustee, and the Class C
Liquidity Provider and, from and after the replacement of such Agreement
pursuant hereto, the Replacement Liquidity Facility therefor, if any, in
each case as amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Class C Liquidity Provider" means Citibank, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class C Liquidity Facility pursuant to Section
3.6(e).
"Class C Trust" means Northwest Airlines 1999-1C Pass Through Trust
created and administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-1C thereto dated as of February
16, 1999, by and among Northwest, Holdings, NWA Corp. and the Trustee,
governing the creation
-6-
<PAGE>
and administration of the Class C Trust and the issuance of the Class C
Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class C Trustee" means State Street, not in its individual capacity
except as expressly set forth in the Class C Trust Agreement, but solely
as trustee under the Class C Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class D Certificates" means the pass through certificates, if any,
issued by Northwest Airlines, Inc. and designated Series 1999-1D, in
connection with a secured financing of an Owned Aircraft or a Leased
Aircraft.
"Class D Trustee" means the trustee of the trust relating to the
Class D Certificates.
"Closing Date" means February 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account established
by the Subordination Agent pursuant to Section 2.2 which the Subordination
Agent shall make deposits in and withdrawals from in accordance with this
Agreement.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the
city at which, at any particular time, its corporate trust business shall
be principally administered.
"Current Distribution Date" means a Distribution Date specified as a
reference date for calculating the Adjusted Expected Distributions or
Expected Distributions with respect to the Certificates of any Trust as of
such Distribution Date.
"Delivery Period Expiry Date" means the earlier of (a) January 31,
2000 and (b) the date on which Equipment Notes with respect to all New
Aircraft have been purchased by the Trusts in accordance with the Note
Purchase Agreement.
"Deposit Agreement" shall mean, with respect to any Class, the
Deposit Agreement pertaining to such Class dated the date hereof between
the Escrow Agent, and the Depositary, as the same may be amended, modified
or supplemented from time to time in accordance with the terms thereof.
-7-
<PAGE>
"Depositary" means ABN AMRO Bank, Chicago Branch, as depositary
under the Deposit Agreement relating to Class A, Class B and Class C
Certificates.
"Deposits" with respect to any Class, shall have the meaning set
forth in the Deposit Agreement pertaining to such Class.
"Designated Representatives" means the Subordination Agent
Representatives, Trustee Representatives and the LP Representatives
identified under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
"Dollars" or "$" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Non-Extension Drawing, a
Final Drawing or a Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or
the District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
has a long-term unsecured debt rating from each Rating Agency of at least
A-3 or its equivalent. An Eligible Deposit Account may be maintained with
a Liquidity Provider so long as such Liquidity Provider is an Eligible
Institution (as defined below); provided that such Liquidity Provider
shall have waived all rights of set-off and counterclaim with respect to
such account.
"Eligible Institution" means, subject to the last sentence of
subsection 2.2(c), (a) the corporate trust department of the Subordination
Agent or any Trustee, as applicable, or (b) a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each
Rating Agency of at least A-3 or its equivalent.
"Eligible Investments" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later
than 90 days following the date of such investment, (b) investments in
open market commercial paper of any corporation incorporated under the
laws of the United States of America or any state thereof with a
short-term unsecured debt rating issued by Moody's and Standard & Poor's
of at least
-8-
<PAGE>
A-1 and P-1, respectively, and, if rated by Fitch, F-1, having maturities
no later than 90 days following the date of such investment or (c)
investments in negotiable certificates of deposit, time deposits, banker's
acceptances, commercial paper or other direct obligations of, or
obligations guaranteed by, 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 90 days following the date of
such investment; provided, however, that (x) all Eligible Investments that
are bank obligations shall be denominated in U.S. dollars; and (y) the
aggregate amount of Eligible Investments at any one time that are bank
obligations issued by any one bank shall not be in excess of 5% of such
bank's capital surplus; provided further that (1) any investment of the
types described in clauses (a), (b) and (c) above may be made through a
repurchase agreement in commercially reasonable form with a bank or other
financial institution qualifying as an Eligible Institution so long as
such investment is held by a third party custodian also qualifying as an
Eligible Institution, and (2) all such investments set forth in (a), (b)
and (c) above mature no later than the Business Day immediately preceding
the next Regular Distribution Date; provided further, however, that in the
case of any Eligible Investment issued by a domestic branch of a foreign
bank, the income from such investment shall be from sources within the
United States for purposes of the Code. Notwithstanding the foregoing, no
investment of the types described in clause (b) or (c) above which is
issued or guaranteed by a Liquidity Provider or Northwest or any of their
respective Affiliates shall be an Eligible Investment.
"Equipment Notes" means, at any time, the Series A Equipment Notes,
the Series B Equipment Notes and the Series C Equipment Notes,
collectively, and in each case, any Equipment Notes issued in exchange
therefor or replacement thereof pursuant to the terms of the Indentures.
"Escrow Agent" means First Security Bank, National Association, as
escrow agent under each Escrow and Paying Agent Agreement, together with
its successors in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any
Class, the Escrow and Paying Agent Agreement pertaining to such Class,
dated the date hereof, among the Escrow Agent, the Underwriters, the
Trustee for such Class and the Paying Agent, as the same may be amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Expected Distributions" means, with respect to the Certificates of
any Trust on any Current Distribution Date, the sum of (x) accrued and
unpaid interest on such Certificates (excluding interest, if any, payable
with respect to the Deposits related to such Trust) and (y) the difference
between (A) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date (or if the current Distribution Date is the
first Distribution Date, the original aggregate face amount of the
Certificates of such Trust) and (B) the Pool Balance of such Certificates
as of the Current Distribution Date,
-9-
<PAGE>
calculated on the basis that (1) the principal of the Equipment Notes held
in such Trust has been paid when due (whether at stated maturity or upon
redemption, prepayment, purchase or acceleration or otherwise) and such
payments have been distributed to the holders of such Certificates and (2)
the principal of any Equipment Notes formerly held in such Trust that have
been sold pursuant to this Agreement has been paid in full and such
payments distributed to the Certificateholders, but without giving effect
to any reduction in the Pool Balance as a result of any distribution
attributable to Deposits occurring after the immediately preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, occurring after the initial issuance of the
Certificates of such Trust). For purposes of calculating Expected
Distributions, any premium paid on the Equipment Notes held in any Trust
which has not been distributed to the Certificateholders of such Trust
(other than such premium or a portion thereof applied to the payment of
interest on the Certificates of such Trust or the reduction of the Pool
Balance of such Trust) shall be added to the amount of such Expected
Distributions.
"Expiry Date" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
"Final Distributions" means, with respect to the Certificates of any
Trust on any Distribution Date, the sum of (a) the aggregate amount of all
accrued and unpaid interest on such Certificates (excluding interest, if
any, payable with respect to the Deposits relating to such Trust) and (b)
the Pool Balance of such Certificates as of the immediately preceding
Distribution Date (less the amount of the Deposits for such Class of
Certificates as of such preceding Distribution Date other than any portion
of such Deposits thereafter used to acquire Equipment Notes pursuant to
the Note Purchase Agreement). For purposes of calculating Final
Distributions with respect to the Certificates of any Trust, any premium
paid on the Equipment Notes held in such Trust which has not been
distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Final Distributions.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing, other than an Interest Drawing, a Downgrade Drawing
or a Non-Extension Drawing, of all available and undrawn amounts under
such Liquidity Facility in accordance with the provisions thereof.
"Final Legal Distribution Date" means, for the Class A Certificates,
August 1, 2021, for the Class B Certificates, August 1, 2021, and, for the
Class C Certificates, August 1, 2015.
"Financing Agreement" means each of the Participation Agreements and
the Note Purchase Agreement.
"Fitch" means Fitch Investors Service, L.P.
-10-
<PAGE>
"Holdings" means Northwest Airlines Holdings Corporation (formerly
known as Northwest Airlines corporation), a Delaware corporation and its
successors and assigns.
"Indenture" means each of the Trust Indentures entered into by the
Loan Trustee, and the Owner Trustee or Northwest, pursuant to the Note
Purchase Agreement, in each case as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Indenture Default" means, with respect to any Indenture, any Event
of Default (as such term is defined in such Indenture) thereunder.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a).
"Interest Payment Date" means, with respect to any Liquidity
Facility, each date on which interest is due and payable under such
Liquidity Facility on a Downgrade Drawing, Non-Extension Drawing or Final
Drawing thereunder, other than any such date on which interest is due and
payable under such Liquidity Facility only on an Applied Provider Advance
(as such term is defined in such Liquidity Facility).
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means, with respect to any Indenture relating to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest
of any kind, including, without limitation, any thereof arising under any
conditional sales or other title retention agreement.
"Liquidity Event of Default" with respect to any Liquidity Facility,
has the meaning assigned to such term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity Obligations other than (i)
the principal amount of any Drawings under the Liquidity Facilities and
(ii) any interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the Class A Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility, as applicable.
-11-
<PAGE>
"Liquidity Obligations" means all principal, interest, fees and
other amounts owing to the Liquidity Providers under the Liquidity
Facilities and Section 7 of the Participation Agreements.
"Liquidity Provider" means, at any time, the Class A Liquidity
Provider, the Class B Liquidity Provider or the Class C Liquidity
Provider, as applicable.
"Loan Trustee" means, with respect to any Indenture, the indenture
trustee thereunder.
"LP Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(b).
"LP Representatives" has the meaning assigned to such term in
Section 2.5(b).
"LTV Appraisal" means a current fair market appraisal (which may be
a "desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between
an informed and willing purchaser under no compulsion to buy and an
informed and willing seller under no compulsion to sell and both having
knowledge of all relevant facts.
"LTV Collateral Amount" of any Leased Aircraft or Owned Aircraft for
any Class of Certificates on any Distribution Date means the lesser of (i)
the LTV Ratio for such Class of Certificates multiplied by the Appraised
Current Market Value of such Aircraft (or with respect to any such
Aircraft which has suffered an Event of Loss under and as defined in the
relevant Lease (in the case of a Leased Aircraft) or Indenture (in the
case of an Owned Aircraft), the amount of the insurance proceeds paid to
the related Loan Trustee in respect thereof to the extent then held by
such Loan Trustee (and/or on deposit in the Special Payments Account) or
payable to such Loan Trustee in respect thereof) and (ii) the outstanding
principal amount of the Equipment Notes secured by such Aircraft after
giving effect to any principal payments of such Equipment Notes on or
before such Distribution Date.
"LTV Ratio" means, for the Class A Certificates, 38.0%, for the
Class B Certificates, 56.0%, and, for the Class C Certificates, 68.0%.
"Minimum Sale Price" means, with respect to any Aircraft or the
Equipment Notes issued in respect of such Aircraft, at any time, the
lesser of (a) 75% of the Appraised Current Market Value of such Aircraft
and (b) the aggregate outstanding principal amount of such Equipment
Notes, plus accrued and unpaid interest thereon.
"Moody's" means Moody's Investors Service, Inc.
"New Aircraft" shall have the meaning set forth in the Note Purchase
Agreement.
-12-
<PAGE>
"Non-Controlling Party" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"Non-Extended Facility" has the meaning provided in Section 3.6(d).
"Non-Extension Drawing" has the meaning provided in Section 3.6(d).
"Non-Performing Equipment Note" means an Equipment Note issued
pursuant to an Indenture that is not a Performing Equipment Note.
"Northwest" means Northwest Airlines, Inc., a Minnesota corporation,
and its successors and assigns.
"Northwest Bankruptcy Event" means the occurrence and continuation
of any of the following:
(a) the commencement of an involuntary case or other
proceeding in respect of Northwest in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of Northwest or for all or substantially all of
its property, or seeking the winding-up or liquidation of its
affairs and the continuation of any such case or other proceeding
undismissed and unstayed for a period of ninety (90) consecutive
days or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing,
without the consent of Northwest, a receiver, trustee or liquidator
of Northwest, or of any substantial part of its property, or
sequestering any substantial part of the property of Northwest and
any such order, judgment or decree or appointment or sequestration
shall be final or shall remain in force undismissed, unstayed or
unvacated for a period of ninety (90) days after the date of entry
thereof; or
(b) the commencement by Northwest of a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the consent
by Northwest to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Northwest or for all or substantially all
of its property, or the making by Northwest of any assignment for
the benefit of creditors or the taking by Northwest of any corporate
action to authorize any of the foregoing.
"Northwest Provisions" has the meaning provided in Section 9.1(a).
-13-
<PAGE>
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of the date hereof, among Northwest, each Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent.
"NWA Corp." means Northwest Airlines Corporation (formerly known as
Newbridge Parent Corporation), a Delaware corporation, and its successors
and assigns.
"Officer's Certificate" of any Person means a certification signed
by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Liquidity
Facilities, the Indentures, the Trust Agreements, the Underwriting
Agreement, the Financing Agreements, the Leases, the Equipment Notes and
the Certificates, together with all exhibits and schedules included with
any of the foregoing and each of the other documents and instruments
referred to in the definitions of "Operative Documents" contained in the
Leases or any Owned Aircraft Indenture.
"Outstanding" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of such
Class theretofore authenticated and delivered under the related Trust
Agreement, except:
(i) Certificates of such Class theretofore cancelled by the
Registrar (as defined in such Trust Agreement) or delivered to the
Trustee thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full
amount required to make the final distribution with respect to such
Certificates pursuant to Section 11.01 of such Trust Agreement has
been theretofore deposited with the related Trustee in trust for the
holders of such Certificates as provided in Section 4.01 of such
Trust Agreement pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of
which other Certificates have been authenticated and delivered
pursuant to such Trust Agreement;
provided, however, that in determining whether the holders of the
requisite Outstanding amount of such Certificates have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, any
Certificates owned by Northwest or any of its Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether such Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates that such Trustee knows to be so owned shall be so
disregarded. Certificates so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to
-14-
<PAGE>
the satisfaction of the applicable Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is not Northwest or
any of its Affiliates.
"Overdue Scheduled Payment" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days of the
Scheduled Payment Date relating thereto.
"Owned Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Owner Trustee" means, with respect to any Indenture pertaining to a
Leased Aircraft, the Owner Trustee (as defined therein) not in its
individual capacity but solely as trustee under the related owner trust
agreement, together with any successor trustee appointed pursuant to such
owner trust agreement.
"Participation Agreements" means, with respect to each Indenture,
each of the Participation Agreements listed on Schedule 1 hereto, as the
same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms.
"Pass Through Trust Agreement" means the Pass Through Trust
Agreement, dated as of June 3, 1996 by and among Holdings, Northwest and
the State Street Bank and Trust Company, not in its individual capacity
except as expressly provided therein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee"), as amended by the Supplemental Agreement, dated as of November
20, 1998, among Holdings, Northwest, NWA Corp. and the Pass Through
Trustee.
"Paying Agent" means State Street Bank and Trust Company, as paying
agent under each Escrow and Paying Agent Agreement, together with its
successors in such capacity.
"Performing Equipment Note" means an Equipment Note issued pursuant
to an Indenture with respect to which no payment default has occurred and
is continuing (without giving effect to any Acceleration thereof);
provided that in the event of a bankruptcy proceeding involving Northwest
under Title 11 of the United States Code (the "Bankruptcy Code"), (i) any
payment default existing during the 60-day period under Section
1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply
under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period")
shall not be taken into consideration, unless during such period the
trustee in such proceeding or Northwest refuses to assume or agree to
perform its obligations under the Lease related to such Equipment Notes
(in the case of a Leased Aircraft) or under the Indenture related to such
Equipment Note (in the case of an Owned Aircraft) and (ii) any payment
default occurring after the date of the order of relief in such proceeding
shall not be taken into consideration if such payment default is cured
under Section 1110(a)(1)(B) of the
-15-
<PAGE>
Bankruptcy Code before the later of 30 days after the date of such default
or the expiration of the Section 1110 Period.
"Performing Note Deficiency" means any time that less than 65% of
the then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, trustee, unincorporated organization or government or any agency or
political subdivision thereof.
"Pool Balance" means, with respect to each Trust or the Certificates
issued by any Trust, as of any date, (i) the original aggregate face
amount of the Certificates of such Trust less (ii) the aggregate amount of
all payments made in respect of the Certificates of such Trust or in
respect of Deposits relating to such Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust or the
Certificates issued by any Trust as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, any payment of principal, if any, on the Equipment Notes
or other Trust Property held in such Trust and the distribution thereof to
be made on such date.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PTC Event of Default" means, with respect to each Trust Agreement,
the failure to pay within 10 Business Days of the due date thereof: (i)
the outstanding Pool Balance of the applicable Class of Certificates on
the Final Legal Distribution Date for such Class or (ii) interest due on
such Certificates on any Distribution Date (unless, in the case of the
Class A, Class B or Class C Certificates, the Subordination Agent shall
have made an Interest Drawing with respect thereto in an amount sufficient
to pay such interest and shall have distributed such amount to the holders
of the Certificates entitled thereto).
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. Initially,
the Rating Agencies shall consist of Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that
such action would not result in (i) a reduction of the rating for any
Class of Certificates below the then current rating for such Class of
Certificates or (ii) a withdrawal or suspension of the rating of any Class
of Certificates.
-16-
<PAGE>
"Regular Distribution Dates" means each February 1 and August 1,
commencing on August 1, 1999; provided, however, that, if any such day
shall not be a Business Day, the related distribution shall be made on the
next succeeding Business Day without additional interest.
"Replacement Liquidity Facility" means, for any Trust, an
irrevocable revolving credit agreement in substantially the form of the
initial Liquidity Facility for such Trust, including reinstatement
provisions or in such other form (which may include a letter of credit) as
shall permit the Rating Agencies to confirm in writing their respective
ratings then in effect for the Certificates (before downgrading of such
ratings, if any, as a result of the downgrading of the Liquidity
Provider), in a face amount equal to the Required Amount for such
Liquidity Facility and issued by a Replacement Liquidity Provider,
provided that, if a form of Liquidity Facility that is not substantially
in the form of the replaced Liquidity Facility is to be used, Northwest
shall have received a satisfactory opinion of tax counsel satisfactory to
Northwest with respect to such form of Replacement Liquidity Facility (and
a copy of such opinion shall be furnished to the Subordination Agent).
"Replacement Liquidity Provider" means a Person having unsecured
debt ratings which are equal to or higher than the Threshold Rating.
"Required Amount" means, with respect to each Liquidity Facility and
each Cash Collateral Account related thereto, for any day, the sum of the
aggregate amount of interest, calculated at the rate per annum equal to
the Stated Interest Rate for the related Class of Certificates, that would
be payable on such Class of Certificates on each of the three successive
Regular Distribution Dates immediately following such day or, if such day
is a Regular Distribution Date, on such day and the succeeding two Regular
Distribution Dates, in each case calculated on the basis of the Pool
Balance of such Class of Certificates on such date and without regard to
expected future payments of principal on such Class of Certificates.
"Responsible Officer" means (i) with respect to the Subordination
Agent and each of the Trustees, any officer in the corporate trust
administration department of the Subordination Agent or such Trustee or
any other officer customarily performing functions similar to those
performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of
his knowledge of and familiarity with a particular subject and (ii) with
respect to each Liquidity Provider, any authorized officer or agent of
such Liquidity Provider.
"Scheduled Payment" means, with respect to any Equipment Note, (i)
any payment of principal and interest on such Equipment Note (other than
an Overdue Scheduled Payment) due from the obligor thereon or (ii) any
payment of interest on the corresponding Class of Certificates with funds
drawn under any Liquidity Facility, which payment represents the
installment of principal at the stated maturity of such installment of
principal on such Equipment Note, the payment of regularly scheduled
interest accrued
-17-
<PAGE>
on the unpaid principal amount of such Equipment Note, or both; provided
that any payment of principal of, premium, if any, or interest resulting
from the redemption or purchase of any Equipment Note shall not constitute
a Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"Series A Equipment Notes" means the 6.81% Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series B Equipment Notes" means the 7.36% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be, and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Series C Equipment Notes" means the 8.13% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or
Northwest, as the case may be, and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in exchange therefor or
replacement thereof pursuant to the terms of such Indenture.
"Special Distribution Date" means, with respect to any Special
Payment, the date chosen by the Subordination Agent pursuant to Section
2.4(a) for the distribution of such Special Payment in accordance with
this Agreement; provided, however, that, if any such day shall not be a
Business Day, the related distribution shall be made on the next
succeeding Business Day without additional interest.
"Special Payment" means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note or Trust Indenture
Estate (as defined in each Indenture), including Overdue Scheduled
Payments, payments in respect of the redemption or repurchase of any
Equipment Note and payments in respect of the sale of any Equipment Note
to the related Owner Trustee, Owner Participant or any other Person.
"Special Payments Account" means the Eligible Deposit Account
created pursuant to Section 2.2 as a sub-account to the Collection
Account.
"Specified Investments" has the meaning assigned to such term in the
Pass Through Trust Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of McGraw-Hill Inc.
-18-
<PAGE>
"State Street" has the meaning assigned to it in the preamble to
this Agreement.
"Stated Amount" with respect to any Liquidity Facility, means the
Commitment (as defined in such Liquidity Facility) of the applicable
Liquidity Provider thereunder.
"Stated Interest Rate" means (i) with respect to the Class A
Certificates, 6.81% per annum; (ii) with respect to the Class B
Certificates, 7.36% per annum, and (iii) with respect to the Class C
Certificates, 8.13% per annum.
"Subordination Agent" has the meaning assigned to it in the preamble
to this Agreement.
"Tax" and "Taxes" mean any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, loss, damage, liability, expense, additions to tax
and additional amounts or costs incurred or imposed with respect thereto)
imposed or otherwise assessed by the United States or by any state, local
or foreign government (or any subdivision or agency thereof) or other
taxing authority, including, without limitation: taxes or other charges on
or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, or net worth
and similar charges; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, taxes on goods and
services, gains taxes, license, registration and documentation fees,
customs duties, tariffs, and similar charges.
"Threshold Rating" means the short-term unsecured debt rating of P-1
by Moody's and A-1+ by Standard & Poor's, in the case of the Class A
Liquidity Provider, and the short-term unsecured debt rating of P-1 by
Moody's and A-1 by Standard & Poor's, in the case of the Class B Liquidity
Provider and the Class C Liquidity Provider.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Triggering Event" means (x) the occurrence of an Indenture Default
under all of the Indentures resulting in a PTC Event of Default with
respect to the most senior Class of Certificates then Outstanding, (y) the
Acceleration of all of the outstanding Equipment Notes (provided that,
with respect to the period prior to the Delivery Period Expiry Date, such
Equipment Notes have an aggregate principal balance in excess of
$300,000,000) or (z) the occurrence of a Northwest Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust or the
Class C Trust.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a).
-19-
<PAGE>
"Trust Agreement" means any of the Class A Trust Agreement, Class B
Trust Agreement or Class C Trust Agreement.
"Trustee" means any of the Class A Trustee, the Class B Trustee or
the Class C Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(a).
"Trustee Representatives" has the meaning assigned to such term in
Section 2.5(a).
"Underwriters" means Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities
Inc. and Salomon Smith Barney Inc.
"Underwriting Agreement" means the Underwriting Agreement dated as
of February 4, 1999, by and among the Underwriters, NWA Corp and
Northwest, relating to the purchase of the Certificates by the
Underwriters, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Written Notice" means, from (i) any Trustee or Liquidity Provider,
a written instrument executed by the Designated Representative of such
Person, and (ii) the Subordination Agent, a written instrument executed by
a Person designated in the Officer's Certificate of the Subordination
Agent delivered on the Closing Date. An invoice delivered by a Liquidity
Provider pursuant to Section 3.1 in accordance with its normal invoicing
procedures shall constitute Written Notice under such Section.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
(b) Except as otherwise expressly provided in the next succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made
-20-
<PAGE>
only from amounts received by it that constitute Scheduled Payments, Special
Payments, payments under Section 6(c) of the Participation Agreements or
payments under Section 7 of the Note Purchase Agreement, and only to the extent
that the Subordination Agent shall have received sufficient income or proceeds
therefrom to enable it to make such payments in accordance with the terms
hereof. Each of the Trustees and the Subordination Agent hereby agrees and, as
provided in each Trust Agreement, each Certificateholder, by its acceptance of a
Certificate, and each Liquidity Provider, by entering into the Liquidity
Facility to which it is a party, has agreed to look solely to such amounts to
the extent available for distribution to it as provided in this Agreement and to
the relevant Deposits and that none of the Trustees, Owner Trustees, Loan
Trustees, Owner Participants nor the Subordination Agent is personally liable to
any of them for any amounts payable or any liability under this Agreement, any
Trust Agreement, any Liquidity Facility or such Certificate, except (in the case
of the Subordination Agent) as expressly provided herein or (in the case of the
Trustees) as expressly provided in each Trust Agreement or (in the case of the
Owner Trustees and the Loan Trustees) as expressly provided in any Operative
Agreement.
SECTION 2.2 Trust Accounts. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment;
provided, however, that following the making of a Downgrade Drawing or a
Non-Extension Drawing, the Subordination Agent shall invest and reinvest such
amounts at the direction of the Liquidity Provider funding such Drawing and the
Subordination Agent shall use reasonable efforts to cause such amounts to be
invested in Specified Investments which yield at least an amount equal to the
interest (excluding the Applicable Margin (as defined in the applicable
Liquidity Facility)) that is payable to such Liquidity Provider in respect of
such amounts pursuant to Section 3.7 of the relevant Liquidity Facility (it
being understood that it may not be feasible to obtain such a yield). Unless
otherwise expressly provided in this Agreement (including, without limitation,
with respect to Investment Earnings on deposit in the Cash Collateral Accounts,
Section 3.6(f) hereof), any Investment Earnings shall be deposited in the
Collection Account when received by the Subordination Agent and shall be applied
by the Subordination Agent in the same manner as the principal amount of
-21-
<PAGE>
such investment is to be applied and any losses shall be charged against the
principal amount invested, in each case net of the Subordination Agent's
reasonable fees and expenses in making such investments. The Subordination Agent
shall not be liable for any loss resulting from any investment, reinvestment or
liquidation required to be made under this Agreement other than by reason of its
willful misconduct or gross negligence or, with respect to the handling or
transfer of funds, ordinary negligence. Eligible Investments and any other
investment required to be made hereunder shall be held to their maturities
except that any such investment may be sold (without regard to its maturity) by
the Subordination Agent without instructions whenever such sale is necessary to
make a distribution required under this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(c) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise provided
herein with respect to Investment Earnings). The Trust Accounts shall be held in
trust by the Subordination Agent under the sole dominion and control of the
Subordination Agent for the benefit of the Trustees, the Certificateholders and
the Liquidity Providers, as the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
to which each Rating Agency may consent) establish a new Collection Account,
Special Payments Account or Cash Collateral Account, as the case may be, as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be. So long as the Subordination Agent is an Eligible
Institution, the Trust Accounts shall be maintained with it as Eligible Deposit
Accounts.
SECTION 2.3 Deposits to the Collection Account and Special Payments
Account. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or more
Special Payments are made to the Subordination Agent as holder of the Equipment
Notes, deposit in the Special Payments Account the aggregate amount of such
Special Payments.
SECTION 2.4 Distributions of Special Payments. (a) Notice of Special
Payment. Except as provided in Section 2.4(e), upon receipt by the Subordination
Agent, as registered holder of the Equipment Notes, of any notice of a Special
Payment (or, in the absence of any such notice, upon receipt by the
Subordination Agent of a Special Payment), the Subordination Agent shall
promptly give notice thereof to each Trustee and the Liquidity Providers. The
Subordination Agent shall promptly calculate the amount of the redemption or
purchase of Equipment Notes or the amount of any Overdue Scheduled Payment, as
the case may be, comprising such Special Payment under the applicable Indenture
or Indentures and shall promptly send to each Trustee and the Liquidity Provider
a Written Notice of such amount and the amount allocable to each Trust. Such
Written Notice shall also set the distribution date for such Special Payment (a
"Special Distribution Date"), which shall be a Business Day which follows the
later to occur of (x) the 15th day after the date of such Written Notice or (y)
the date
-22-
<PAGE>
the Subordination Agent has received or expects to receive such Special Payment.
Amounts on deposit in the Special Payments Account shall be distributed in
accordance with Sections 2.4(b) and 2.4(c) hereof, as applicable.
(b) (i) Redemptions and Purchases of Equipment Notes. So long as no
Triggering Event shall have occurred (whether or not continuing), the
Subordination Agent shall make distributions pursuant to this Section 2.4(b) of
amounts on deposit in the Special Payments Account on account of the redemption
or purchase (including, without limitation, a purchase resulting from the sale
of the Equipment Notes permitted by Article IV hereof) of all of the Equipment
Notes issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in the following order of priority:
first, such amount as shall be required to pay (A) all accrued and
unpaid Liquidity Expenses then in arrears plus (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses not in
arrears to such Special Payment Date multiplied by (y) a fraction, the
numerator of which is the aggregate outstanding principal amount of
Equipment Notes being redeemed, purchased or prepaid on such Special
Payment Date and the denominator of which is the aggregate outstanding
principal amount of all Equipment Notes, shall be distributed to the
Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay (A) all accrued and
unpaid interest then in arrears on all Liquidity Obligations (other than
interest in respect of a Downgrade Drawing or a Non-Extension Drawing)
plus (B) the product of (x) the aggregate amount of all accrued and unpaid
interest on all Liquidity Obligations not in arrears to such Special
Payment Date (at the rate provided in the applicable Liquidity Facility)
multiplied by (y) a fraction, the numerator of which is the aggregate
outstanding principal amount of Equipment Notes being redeemed, purchased
or prepaid on such Special Payment Date and the denominator of which is
the aggregate outstanding principal amount of all Equipment Notes, shall
be distributed to the Liquidity Providers pari passu on the basis of the
amount of such accrued and unpaid interest owed to each Liquidity
Provider;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Account, (B) if any Liquidity Facility shall become a Downgraded
Facility or a Non-Extended Facility at a time when unreimbursed Interest
Drawings under such Liquidity Facility have reduced the Available Amount
thereunder to zero, to deposit into the related Cash Collateral Account an
amount equal to such Account's Required Amount shall be deposited in such
Account, and (C) if, with respect to any particular Liquidity Facility,
neither subclause (A) nor subclause (B) of this clause "third" are
applicable, to pay or reimburse the Liquidity Provider in respect of such
Liquidity Facility in an amount equal to the amount of any unreimbursed
Interest Drawings under such Liquidity Facility shall be distributed
-23-
<PAGE>
to such Liquidity Provider, pari passu on the basis of the amounts of all
such deficiencies and/or unreimbursed Interest Drawings;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class A Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee; and
eighth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
(ii) Upon the occurrence of a Triggering Event (whether or not
continuing), the Subordination Agent shall make distributions pursuant to
this Section 2.4(b) of amounts on deposit in the Special Payments Account
on account of the redemption or purchase of all of the Equipment Notes
issued pursuant to an Indenture on the Special Distribution Date for such
Special Payment in accordance with Section 3.3 hereof.
(c) Other Special Payments. Except as provided in clause (e) below,
any amounts on deposit in the Special Payments Account other than in respect of
amounts to be distributed pursuant to Section 2.4(b) shall be distributed on the
Special Distribution Date therefor in accordance with Article III hereof.
(d) Investment of Amounts in Special Payments Account. Any amounts
on deposit in the Special Payments Account prior to the distribution thereof
pursuant to Section 2.4(b) or (c) shall be invested in accordance with Section
2.2(b). Investment Earnings on such investments shall be distributed in
accordance with Section 2.4(b) or (c), as the case may be.
(e) Certain Payments. The Subordination Agent will distribute
promptly upon receipt thereof (i) any indemnity payment received by it from the
Owner Participant, the Owner Trustee or Northwest in respect of any Trustee, any
Liquidity Provider, Paying Agent, Depositary or any Escrow Agent (collectively,
the "Payees") and (ii) any compensation (including, without
-24-
<PAGE>
limitation, any fees payable to any Liquidity Provider under Section 2.03 of any
Liquidity Facility) received by it from the Owner Participant, the Owner Trustee
or Northwest under any Operative Agreement in respect of any Payee, directly to
the Payee entitled thereto.
SECTION 2.5 Designated Representatives. (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each Trustee, at the Subordination Agent's discretion, or upon any
Liquidity Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month period), a certificate (a "Subordination Agent
Incumbency Certificate") of a Responsible Officer of the Subordination Agent
certifying as to the incumbency and specimen signatures of the officers of the
Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "Subordination Agent Representatives") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each Liquidity
Provider and Trustee receives a subsequent Subordination Agent Incumbency
Certificate, it shall be entitled to rely on the last Subordination Agent
Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider
shall furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP Incumbency
Certificate") of any authorized signatory of such Liquidity Provider certifying
as to the incumbency and specimen signatures of any officer, attorney-in-fact,
agent or other designated representative of such Liquidity Provider (the "LP
Representatives" and, together with the Trustee Representatives, the "Designated
Representatives") authorized to give Written Notices on behalf of such Liquidity
Provider hereunder. Until the Subordination Agent receives a subsequent LP
Incumbency Certificate, it shall be entitled to rely on the last LP Incumbency
Certificate delivered to it hereunder.
SECTION 2.6 Controlling Party. (a) The Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture at any given time,
the Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action with respect to such Indenture or the Equipment Notes issued
thereunder, so long as no Indenture Default has occurred and is continuing
thereunder, by the holders of at least a majority of the outstanding principal
amount of
-25-
<PAGE>
such Equipment Notes (provided that, for so long as the Subordination Agent is
the registered holder of the Equipment Notes, the Subordination Agent shall act
with respect to this clause (i) in accordance with the directions of the
Trustees representing holders of Certificates representing an undivided interest
in such principal amount of Equipment Notes), and (ii) after the occurrence and
during the continuance of an Indenture Default thereunder (which, in the case of
an Indenture pertaining to a Leased Aircraft, has not been cured by the
applicable Owner Trustee or the applicable Owner Participant, if applicable,
pursuant to Section 4.03 of such Indenture), in taking, or refraining from
taking, any action with respect to such Indenture or such Equipment Notes,
including exercising remedies thereunder (including accelerating the Equipment
Notes issued thereunder or foreclosing the Lien on the Aircraft securing such
Equipment Notes), by the Controlling Party.
(b) The Person who shall be the "Controlling Party" with respect to
any Indenture shall be: (w) the Class A Trustee, (x) upon payment of Final
Distributions to the holders of Class A Certificates, the Class B Trustee and
(y) upon payment of Final Distributions to the holders of Class B Certificates,
the Class C Trustee. For purposes of giving effect to the foregoing, the
Trustees (other than the Controlling Party) irrevocably agree (and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party and any vote so exercised shall be binding
upon the Trustees and all Certificateholders.
The Subordination Agent shall give written notice to all of the
other parties to this Agreement promptly upon a change in the identity of the
Controlling Party. Each of the parties hereto agrees that it shall not exercise
any of the rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing herein contained
shall prevent or prohibit any Non-Controlling Party from exercising such rights
as shall be specifically granted to such Non-Controlling Party hereunder and
under the other Operative Agreements.
(c) Notwithstanding the foregoing, at any time after 18 months from
the earliest to occur of (i) the date on which the entire Available Amount under
any Liquidity Facility shall have been drawn (for any reason other than a
Downgrade Drawing or a Non-Extension Drawing) and remain unreimbursed, (ii) the
date on which the entire amount of any Downgrade Drawing or Non-Extension
Drawing has been withdrawn from a Cash Collateral Account to pay interest on the
related Class of Certificates and remains unreimbursed and (iii) the date on
which all Equipment Notes shall have been Accelerated (provided that with
respect to the period prior to the Delivery Period Expiry Date, such Equipment
Notes have an aggregate outstanding principal balance in excess of
$300,000,000), the Liquidity Providers with a majority of unreimbursed Liquidity
Obligations shall have the right to elect, by Written Notice to the
Subordination Agent and each of the Trustees, to become the Controlling Party
hereunder with respect to any Indenture at any time from and including the last
day of such 18-month period.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
-26-
<PAGE>
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), each of the following Persons shall deliver to the
Subordination Agent a Written Notice setting forth the following information as
at the close of business on such Business Day:
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clause "fifth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clause "sixth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clause "seventh" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(iv) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with clauses "first", "second", "third" and "fourth" of Section 3.2 or
Section 2.4(b), as the case may be, hereof; and
(v) Each Trustee shall set forth the amounts to be paid in
accordance with clause "ninth" of Section 3.2 hereof.
The notices required under this Section 3.1(a) shall be provided to the
Subordination Agent by the parties referenced therein or by any one of them
pursuant to an agreement between the parties referred to therein, and may state
that, unless there has been a prepayment of the Certificates, such notice is to
remain in effect until any substitute notice or amendment shall be given to the
Subordination Agent by the party providing such notice.
(b) Following the occurrence of a Triggering Event, the
Subordination Agent shall request the following information from the following
Persons, and each of the following Persons shall, upon the request of the
Subordination Agent, deliver a Written Notice to the Subordination Agent setting
forth for such Person the following information:
-27-
<PAGE>
(i) With respect to the Class A Certificates, the Class A Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (relating to reimbursement payments made by the Class A
Certificateholders) and "seventh" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (relating to reimbursement payments made by the Class B
Certificateholders) and "eighth" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C Trustee
shall separately set forth the amounts to be paid in accordance with
clauses "first" (relating to reimbursement payments made by the Class C
Certificateholders) and "ninth" of Section 3.3 hereof;
(iv) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with clauses "second," "third", "fourth" and "fifth" of Section 3.3
hereof; and
(v) Each Trustee shall set forth the amounts to be paid in
accordance with clause "sixth" of Section 3.3 hereof.
(c) At such time as a Trustee or a Liquidity Provider shall have
received all amounts owing to it (and, in the case of a Trustee, the
Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable, and, in the case of a Liquidity Provider, its commitment
under the related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination Agent and each
other party to this Agreement.
(d) As provided in Section 6.5 hereof, the Subordination Agent shall
be fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs
(a) through (c) above and shall have no independent obligation to verify,
calculate or recalculate any amount set forth in any Written Notice delivered in
accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee or a Liquidity
Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if
made prior to 10:00 A.M. (New York City time) shall be effective on the date
delivered (or if delivered later shall be effective as of the next Business
Day). Subject to the terms of this Agreement, the Subordination Agent shall as
promptly as practicable comply with any such instructions; provided, however,
that any transfer of funds pursuant to any instruction received after 10:00 A.M.
(New York City time) on any Business Day may be made on the next succeeding
Business Day.
(f) In the event the Subordination Agent shall not receive from any
Person any information set forth in paragraphs (a) or (b) above which is
required to enable the Subordination
-28-
<PAGE>
Agent to make a distribution to such Person pursuant to Section 3.2 or 3.3
hereof, the Subordination Agent shall request such information in writing and,
failing to receive any such information, the Subordination Agent shall, after
written notice to such person, not make such distribution(s) to such Person. In
such event, the Subordination Agent shall make distributions pursuant to clauses
"first" through "eighth" of Section 3.2 and clauses "first" through "ninth" of
Section 3.3 to the extent it shall have sufficient information to enable it to
make such distributions, and shall continue to hold any funds remaining, after
making such distributions, until the Subordination Agent shall receive all
necessary information to enable it to distribute any funds so withheld.
(g) On such dates (but not more frequently than monthly) as any
Liquidity Provider or any Trustee shall request, the Subordination Agent shall
send to such party a written statement reflecting all amounts on deposit with
the Subordination Agent pursuant to Section 3.1(f) hereof.
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and
3.6(b), amounts on deposit in the Collection Account (or, in the case of any
amount described in Section 2.4(c), on deposit in the Special Payments Account)
shall be promptly distributed on each Distribution Date (or, in the case of any
amount described in Section 2.4(c), on the Special Distribution Date therefor)
in the following order of priority and in accordance with the information
provided to the Subordination Agent pursuant to Section 3.1(a) hereof:
first, such amount as shall be required to pay all accrued and
unpaid Liquidity Expenses owed to each Liquidity Provider shall be
distributed to the Liquidity Providers pari passu on the basis of the
amount of Liquidity Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay in full the
aggregate amount of interest accrued on all Liquidity Obligations (at the
rate provided in the applicable Liquidity Facility, but not including
interest in respect of a Downgrade Drawing or a Non-Extension Drawing) and
unpaid shall be distributed to the Liquidity Providers pari passu on the
basis of the amount of Liquidity Obligations owed to each Liquidity
Provider;
third, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Account up to its Required Amount shall be deposited in such Account,
(B) if any Liquidity Facility shall become a Downgraded Facility or a
Non-Extended Facility at a time when unreimbursed Interest Drawings under
such Liquidity Facility have reduced the Available Amount thereunder to
zero, to deposit into the related Cash Collateral Account an amount equal
to such Account's Required Amount shall be deposited in such Cash
Collateral Account, and (C) if, with respect to any particular Liquidity
Facility, neither subclause (A) nor subclause (B) of this clause "third"
is applicable, to pay or reimburse the Liquidity Provider in respect of
such Liquidity Facility in an amount equal to the amount of all
-29-
<PAGE>
Liquidity Obligations then due under such Liquidity Facility (other than
amounts payable pursuant to clause "first" or "second" of this Section
3.2) shall be distributed to such Liquidity Provider, pari passu on the
basis of the amounts of all such deficiencies and/or unreimbursed
Liquidity Obligations;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
sixth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C Certificates on such
Distribution Date shall be distributed to the Class C Trustee;
eighth, such amount as shall be required to pay in full the
aggregate unpaid amount of fees and expenses payable as of such
Distribution Date to the Subordination Agent and each Trustee pursuant to
the terms of this Agreement and the Trust Agreements, as the case may be,
shall be distributed to the Subordination Agent and such Trustee; and
ninth, the balance, if any, of any such payment remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III (including the priorities set forth
therein).
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of
-30-
<PAGE>
the nature described in clause (i) above actually incurred by it under the
applicable Trust Agreement (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) any Liquidity Provider or
Certificateholder for payments, if any, made by it to the Subordination
Agent or any Trustee in respect of amounts described in clause (i) above,
shall be distributed to such Liquidity Provider or to the applicable
Trustee for the account of such Certificateholder, in each such case, pari
passu on the basis of all amounts described in clauses (i) through (iii)
above;
second, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Liquidity Provider pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations (other than interest in
respect of a Downgrade Drawing or a Non-Extension Drawing) as provided in
the Liquidity Facilities shall be distributed to each Liquidity Provider
pari passu on the basis of the amount of such accrued and unpaid interest
owed to each Liquidity Provider;
fourth, such amount remaining as shall be required (A) if any Cash
Collateral Account had been previously funded as provided in Section
3.6(f), unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to such Liquidity Facility, to fund such Account up to its
Required Amount (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) above is applicable)
shall be deposited in such Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, unless (i) a Performing Note
Deficiency exists and a Liquidity Event of Default shall have occurred and
be continuing with respect to the relevant Liquidity Facility or (ii) a
Final Drawing shall have occurred with respect to such Liquidity Facility,
to deposit into the related Cash Collateral Account an amount equal to
such Account's Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (B)(i)
above is applicable) shall be deposited in such Cash Collateral Account,
and (C) if, with respect to any particular Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause "fourth" are applicable, to
pay in full the outstanding amount of all Liquidity Obligations then due
under such Liquidity Facility (other than amounts payable pursuant to
clause "second" or "third" of this Section 3.3) shall be distributed to
such Liquidity Provider, pari passu on the basis of the amounts of all
such deficiencies and/or unreimbursed Liquidity Obligations;
fifth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "fourth" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed advances (whether or not then due)
-31-
<PAGE>
under such Liquidity Facility over (y) the Required Amount for the
relevant Class (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) or (B)(i) , as the
case may be, of clause "fourth" above is applicable), pari passu on the
basis of such amounts in respect of each Liquidity Provider;
sixth, such amount as shall be required to reimburse or pay (i) the
Subordination Agent for any Tax (other than Taxes imposed on compensation
paid hereunder), expense, fee, charge or other loss incurred by or any
other amount payable to the Subordination Agent in connection with the
transactions contemplated hereby (to the extent not previously
reimbursed), shall be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
seventh, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A Certificates shall be
distributed to the Class A Trustee;
eighth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee;
ninth, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C Certificates shall be
distributed to the Class C Trustee;
tenth, such amount remaining shall be retained in the Collection
Account until the immediately succeeding Distribution Date or, if all
Classes of Certificates shall have been paid in full, shall be distributed
to the Owner Trustee to the extent that the amount received from the Loan
Trustees and deposited in the Collection Account exceed the amounts
described in clauses "first" through "tenth" above; and
eleventh, amount remaining shall be distributed to the
Certificateholders of the related Trust.
SECTION 3.4 Other Payments. Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent in the order
of priority specified in Section 3.3 hereof.
-32-
<PAGE>
SECTION 3.5 Payments to the Trustees and the Liquidity Providers.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer of funds to the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6 Liquidity Facilities. (a) Interest Drawings. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 12:00 noon
(New York City time) on such Distribution Date, the Subordination Agent shall
request a drawing (each such drawing, an "Interest Drawing") under the Liquidity
Facility with respect to such Class of Certificates in an amount equal to the
lesser of (i) an amount sufficient to pay the amount of such accrued interest
(at the Stated Interest Rate for such Class of Certificates) or (ii) the
Available Amount under such Liquidity Facility, and shall pay such amount to the
Trustee with respect to such Class of Certificates in payment of such accrued
interest.
(b) Application of Interest Drawings. Notwithstanding anything to
the contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee and
(ii) all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time the debt rating of any
Liquidity Provider issued by either Rating Agency is lower than the applicable
Threshold Rating, within 30 days after receiving notice of such downgrading (but
no later than the expiration date of the Liquidity Facility issued by the
downgraded Liquidity Provider (the "Downgraded Facility")), such Liquidity
Provider may arrange, or the Subordination Agent (in consultation with
Northwest), may arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility to the Subordination Agent. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination Agent shall, on such 30th day (or if such 30th day
is not a Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of such Downgraded Facility), request a drawing in accordance
with and to the
-33-
<PAGE>
extent permitted by such Downgraded Facility (such drawing, a "Downgrade
Drawing") of all available and undrawn amounts thereunder. Amounts drawn
pursuant to a Downgrade Drawing shall be maintained and invested as provided in
Section 3.6(f) hereof. The Liquidity Provider may also arrange for a Replacement
Liquidity Provider to issue and deliver a Replacement Liquidity Facility at any
time after such Downgrade Drawing so long as such Downgrade Drawing has not been
reimbursed in full to the Liquidity Provider.
(d) Non-Extension Drawings. If any Liquidity Facility with respect
to any Class of Certificates is scheduled to expire on a date (the "Stated
Expiration Date") prior to the date that is 15 days after the Final Legal
Distribution Date for such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration Date for a period of 364 days after the Stated Expiration Date
(unless the obligations of such Liquidity Provider thereunder are earlier
terminated in accordance with such Liquidity Facility). The Liquidity Provider
shall advise the Subordination Agent, no earlier than 40 days and no later than
25 days prior to such Stated Expiration Date, whether, in its sole discretion,
it agrees to so extend the Stated Expiration Date. If, on or before the 25th day
prior to the Stated Expiration Date, such Liquidity Facility shall not have been
so extended or replaced in accordance with Section 3.6(e), or if the Liquidity
Provider fails irrevocably and unconditionally to advise the Subordination Agent
on or before the 25th day prior to the Stated Expiration Date then in effect
that such Stated Expiration Date shall be so extended, the Subordination Agent
shall, on such 25th day (or as soon as possible thereafter), in accordance with
and to the extent permitted by the terms of the expiring Liquidity Facility (a
"Non-Extended Facility"), request a drawing under such expiring Liquidity
Facility (such drawing, a "Non-Extension Drawing") of all available and undrawn
amounts thereunder. Amounts drawn pursuant to any Non-Extension Drawing shall be
maintained and invested in accordance with Section 3.6(f) hereof.
(e) Issuance of Replacement Liquidity Facility. At any time, the
Subordination Agent may, at its option, in consultation with Northwest, arrange
for a Replacement Liquidity Facility to replace the Liquidity Facility for any
Class of Certificates; provided that, the initial Liquidity Provider may not be
replaced unless there shall have become due to the initial Liquidity Provider
amounts pursuant to Section 3.1, 3.2 or 3.3 of the Liquidity Facilities and the
replacement of the initial Liquidity Provider would reduce or eliminate the
obligation to pay such amounts; provided further that, the Liquidity Provider
may arrange, or the Subordination Agent (in consultation with Northwest) may
arrange, for a Replacement Liquidity Provider pursuant to paragraphs (c) and (d)
of this Section 3.6. In any such consultation, the Subordination Agent shall
accept the recommendations of Northwest in the absence of a good faith reason
not to do so. No such Replacement Liquidity Facility executed in connection
therewith shall become effective and no such Replacement Liquidity Facility
shall be deemed a "Liquidity Facility" under the Operative Agreements, unless
and until (i) the conditions referred to in the immediately following paragraph
shall have been satisfied and (ii) if such Replacement Liquidity Facility shall
materially adversely affect the rights, remedies, interests or obligations of
the Class A Certificateholders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the applicable Trustee
shall have consented, in writing, to the execution and issuance of such
Replacement Liquidity Facility.
-34-
<PAGE>
In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, obtain written confirmation from each Rating
Agency that such Replacement Liquidity Facility will not cause a reduction of
the rating then in effect for any Class of Certificates by such Rating Agency
(without regard to any downgrading of the ratings of any Liquidity Provider
being replaced pursuant to Section 3.6(c) hereof), (y) pay all Liquidity
Obligations then owing to the replaced Liquidity Provider (which payment shall
be made first from available funds in the Cash Collateral Account as described
in clause (vii) of Section 3.6(f) hereof and thereafter from any other available
source, including, without limitation, a drawing under the Replacement Liquidity
Facility, it being understood that no Replacement Liquidity Facility shall
become effective (other than insofar as necessary to permit the repayment of
amounts owed to the replaced Liquidity Provider) until all amounts owed to the
replaced Liquidity Provider have been paid) and (z) cause the issuer of the
Replacement Liquidity Facility to deliver the Replacement Liquidity Facility to
the Subordination Agent, together with a legal opinion opining that such
Replacement Liquidity Facility is an enforceable obligation of such Replacement
Liquidity Provider. Upon satisfaction of the conditions set forth in this
Section 3.6(e), (i) the replaced Liquidity Facility shall terminate and (ii)
such Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder and under the
other Operative Agreements and such Replacement Liquidity Facility shall be
deemed to be a Liquidity Facility hereunder and under the other Operative
Agreements.
(f) Cash Collateral Accounts; Withdrawals; Investments. In the event
the Subordination Agent shall draw all available amounts under the Class A
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c), 3.6(d) or 3.6(i) , amounts so drawn shall
be deposited by the Subordination Agent in the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral Account,
respectively. Amounts so deposited shall be invested in Eligible Investments in
accordance with Section 2.2(b) hereof. Investment Earnings on amounts on deposit
in the Cash Collateral Accounts as a result of any drawings under Section 3.6(c)
or 3.6(d) hereof (other than to the extent it becomes a Final Drawing) shall be
paid to the respective Liquidity Provider entitled thereto prior to giving
effect to the distributions below on each Distribution Date commencing on the
first Distribution Date after any such drawing. Investment Earnings on amounts
on deposit in the Cash Collateral Accounts as a result of any drawings under
Section 3.6(i) hereof (and amounts which become a Final Drawing) shall be
deposited in the Collection Account. The Subordination Agent shall deliver a
written statement to the respective Liquidity Provider one day prior to each
Distribution Date setting forth the aggregate amount of Investment Earnings held
in the applicable Cash Collateral Accounts as of such date. In addition, from
and after the date funds are so deposited, the Subordination Agent shall make
withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to the
extent it shall not have received funds to pay accrued and unpaid interest
on the Class A Certificates (at the Stated Interest Rate for the Class A
Certificates) from any other source, withdraw from the Class A Cash
Collateral Account, and pay to the Class A Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and
-35-
<PAGE>
unpaid interest (at the Stated Interest Rate for the Class A Certificates)
on such Class A Certificates and (y) the amount on deposit in the Class A
Cash Collateral Account;
(ii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class B Certificates (at the Stated Interest Rate for the
Class B Certificates) from any other source, withdraw from the Class B
Cash Collateral Account, and pay to the Class B Trustee an amount equal to
the lesser of (x) an amount necessary to pay accrued and unpaid interest
(at the Stated Interest Rate for the Class B Certificates) on such Class B
Certificates and (y) the amount on deposit in the Class B Cash Collateral
Account;
(iii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class C Certificates (at the Stated Interest Rate for the
Class C Certificates) from any other source, withdraw from the Class C
Cash Collateral Account, and pay to the Class C Trustee an amount equal to
the lesser of (x) an amount necessary to pay accrued and unpaid interest
(at the Stated Interest Rate for the Class C Certificates) on such Class C
Certificates and (y) the amount on deposit in the Class C Cash Collateral
Account;
(iv) on each date on which the Pool Balance of the Class A Trust
shall have been reduced by payments made to the Class A Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement for such Class, the Subordination
Agent shall withdraw from the Class A Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class A Cash Collateral Account on
such date), the Required Amount (with respect to the Class A Liquidity
Facility) will be on deposit in the Class A Cash Collateral Account and
shall first, pay such amount to the Class A Liquidity Provider until the
Liquidity Obligations (with respect to the Class A Certificates) shall
have been paid in full, and second, deposit any remaining amount in the
Collection Account;
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement for such Class, the Subordination
Agent shall withdraw from the Class B Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class B Cash Collateral Account on
such date), the Required Amount (with respect to the Class B Liquidity
Facility) will be on deposit in the Class B Cash Collateral Account and
shall first, pay such amount to the Class B Liquidity Provider until the
Liquidity Obligations (with respect to the Class B Certificates) shall
have been paid in full, and second, deposit any remaining amount in the
Collection Account;
-36-
<PAGE>
(vi) on each date on which the Pool Balance of the Class C Trust
shall have been reduced by payments made of the Class C Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement for such Class, the Subordination
Agent shall withdraw from the Class C Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class C Cash Collateral Account on
such date), the Required Amount (with respect to the Class C Liquidity
Facility) will be on deposit in the Class C Cash Collateral Account and
shall first, pay such amount to the Class C Liquidity Provider until the
Liquidity Obligations (with respect to the Class C Certificates) shall
have been paid in full, and second, deposit any remaining amount in the
Collection Account;
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to each replaced Liquidity Provider pari passu until all Liquidity
Obligations owed to such Person shall have been paid in full, and shall
deposit any remaining amount in the Collection Account; and
(viii) following the payment of Final Distributions with respect to
any Class of Certificates, on the date on which the Subordination Agent
shall have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent shall withdraw
all amounts on deposit in the Cash Collateral Account in respect of such
Class of Certificates and shall deposit such amount in the Collection
Account.
(g) Reinstatement. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider, but not to exceed the Required
Amount for such Liquidity Facility; provided, however, that such Liquidity
Facility shall not be so reinstated in part or in full at any time if (x) both
(i) a Triggering Event shall have occurred and (ii) a Performing Note Deficiency
exists or (y) a Liquidity Event of Default shall have occurred and be continuing
under such Liquidity Facility. In the event that at any time prior to both the
occurrence of a Triggering Event and the existence of a Performing Note
Deficiency funds are withdrawn from any Cash Collateral Account pursuant to
clauses (i) , (ii) or (iii) of Section 3.6(f) hereof, then funds received by the
Subordination Agent prior to both the occurrence of a Triggering Event and the
existence of a Performing Note Deficiency shall be deposited in such Cash
Collateral Account as provided in clause "third" of Section 2.4(b), clause
"third" of Section 3.2 or clause "fourth" of Section 3.3, as applicable, and
applied in accordance with Section 3.6(f) hereof.
-37-
<PAGE>
(h) Reimbursement. The amount of each drawing under the Liquidity
Facilities shall be due and payable, together with interest thereon, on the
dates and at the rates, respectively, provided in the Liquidity Facilities.
(i) Final Drawing. If any action is required under a Liquidity
Facility to be taken by the Subordination Agent in order to make a Final Drawing
thereunder, the Subordination Agent shall not fail to take such action. Upon
receipt of the proceeds of a Final Drawing under the related Liquidity Facility,
the Subordination Agent shall maintain and invest such proceeds in accordance
with Section 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each date on
which the Required Amount of the Liquidity Facility for a Class of Certificates
is reduced as a result of a distribution to the Certificateholders of such Class
of Certificates, the Subordination Agent shall, if such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and if
such reductions are not automatic, request the Liquidity Provider for such Class
of Certificates to reduce such Stated Amount to an amount equal to the Required
Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) Relation to Subordination Provisions. Interest Drawings under
the Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in
each case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party. (a) (i) Following
the occurrence and during the continuation of an Indenture Default under any
Indenture, the Controlling Party shall direct the Loan Trustee under such
Indenture in the exercise of remedies available to the holders of the Equipment
Notes issued pursuant to such Indenture, including, without limitation, the
ability to vote all such Equipment Notes in favor of declaring all of the unpaid
principal amount of such Equipment Notes and accrued interest thereon to be due
and payable under, and in accordance with, the provisions of such Indenture.
Subject to the Owner Trustees' and the Owner Participants' rights, if any, set
forth in the Indentures with respect to Leased Aircraft to purchase the
Equipment Notes, if the Equipment Notes issued pursuant to any Indenture have
been Accelerated following an Indenture Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver all (but not less than all) of such Equipment Notes to any Person at
public or private sale, at any location at the option of the Controlling Party,
all upon such terms and conditions as it may reasonably deem advisable in
accordance with applicable law.
-38-
<PAGE>
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights set forth in the Indentures with respect to Leased Aircraft to purchase
the Equipment Notes, and notwithstanding the foregoing, so long as any
Certificates remain Outstanding, during the period ending on the date which is
nine months after the earlier of (x) the Acceleration of the Equipment Notes
issued pursuant to any Indenture or (y) the occurrence of a Northwest Bankruptcy
Event, without the consent of each Trustee, (A) no Aircraft subject to the Lien
of such Indenture or such Equipment Notes may be sold if the net proceeds from
such sale would be less than the Minimum Sale Price for such Aircraft or such
Equipment Notes, and (B) with respect to any Leased Aircraft, the amount and
payment dates of rentals payable by Northwest under the Lease for such Aircraft
may not be adjusted, if, as a result of such adjustment, the discounted present
value of all such rentals would be less than 75% of the discounted present value
of the rentals payable by Northwest under such Lease before giving effect to
such adjustment, in each case, using the weighted average interest rate of the
Equipment Notes issued pursuant to such Indenture as the discount rate.
(iii) At the request of the Controlling Party, the Subordination
Agent may from time to time during the continuance of an Indenture Default (and
before the occurrence of a Triggering Event) commission LTV Appraisals with
respect to the related Aircraft.
(iv) After a Triggering Event occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the Subordination Agent shall obtain LTV
Appraisals for the Aircraft as soon as practicable and additional LTV Appraisals
on or prior to each anniversary of the date of such initial LTV Appraisals;
provided that, if the Controlling Party reasonably objects to the appraised
value of the Aircraft shown in any such LTV Appraisals, the Controlling Party
shall have the right to obtain or cause to be obtained at its expense substitute
LTV Appraisals (including any LTV Appraisals based upon physical inspection of
the Aircraft).
(b) The Controlling Party shall take such actions as it may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft or Equipment Notes. In addition, in lieu of any sale, assignment,
contract to sell or other disposition, the Subordination Agent, on behalf of the
Controlling Party, may maintain possession of such Equipment Notes and continue
to apply monies received in respect of such Equipment Notes in accordance with
Article III hereof. In addition, in lieu of such sale, assignment, contract to
sell or other disposition, or in lieu of such maintenance of possession, the
Controlling Party may instruct the Loan Trustee under such Indenture to
foreclose on the Lien on the related Aircraft or to take any other remedial
action permitted under such Indenture or applicable law.
SECTION 4.2 Remedies Cumulative. Each and every right, power and
remedy given to the Trustees, the Liquidity Providers, the Controlling Party or
the Subordination Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject always to the terms and conditions
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee, any Liquidity Provider, the Controlling Party
or the Subordination Agent, as appropriate, and the
-39-
<PAGE>
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy. No delay or omission by any Trustee, any
Liquidity Provider, the Controlling Party or the Subordination Agent in the
exercise of any right, remedy or power or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default or to be an acquiescence therein.
SECTION 4.3 Discontinuance of Proceedings. In case any party to this
Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, entry or otherwise, and such Proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such proceedings, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceedings had been
instituted.
SECTION 4.4 Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments pursuant to Section 2.4,
3.2 or 3.3 hereof when due, or to institute suit for the enforcement of any such
payment on or after the applicable Distribution Date, shall not be impaired or
affected without the consent of such Certificateholder or such Liquidity
Provider, respectively.
SECTION 4.5 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Agreement or in any suit against any
Controlling Party or the Subordination Agent for any action taken or omitted by
it as Controlling Party or Subordination Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a suit instituted by the Subordination Agent, a
Liquidity Provider or a Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event. (a) In
the event the Subordination Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering Event, as promptly as practicable, and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall transmit by mail to the Rating Agencies, the
-40-
<PAGE>
Liquidity Providers and the Trustees notice of such Indenture Default or
Triggering Event, unless such Indenture Default or Triggering Event shall have
been cured or waived. For all purposes of this Agreement, in the absence of
actual knowledge on the part of a Responsible Officer, the Subordination Agent
shall not be deemed to have knowledge of any Indenture Default or Triggering
Event unless notified in writing by one or more Trustees, one or more Liquidity
Providers or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to each
Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
SECTION 5.2 Indemnification. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
from a breach of its obligations that constitute willful misconduct or gross
negligence hereunder or any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a
Responsible Officer of any Liquidity Provider or Trustee has actual notice of an
Indenture
-41-
<PAGE>
Default or a Triggering Event, such Person shall promptly use its best efforts
give notice thereof to all other Liquidity Providers and Trustees and to the
Subordination Agent, provided, however, that no such Person shall have any
liability hereunder as a result of its failure to deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties. Each of
the Class A Trustee, Class B Trustee and Class C Trustee hereby designates and
appoints the Subordination Agent as the agent and trustee of such Trustee under
the applicable Liquidity Facility and authorizes the Subordination Agent to
enter into the applicable Liquidity Facility as agent and trustee for such
Trustee. Each of the Liquidity Providers and the Trustees hereby designates and
appoints the Subordination Agent as the Subordination Agent under this
Agreement.
State Street hereby accepts the duties hereby created and applicable
to it as the Subordination Agent and agrees to perform the same but only upon
the terms of this Agreement and agrees to receive and disburse all monies
received by it in accordance with the terms hereof. The Subordination Agent
shall not be answerable or accountable under any circumstances, except (a) for
its own willful misconduct or gross negligence or, with respect to the handling
or transfer of funds, ordinary negligence, (b) as provided in Section 2.2 hereof
and (c) for liabilities that may result from the material inaccuracy of any
representation or warranty of the Subordination Agent made in its individual
capacity in any Operative Agreement. The Subordination Agent shall not be liable
for any error of judgment made in good faith by a Responsible Officer of the
Subordination Agent, unless it is proved that the Subordination Agent was
negligent in ascertaining the pertinent facts.
SECTION 6.2 Absence of Duties. The Subordination Agent shall have no
duty to see to any recording or filing of this Agreement or any other document,
or to see to the maintenance of any such recording or filing.
SECTION 6.3 No Representations or Warranties as to Documents. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4 No Segregation of Monies; No Interest. Any monies paid
to or retained by the Subordination Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity Provider as
provided in Articles II and III hereof need
-42-
<PAGE>
not be segregated in any manner except to the extent required by such Articles
II and III and by law, and the Subordination Agent shall not (except as
otherwise provided in Section 2.2 hereof) be liable for any interest thereon;
provided, however, that any payments received or applied hereunder by the
Subordination Agent shall be accounted for by the Subordination Agent so that
any portion thereof paid or applied pursuant hereto shall be identifiable as to
the source thereof.
SECTION 6.5 Reliance; Agents; Advice of Counsel. The Subordination
Agent shall not incur liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers or the Trustees the manner of ascertainment of which is not
specifically described herein, the Subordination Agent may for all purposes
hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Subordination Agent shall assume, and shall be
fully protected in assuming, that each of the Liquidity Providers and each of
the Trustees are authorized to enter into this Agreement and to take all action
to be taken by them pursuant to the provisions hereof, and shall not inquire
into the authorization of each of the Liquidity Providers and each of the
Trustees with respect thereto. In the administration of the trusts hereunder,
the Subordination Agent may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled persons to be
selected and retained by it, and the Subordination Agent shall not be liable for
the acts or omissions of any agent appointed with due care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.6 Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7 Compensation. The Subordination Agent shall be entitled
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such compensation, to the extent that such compensation shall not be paid by
others. The Subordination Agent agrees that it shall have no right against any
Trustee or Liquidity Provider for any fee as compensation for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.
SECTION 6.8 May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits
-43-
<PAGE>
of a Certificateholder to the same extent as if it were not the institution
acting as the Subordination Agent.
SECTION 6.9 Subordination Agent Required; Eligibility. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any State
thereof or of the District of Columbia and having a combined capital and surplus
of at least $100,000,000), if there is such an institution willing and able to
perform the duties of the Subordination Agent hereunder upon reasonable or
customary terms. Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any State thereof or
of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of any of the aforesaid
supervising or examining authorities, then, for the purposes of this Section
6.9, the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published.
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section, the Subordination
Agent shall resign immediately in the manner and with the effect specified in
Section 8.1.
SECTION 6.10 Money to Be Held in Trust. All Equipment Notes, monies
and other property deposited with or held by the Subordination Agent pursuant to
this Agreement shall be held in trust for the benefit of the parties entitled to
such Equipment Notes, monies and other property. All such Equipment Notes,
monies or other property shall be held in the Trust Department of the
institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification. The Subordination Agent shall
be indemnified hereunder to the extent and in the manner described in Section
6(c) of the Participation Agreements and Section 7 of the Note Purchase
Agreement. The indemnities contained in such Section 7(c) shall survive the
termination of this Agreement.
-44-
<PAGE>
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor. The Subordination Agent may resign at any time by so notifying the
Trustees and the Liquidity Providers. The Liquidity Provider or the Controlling
Party may remove the Subordination Agent for cause by so notifying the
Subordination Agent and may appoint a successor Subordination Agent. The
Controlling Party shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of acting.
If the Subordination Agent resigns or is removed or if a vacancy
exists in the office of Subordination Agent for any reason (the Subordination
Agent in such event being referred to herein as the retiring Subordination
Agent), the Controlling Party in consultation with Northwest shall promptly
appoint a successor Subordination Agent.
Any corporation into which the Subordination Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Subordination Agent
shall be a party, or any corporation to which substantially all the corporate
trust business of the Subordination Agent may be transferred, shall, subject to
the terms of Section 6.9 hereof, be the Subordination Agent hereunder and under
the other Operative Agreements to which the Subordination Agent is a party
without further act, except that such Person shall give prompt subsequent notice
of such transaction to the Liquidity Provider and each Trustee,
A successor Subordination Agent shall deliver a written acceptance
of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent, upon which the resignation or removal of the retiring
Subordination Agent shall become effective, and the successor Subordination
Agent shall have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall send a written
notice of its succession to the Liquidity Providers and the Trustees. The
retiring Subordination Agent shall promptly transfer its rights under each of
the Liquidity Facilities and all of the property held by it as Subordination
Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or
-45-
<PAGE>
more of the Trustees may petition any court of competent jurisdiction for the
appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers or Northwest may petition any court of competent
jurisdiction for the removal of the Subordination Agent and the appointment of a
successor Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting,
except in the case of any amendment pursuant to Section 3.6(e)(v) (y) hereof,
with the consent of holders of Certificates of the related Class evidencing
interests in the related Trust aggregating not less than a majority in interest
in such Trust or as otherwise authorized pursuant to the relevant Trust
Agreement), the Subordination Agent and each Liquidity Provider; provided,
however, that this Agreement may be supplemented, amended or modified without
the consent of any Trustee if such supplement, amendment or modification cures
an ambiguity or inconsistency or does not materially adversely affect such
Trustee or the holders of the related Class of Certificates; provided further,
however, that, if such supplement, amendment or modification would (x) directly
or indirectly modify or supersede, or otherwise conflict with, Section 2.2(b),
Section 3.6(e), Section 3.6(f)(other than the last sentence thereof), or the
second sentence of Section 10.6 (collectively, together with this proviso and
Section 9.1, the "Northwest Provisions") or (y) otherwise adversely affect the
interests of a potential Replacement Liquidity Provider or of Northwest with
respect to its ability to replace any Liquidity Facility or with respect to its
payment obligations under any Financing Agreement, Leased or Owned Aircraft
Indenture, then such supplement, amendment or modification shall not be
effective without the additional written consent of Northwest. Notwithstanding
the foregoing, without the consent of each Certificateholder and each Liquidity
Provider, no supplement, amendment or modification of this Agreement may (i)
reduce the percentage of the interest in any Trust evidenced by the Certificates
issued by such Trust necessary to consent to modify or amend any provision of
this Agreement or to waive compliance therewith or (ii) modify Section 2.4, 3.2
or 3.3 hereof, relating to the distribution of monies received by the
Subordination Agent hereunder from the Equipment Notes or pursuant to the
Liquidity Facilities. Nothing contained in this Section shall require the
consent of a Trustee at any time following the payment of Final Distributions
with respect to the related Class of Certificates.
-46-
<PAGE>
(b) In the event that the Subordination Agent, as the registered
holder of any Equipment Notes, receives a request for its consent to any
amendment, modification, consent or waiver under such Equipment Notes, the
Indenture pursuant to which such Equipment Notes were issued, or the related
Lease, Participation Agreement or other related document, (i) if no Indenture
Default shall have occurred and be continuing with respect to such Indenture,
the Subordination Agent shall request directions with respect to each Series of
such Equipment Notes from the Trustee of the Trust which holds such Equipment
Notes and shall vote or consent in accordance with the directions of such
Trustee and (ii) if any Indenture Default (which, in the case of any Indenture
pertaining to a Leased Aircraft, has not been cured by the applicable Owner
Trustee or the applicable Owner Participant, if applicable, pursuant to Section
4.03 of such Indenture) shall have occurred and be continuing with respect to
such Indenture, the Subordination Agent will exercise its voting rights as
directed by the Controlling Party, subject to Sections 4.1 and 4.4 hereof;
provided that no such amendment, modification or waiver shall, without the
consent of each Liquidity Provider, reduce the amount of rent, supplemental rent
or stipulated loss values payable by Northwest under any Lease or reduce the
amount of principal or interest payable by Northwest under any Equipment Note
issued under any Indenture in respect of an Owned Aircraft
SECTION 9.2 Subordination Agent Protected. If, in the reasonable
opinion of the institution acting as the Subordination Agent hereunder, any
document required to be executed pursuant to the terms of Section 9.1 affects
any right, duty, immunity or indemnity with respect to it under this Agreement
or any Liquidity Facility, the Subordination Agent may in its discretion decline
to execute such document.
SECTION 9.3 Effect of Supplemental Agreements. Upon the execution of
any amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Agreement of the parties hereto and beneficiaries
hereof shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental agreement shall be and be deemed to be part
of the terms and conditions of this Agreement for any and all purposes. In
executing or accepting any supplemental agreement permitted by this Article IX,
the Subordination Agent shall be entitled to receive, and shall be fully
protected in relying upon, an opinion of counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
SECTION 9.4 Notice to Rating Agencies. Promptly following its
receipt of each amendment, consent, modification, supplement or waiver
contemplated by this Article IX, the Subordination Agent shall send a copy
thereof to each Rating Agency.
SECTION 9.5 Addition of Class D Trustee. If with respect to any
Aircraft Class D Certificates are issued, this Agreement shall be amended by
written agreement of Northwest and the Subordination Agent to provide for the
subordination of such Class D Certificates to the Class A Certificates, the
Class B Certificates and the Class C Certificates substantially in the same
manner as the Class C Certificates are subordinated hereunder to the Class B
Certificates
-47-
<PAGE>
and the Class A Certificates. No such amendment shall materially adversely
affect any Trustee. The amendment to this Agreement to give effect to the
issuance of any Class D Certificates shall include, without limitation:
(i) the Class D Trust Trustee shall be added as a party to this
Agreement; and
(ii) the definitions of "Cash Collateral Account," "Certificate,"
"Class," "Equipment Notes," "Final Legal Distribution Date," "Liquidity
Facilities," "Liquidity Provider," "LTV Ratio," "Stated Interest Rate,"
"Trust," "Trust Agreement" and "Controlling Party" shall be revised, as
appropriate, to reflect the issuance of the Class D Certificates (and the
subordination thereof); and
If with respect to any Aircraft, Series D Equipment Notes are issued to any
Person other than the Class D Trust, this Agreement shall be amended by written
agreement of Northwest and the Subordination Agent to (i) provide for each
holder of a Series D Equipment Note to be bound by the provisions of Section
2.6(a) hereof so that the Controlling Party shall be entitled to direct the Loan
Trustee as provided therein (and such Series D Equipment Notes shall make
effective provision therefor so as to bind each holder thereof to such
provisions of Section 2.6(a) hereof) and (ii) to revise the definitions of
"Controlling Party" and "Equipment Notes", as appropriate, to reflect the
issuance of the Series D Equipment Notes (and the prior rights, as against the
holders of such Series D Equipment Notes, of the Class A Trustee, the Class B
Trustee and the Class C Trustee to be such "Controlling Party"). No such
amendment shall materially adversely affect any Trustee.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity Obligations to the Liquidity Providers and
provided that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except as aforesaid or
otherwise provided, this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent. Nothing in this Agreement, whether
express or implied, shall be construed to give to any Person other than the
Trustees, the Liquidity Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.
-48-
<PAGE>
SECTION 10.3 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent or any Trustee, addressed to it at
its office at:
c/o State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Fax:
(ii) if to any Liquidity Provider, addressed to it at its office at:
Citibank, N.A.
Two Penns' Way, Suite 200
New Castle, Delaware 19720
Attention: Tim Smith, Global Loans
Fax: (302) 894-6120
With a copy to:
Citibank, N.A.
Global Aviation
399 Park Avenue, 12th Floor
New York, NY 10043
Attention: Tom Boyle
Fax: (212) 793-1246
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received, if such notice is mailed by certified mail, postage prepaid or by
courier service or if such notice is sent by confirmed telecopy addressed as
provided above. Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other parties to this
Agreement.
SECTION 10.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only
-49-
<PAGE>
by an instrument in writing signed by the party or other Person against whom
enforcement of the change, waiver, discharge or termination is sought and any
other party or other Person whose consent is required pursuant to this Agreement
and any waiver of the terms hereof shall be effective only in the specific
instance and for the specific purpose given.
SECTION 10.6 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
SECTION 10.7 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9 Subordination. (a) As between the Liquidity Providers,
on the one hand, and the Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Section 510 of
the United States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior to
the payment in full to the Liquidity Providers of all Liquidity Obligations then
due and payable, any party hereto shall have received any payment or
distribution in respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the subordination provisions
of this Agreement been properly applied to such payment, distribution or other
amount, would not have been distributed to such Person, then such payment,
distribution or other amount shall be received and held in trust by such Person
and paid over or delivered to the Subordination Agent for application as
provided herein.
(c) If any Trustee, any Liquidity Provider or the Subordination
Agent receives any payment in respect of any obligations owing hereunder (or, in
the case of the Liquidity Providers, in respect of the Liquidity Obligations),
which is subsequently invalidated, declared preferential, set aside and/or
required to be repaid to a trustee, receiver or other party, then, to the extent
of such payment, such obligations (or, in the case of the Liquidity Providers,
such Liquidity Obligations) intended to be satisfied shall be revived and
continue in full force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances, notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain assets and the
Liquidity Obligations are not so secured. The Trustees expressly agree (on
behalf of themselves and the holders of Certificates) not to assert priority
over the holders of Liquidity
-50-
<PAGE>
Obligations due to their status as secured creditors in any bankruptcy,
insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a lien on any property to secure any amounts owing to it
hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other obligor
with respect to any amounts owing to it hereunder, including, in the case
of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any of
the Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated party
or a surety under applicable law;
provided, however, that the taking of any such actions by any of the Trustees,
the Liquidity Providers or the Subordination Agent shall not prejudice the
rights or adversely affect the obligations of any other party under this
Agreement.
SECTION 10.10 Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceedings may be brought in
such courts, and waives any objection that it may now or hereafter have
that the venue of any
-51-
<PAGE>
such action or proceeding was brought in an inconvenient court and agrees
not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 10.3
hereof, or at such other address of which the other parties shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each of the parties warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
-52-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, and acknowledge that this Agreement has
been made and delivered in the City of New York, and this Agreement has become
effective only upon such execution and delivery.
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity
but solely as Trustee for each of the Trusts
By: /s/ Donald Smith
----------------------------------------------
Name: Donald Smith
Title: Vice President
CITIBANK, N.A., as Class A Liquidity Provider,
Class B Liquidity Provider and Class C Liquidity
Provider
By: /s/ Thomas Boyle
----------------------------------------------
Name: Thomas Boyle
Title: Managing Director
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity
except as expressly set forth herein but
solely as Subordination Agent and trustee
By: /s/ Donald Smith
----------------------------------------------
Name: Donald Smith
Title: Vice President
-53-
<PAGE>
SCHEDULE 1 TO
INTERCREDITOR AGREEMENT
Participation Agreements
*
- --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class A)
Dated as of February 16, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE II
MAINTENANCE OF DEPOSITS......................................................3
Section 2.1 Deposits.............................................3
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.......................................4
ARTICLE III
TERMINATION..................................................................4
ARTICLE IV
PAYMENTS.....................................................................4
ARTICLE V
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE VI
TRANSFER.....................................................................6
ARTICLE VII
AMENDMENT....................................................................7
ARTICLE VIII
NOTICES......................................................................7
ARTICLE IX
OBLIGATIONS UNCONDITIONAL....................................................7
<PAGE>
Page
----
ARTICLE X
ENTIRE AGREEMENT ............................................................8
ARTICLE XI
GOVERNING LAW................................................................8
ARTICLE XII
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE XIII
COUNTERPARTS.................................................................8
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
ii
<PAGE>
This DEPOSIT AGREEMENT (Class A) dated as of February 16, 1999 (as
amended, modified or supplemented from time to time, this "Agreement") between
First Security Bank, National Association, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and ABN AMRO BANK N.V.,
Chicago Branch, as depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and State Street Bank and
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") have entered into a
Trust Supplement, dated February 16, 1999, to the Pass Through Trust Agreement
dated as of June 3, 1996, by and among Holdings, Northwest and the Pass Through
Trustee, as amended by the Supplemental Agreement, dated as of November 20,
1998, among the Guarantor, Holdings, Northwest and the Pass Through Trustee (the
"Basic Agreement") relating to Northwest Airlines Pass Through Trust 1999-1A
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1A
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Credit Suisse
First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc. (collectively, the "Underwriters" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into an Underwriting Agreement dated
as of February 4, 1999 pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Northwest, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
State Street Bank and Trust Company, as paying agent for the Escrow Agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent") concurrently herewith are entering into an Escrow and Paying Agent
Agreement, dated as of the date hereof (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Escrow and Paying
Agent Agreement"); and
<PAGE>
[Deposit Agreement (Class A)]
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent pursuant to the Escrow and Paying
Agent Agreement, subject to withdrawal upon request of and proper certification
by the Pass Through Trustee for the purpose of purchasing Equipment Notes, and
that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
FORMATION OF DEPOSITS
Section 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
Section 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
2
<PAGE>
[Deposit Agreement (Class A)]
ARTICLE 2
MAINTENANCE OF DEPOSITS
Section 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Federal Reserve Bank, New York,
ABN NY ABA #02609580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-1 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$235,505,000. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in Schedule I
hereto maturing on the respective dates (each such date, as it may be extended
from time to time in accordance with the Indemnity Agreement through the
Delivery Period Termination Date, a "Maturity Date") set forth therein
(including any deposit made pursuant to Section 2.4 hereof, individually, a
"Deposit" and, collectively, the "Deposits") and (ii) credit each Deposit to the
related Account as set forth therein. No amount shall be deposited in any
Account other than the related Deposit.
Section 2.2 Interest. Each Deposit shall bear interest from and including
the date of deposit to but excluding the earlier of (x) date of withdrawal and
(y) such Deposit's Maturity Date at the rate of 6.81% per annum (computed on the
basis of a year of twelve 30-day months) payable to the Paying Agent on behalf
of the Escrow Agent semiannually in arrears on each February 1 and August 1,
commencing on August 1, 1999 (each, an "Interest Payment Date"), and on the date
of the Final Withdrawal (as defined below), all in accordance with the terms of
this Agreement (whether or not any such Deposit is withdrawn on an Interest
Payment Date). Interest accrued on any Deposit that is withdrawn pursuant to a
Notice of Purchase Withdrawal (as defined below) shall be paid on the next
Interest Payment Date, notwithstanding any intervening Final Withdrawal (such
remaining interest being hereinafter referred to as a "Carryover Deposit").
Section 2.3 Withdrawals. On and after the date seven (7) days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
(1) Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Minneapolis, Minnesota, Boston,
Massachusetts, Salt Lake City, Utah or Chicago, Illinois.
3
<PAGE>
[Deposit Agreement (Class A)]
(a) The Escrow Agent may, by providing at least fifteen (15) days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before February 1, 2000 and there are unwithdrawn
Deposits on such date, the Depositary shall pay the amount of the Final
Withdrawal to the Paying Agent on February 16, 2000.
(b) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
Section 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on February 1, 2000 and
bear interest as provided in Section 2.2. The Depositary shall promptly give
notice to the Escrow Agent of receipt of each such re-deposit and the account
number assigned thereto.
ARTICLE 3
TERMINATION
This Agreement shall terminate on the fifth (5th) Business Day after the
later of the date on which (i) all of the Deposits shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposits shall have been paid as provided herein, but in no
event prior to the date on which the Depositary shall have performed in full its
obligations hereunder.
ARTICLE 4
PAYMENTS
All payments (including, without limitation, those Payments made in
respect of Taxes (as defined and provided for below)) made by the Depositary
hereunder shall be paid in United
4
<PAGE>
[Deposit Agreement (Class A)]
States Dollars and immediately available funds by wire transfer (i) in the case
of accrued interest on the Deposits payable under Section 2.2 hereof or any
Final Withdrawal, directly to the Paying Agent on behalf of the Escrow Agent at
State Street Bank and Trust Company, Two International Place, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, Reference: Northwest
Airlines 1999-1 EETC, or to such other account as the Paying Agent may direct
from time to time in writing to the Depositary and the Escrow Agent and (ii) in
the case of any withdrawal of one or more Deposits pursuant to a Notice of
Purchase Withdrawal, directly to or as directed by the Pass Through Trustee as
specified and in the manner provided in such Notice of Purchase Withdrawal. The
Depositary hereby waives any and all rights of set-off, combination of accounts,
right of retention or similar right (whether arising under applicable law,
contract or otherwise) it may have against the Deposits howsoever arising.
Except as provided below, all payments on or in respect of each Deposit shall be
made free and clear of and without reduction for or on account of any and all
taxes, levies or other impositions or charges (collectively, "Taxes"). However,
if the Depositary or the Paying Agent (pursuant to Section 2.4 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable hereunder, the Depositary shall: (i) make
such deductions or withholding; (ii) pay the full amount deducted or withheld
(including in respect of such additional amounts) to the competent taxation
authority; and (iii) if the Taxes required to be deducted or withheld are
imposed by the Netherlands or any political subdivision thereof, pay such
additional amounts as may be necessary in order that the actual amount received
by the designated recipient of such sum under this Agreement or the Escrow and
Paying Agent Agreement after such deduction or withholding equals the sum it
would have received had no such deduction or withholding been required. If the
date on which any payment due on any Deposit would otherwise fall on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day with the same force and effect as if made on such scheduled date,
and no additional interest shall accrue in respect of such extension.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Depositary hereby represents and warrants to Northwest, the Guarantor,
the Escrow Agent, the Pass Through Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of Illinois through its
Chicago branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and perform its
obligations under this Agreement;
5
<PAGE>
[Deposit Agreement (Class A)]
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it and do
not require any stockholder approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of, or other action by,
and no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts or
will conflict with or results or will result in, a breach or violation of any of
the terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar instrument binding on it or
any order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which it is a party or
by which it or any of its properties is bound, or constitutes or will constitute
a default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf of
it) against or affecting it or any of its property before or by any court or
administrative agency which, if adversely determined, (i) would adversely affect
the ability of it to perform its obligations under this Agreement or (ii) would
call into question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the Depositary
in default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its ability
to perform its obligations under this Agreement.
ARTICLE 6
TRANSFER
Neither party hereto shall be entitled to assign or otherwise transfer
this Agreement (or any interest herein) other than (in the case of the Escrow
Agent) to a successor escrow agent under Section 1.7 of the Escrow and Paying
Agent Agreement, and any purported assignment in violation thereof shall be
void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
6
<PAGE>
[Deposit Agreement (Class A)]
ARTICLE 7
AMENDMENT
This Agreement may not be amended, waived or otherwise modified except by
an instrument in writing signed by the party against whom the amendment, waiver
or other modification is sought to be enforced and by the Pass Through Trustee.
ARTICLE 8
NOTICES
Unless otherwise expressly provided herein, any notice or other
communication under this Agreement shall be in writing (including by facsimile)
and shall be deemed to be given and effective upon receipt thereof. All notices
shall be sent to (x) in the case of the Depositary, ABN AMRO BANK N.V., Chicago
Branch, 135 South LaSalle Street, Suite 660, Chicago, IL 60674-9135, Attention:
Claudia Heldring (Telecopier: 312-606-8428) and ABN AMRO BANK N.V., Chicago
Branch, 181 W. Madison Street, Chicago, IL 60602, Attention: Money Markets Desk
(Telecopier: 312-904-9106) or (y) in the case of the Escrow Agent, First
Security Bank, National Association 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate-Trust Services (Telecopier: (801) 246-5053), in each
case, with a copy to the Pass Through Trustee, State Street Bank and Trust
Company, 2 International Place, 4th Floor, Boston, MA 02110 (Telecopier: (617)
664-5151) and to Northwest, Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the parties hereto). On or prior to the
execution of this Agreement, the Escrow Agent has delivered to the Depositary a
certificate containing specimen signatures of the representatives of the Escrow
Agent who are authorized to give notices and instructions with respect to this
Agreement. The Depositary may conclusively rely on such certificate until the
Depositary receives written notice from the Escrow Agent to the contrary.
ARTICLE 9
OBLIGATIONS UNCONDITIONAL
The Depositary hereby acknowledges and agrees that its obligation to repay
each Deposit together with interest thereon as provided herein is absolute,
irrevocable and unconditional and constitutes a full recourse obligation of the
Depositary enforceable against it to the full extent of all of its assets and
properties.
7
<PAGE>
[Deposit Agreement (Class A)]
ARTICLE 10
ENTIRE AGREEMENT
This Agreement (including all attachments hereto) sets forth all of the
promises, covenants, agreements, conditions and understandings between the
Depositary and the Escrow Agent with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and undertakings,
inducements or conditions, express or implied, oral or written.
ARTICLE 11
GOVERNING LAW
THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE DEPOSITARY AND THE
ESCROW AGENT WITH RESPECT TO THE DEPOSITS, SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND SUBJECT TO THE
PROVISIONS OF REGULATION D OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM (OR ANY SUCCESSOR), AS THE SAME MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME.
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT
EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT
IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
ARTICLE 13
COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one instrument.
* * *
8
<PAGE>
[Deposit Agreement (Class A)]
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By: /s/ Greg A. Hawley
-------------------------------
Name: Greg A. Hawley, Esq.
Title: Vice President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
By: /s/ Claudia Heldring
-------------------------------
Name: Claudia Heldring
Title: Vice President
By: /s/ Carla Waggoner
-------------------------------
Name: Carla Waggoner
Title: Assistant Vice President
9
<PAGE>
Schedule I
SCHEDULE OF DEPOSITS
(Class A)
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE
- ---- -------- -------------- ----------- -------------
2/16/99 671US $58,805,000 178307 3/15/99
2/16/99 672US $58,900,000 178329 7/15/99
2/16/99 673US $58,900,000 178360 8/15/99
2/16/99 674US $58,900,000 178432 10/15/99
<PAGE>
[Deposit Agreement (Class A)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., Chicago Branch, as
Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. ________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposit to _________________, Account No. __________, Reference: ___________ on
__________,____, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
<PAGE>
[Deposit Agreement (Class A)]
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V., Chicago Branch (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at [NAME], ABA
#___________, Account #_________, Attention: ___________________, Reference:
[Northwest Airlines 1999-1 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
*
- --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class B)
Dated as of February 16, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE II
MAINTENANCE OF DEPOSITS......................................................3
Section 2.1 Deposits.............................................3
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.......................................4
ARTICLE III
TERMINATION..................................................................4
ARTICLE IV
PAYMENTS.....................................................................4
ARTICLE V
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE VI
TRANSFER.....................................................................6
ARTICLE VII
AMENDMENT....................................................................7
ARTICLE VIII
NOTICES......................................................................7
ARTICLE IX
OBLIGATIONS UNCONDITIONAL....................................................7
<PAGE>
ARTICLE X
ENTIRE AGREEMENT ............................................................8
ARTICLE XI
GOVERNING LAW................................................................8
ARTICLE XII
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE XIII
COUNTERPARTS.................................................................8
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
ii
<PAGE>
This DEPOSIT AGREEMENT (Class B) dated as of February 16, 1999 (as
amended, modified or supplemented from time to time, this "Agreement") between
First Security Bank, National Association, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and ABN AMRO BANK N.V.,
Chicago Branch, as depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and State Street Bank and
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") have entered into a
Trust Supplement, dated February 16, 1999, to the Pass Through Trust Agreement
dated as of June 3, 1996, by and among Holdings, Northwest and the Pass Through
Trustee, as amended by the Supplemental Agreement, dated as of November 20,
1998, among the Guarantor, Holdings, Northwest and the Pass Through Trustee (the
"Basic Agreement") relating to Northwest Airlines Pass Through Trust 1999-1B
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1B
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Credit Suisse
First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc. (collectively, the "Underwriters" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into an Underwriting Agreement dated
as of February 4, 1999 pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Northwest, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
State Street Bank and Trust Company, as paying agent for the Escrow Agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent") concurrently herewith are entering into an Escrow and Paying Agent
Agreement, dated as of the date hereof (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Escrow and Paying
Agent Agreement"); and
<PAGE>
[Deposit Agreement (Class B)]
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent pursuant to the Escrow and Paying
Agent Agreement, subject to withdrawal upon request of and proper certification
by the Pass Through Trustee for the purpose of purchasing Equipment Notes, and
that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
FORMATION OF DEPOSITS
Section 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
Section 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
2
<PAGE>
[Deposit Agreement (Class B)]
ARTICLE 2
MAINTENANCE OF DEPOSITS
Section 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Federal Reserve Bank, New York,
ABN NY ABA #02609580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-1 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$111,555,000. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in Schedule I
hereto maturing on the respective dates (each such date, as it may be extended
from time to time in accordance with the Indemnity Agreement through the
Delivery Period Termination Date, a "Maturity Date") set forth therein
(including any deposit made pursuant to Section 2.4 hereof, individually, a
"Deposit" and, collectively, the "Deposits") and (ii) credit each Deposit to the
related Account as set forth therein. No amount shall be deposited in any
Account other than the related Deposit.
Section 2.2 Interest. Each Deposit shall bear interest from and including
the date of deposit to but excluding the earlier of (x) date of withdrawal and
(y) such Deposit's Maturity Date at the rate of 7.36% per annum (computed on the
basis of a year of twelve 30-day months) payable to the Paying Agent on behalf
of the Escrow Agent semiannually in arrears on each February 1 and August 1,
commencing on August 1, 1999 (each, an "Interest Payment Date"), and on the date
of the Final Withdrawal (as defined below), all in accordance with the terms of
this Agreement (whether or not any such Deposit is withdrawn on an Interest
Payment Date). Interest accrued on any Deposit that is withdrawn pursuant to a
Notice of Purchase Withdrawal (as defined below) shall be paid on the next
Interest Payment Date, notwithstanding any intervening Final Withdrawal (such
remaining interest being hereinafter referred to as a "Carryover Deposit").
Section 2.3 Withdrawals. On and after the date seven (7) days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
(1) Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Minneapolis, Minnesota, Boston,
Massachusetts, Salt Lake City, Utah or Chicago, Illinois.
3
<PAGE>
[Deposit Agreement (Class B)]
(a) The Escrow Agent may, by providing at least fifteen (15) days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before February 1, 2000 and there are unwithdrawn
Deposits on such date, the Depositary shall pay the amount of the Final
Withdrawal to the Paying Agent on February 16, 2000.
(b) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
Section 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on February 1, 2000 and
bear interest as provided in Section 2.2. The Depositary shall promptly give
notice to the Escrow Agent of receipt of each such re-deposit and the account
number assigned thereto.
ARTICLE 3
TERMINATION
This Agreement shall terminate on the fifth (5th) Business Day after the
later of the date on which (i) all of the Deposits shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposits shall have been paid as provided herein, but in no
event prior to the date on which the Depositary shall have performed in full its
obligations hereunder.
ARTICLE 4
PAYMENTS
All payments (including, without limitation, those Payments made in
respect of Taxes (as defined and provided for below)) made by the Depositary
hereunder shall be paid in United
4
<PAGE>
[Deposit Agreement (Class B)]
States Dollars and immediately available funds by wire transfer (i) in the case
of accrued interest on the Deposits payable under Section 2.2 hereof or any
Final Withdrawal, directly to the Paying Agent on behalf of the Escrow Agent at
State Street Bank and Trust Company, Two International Place, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, Reference: Northwest
Airlines 1999-1 EETC, or to such other account as the Paying Agent may direct
from time to time in writing to the Depositary and the Escrow Agent and (ii) in
the case of any withdrawal of one or more Deposits pursuant to a Notice of
Purchase Withdrawal, directly to or as directed by the Pass Through Trustee as
specified and in the manner provided in such Notice of Purchase Withdrawal. The
Depositary hereby waives any and all rights of set-off, combination of accounts,
right of retention or similar right (whether arising under applicable law,
contract or otherwise) it may have against the Deposits howsoever arising.
Except as provided below, all payments on or in respect of each Deposit shall be
made free and clear of and without reduction for or on account of any and all
taxes, levies or other impositions or charges (collectively, "Taxes"). However,
if the Depositary or the Paying Agent (pursuant to Section 2.4 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable hereunder, the Depositary shall: (i) make
such deductions or withholding; (ii) pay the full amount deducted or withheld
(including in respect of such additional amounts) to the competent taxation
authority; and (iii) if the Taxes required to be deducted or withheld are
imposed by the Netherlands or any political subdivision thereof, pay such
additional amounts as may be necessary in order that the actual amount received
by the designated recipient of such sum under this Agreement or the Escrow and
Paying Agent Agreement after such deduction or withholding equals the sum it
would have received had no such deduction or withholding been required. If the
date on which any payment due on any Deposit would otherwise fall on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day with the same force and effect as if made on such scheduled date,
and no additional interest shall accrue in respect of such extension.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Depositary hereby represents and warrants to Northwest, the Guarantor,
the Escrow Agent, the Pass Through Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of Illinois through its
Chicago branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and perform its
obligations under this Agreement;
5
<PAGE>
[Deposit Agreement (Class B)]
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it and do
not require any stockholder approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of, or other action by,
and no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts or
will conflict with or results or will result in, a breach or violation of any of
the terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar instrument binding on it or
any order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which it is a party or
by which it or any of its properties is bound, or constitutes or will constitute
a default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf of
it) against or affecting it or any of its property before or by any court or
administrative agency which, if adversely determined, (i) would adversely affect
the ability of it to perform its obligations under this Agreement or (ii) would
call into question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the Depositary
in default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its ability
to perform its obligations under this Agreement.
ARTICLE 6
TRANSFER
Neither party hereto shall be entitled to assign or otherwise transfer
this Agreement (or any interest herein) other than (in the case of the Escrow
Agent) to a successor escrow agent under Section 1.7 of the Escrow and Paying
Agent Agreement, and any purported assignment in violation thereof shall be
void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
6
<PAGE>
[Deposit Agreement (Class B)]
ARTICLE 7
AMENDMENT
This Agreement may not be amended, waived or otherwise modified except by
an instrument in writing signed by the party against whom the amendment, waiver
or other modification is sought to be enforced and by the Pass Through Trustee.
ARTICLE 8
NOTICES
Unless otherwise expressly provided herein, any notice or other
communication under this Agreement shall be in writing (including by facsimile)
and shall be deemed to be given and effective upon receipt thereof. All notices
shall be sent to (x) in the case of the Depositary, ABN AMRO BANK N.V., Chicago
Branch, 135 South LaSalle Street, Suite 660, Chicago, IL 60674-9135, Attention:
Claudia Heldring (Telecopier: 312-606-8428) and ABN AMRO BANK N.V., Chicago
Branch, 181 W. Madison Street, Chicago, IL 60602, Attention: Money Markets Desk
(Telecopier: 312-904-9106) or (y) in the case of the Escrow Agent, First
Security Bank, National Association 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate-Trust Services (Telecopier: (801) 246-5053), in each
case, with a copy to the Pass Through Trustee, State Street Bank and Trust
Company, 2 International Place, 4th Floor, Boston, MA 02110 (Telecopier: (617)
664-5151) and to Northwest, Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the parties hereto). On or prior to the
execution of this Agreement, the Escrow Agent has delivered to the Depositary a
certificate containing specimen signatures of the representatives of the Escrow
Agent who are authorized to give notices and instructions with respect to this
Agreement. The Depositary may conclusively rely on such certificate until the
Depositary receives written notice from the Escrow Agent to the contrary.
ARTICLE 9
OBLIGATIONS UNCONDITIONAL
The Depositary hereby acknowledges and agrees that its obligation to repay
each Deposit together with interest thereon as provided herein is absolute,
irrevocable and unconditional and constitutes a full recourse obligation of the
Depositary enforceable against it to the full extent of all of its assets and
properties.
7
<PAGE>
[Deposit Agreement (Class B)]
ARTICLE 10
ENTIRE AGREEMENT
This Agreement (including all attachments hereto) sets forth all of the
promises, covenants, agreements, conditions and understandings between the
Depositary and the Escrow Agent with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and undertakings,
inducements or conditions, express or implied, oral or written.
ARTICLE 11
GOVERNING LAW
THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE DEPOSITARY AND THE
ESCROW AGENT WITH RESPECT TO THE DEPOSITS, SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND SUBJECT TO THE
PROVISIONS OF REGULATION D OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM (OR ANY SUCCESSOR), AS THE SAME MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME.
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT
EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT
IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
ARTICLE 13
COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one instrument.
* * *
8
<PAGE>
[Deposit Agreement (Class B)]
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By: /s/ Greg A. Hawley
-----------------------------------
Name: Greg A. Hawley, Esq.
Title: Vice President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
By: /s/ Claudia Heldring
-----------------------------------
Name: Claudia Heldring
Title: Vice President
By: /s/ Carla Waggoner
-----------------------------------
Name: Carla Waggoner
Title: Assistant Vice President
9
<PAGE>
Schedule I
SCHEDULE OF DEPOSITS
(Class B)
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE
- ---- -------- -------------- ----------- -------------
2/16/98 671US $27,855,000 178316 3/15/99
2/16/98 672US $27,900,000 178336 7/15/99
2/16/98 673US $27,900,000 178379 8/15/99
2/16/98 674US $27,900,000 178445 10/15/99
<PAGE>
[Deposit Agreement (Class B)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., Chicago Branch, as
Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. ________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposit to _________________, Account No. __________, Reference: ___________ on
__________,____, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
<PAGE>
[Deposit Agreement (Class B)]
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V., Chicago Branch (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at [NAME], ABA
#___________, Account #_________, Attention: ___________________, Reference:
[Northwest Airlines 1999-1 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
*
- --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class C)
Dated as of February 16, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE II
MAINTENANCE OF DEPOSITS......................................................3
Section 2.1 Deposits.............................................3
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.......................................4
ARTICLE III
TERMINATION..................................................................4
ARTICLE IV
PAYMENTS.....................................................................4
ARTICLE V
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE VI
TRANSFER.....................................................................6
ARTICLE VII
AMENDMENT....................................................................7
ARTICLE VIII
NOTICES......................................................................7
ARTICLE IX
OBLIGATIONS UNCONDITIONAL....................................................7
<PAGE>
ARTICLE X
ENTIRE AGREEMENT ............................................................8
ARTICLE XI
GOVERNING LAW................................................................8
ARTICLE XII
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE XIII
COUNTERPARTS.................................................................8
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
ii
<PAGE>
This DEPOSIT AGREEMENT (Class C) dated as of February 16, 1999 (as
amended, modified or supplemented from time to time, this "Agreement") between
First Security Bank, National Association, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and ABN AMRO BANK N.V.,
Chicago Branch, as depositary bank (the "Depositary").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and State Street Bank and
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "Pass Through Trustee") have entered into a
Trust Supplement, dated February 16, 1999, to the Pass Through Trust Agreement
dated as of June 3, 1996, by and among Holdings, Northwest and the Pass Through
Trustee, as amended by the Supplemental Agreement, dated as of November 20,
1998, among the Guarantor, Holdings, Northwest and the Pass Through Trustee (the
"Basic Agreement") relating to Northwest Airlines Pass Through Trust 1999-1C
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1C
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Credit Suisse
First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and
Salomon Smith Barney Inc. (collectively, the "Underwriters" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "Investors") have entered into an Underwriting Agreement dated
as of February 4, 1999 pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass through
trustees and certain other persons concurrently herewith are entering into the
Note Purchase Agreement, dated as of the date hereof (the "Note Purchase
Agreement"), pursuant to which the Pass Through Trustee has agreed to acquire
from time to time on or prior to the Delivery Period Termination Date (as
defined in the Note Purchase Agreement) equipment notes (the "Equipment Notes")
issued to finance the acquisition of aircraft by Northwest, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through Trustee and
State Street Bank and Trust Company, as paying agent for the Escrow Agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent") concurrently herewith are entering into an Escrow and Paying Agent
Agreement, dated as of the date hereof (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Escrow and Paying
Agent Agreement"); and
<PAGE>
[Deposit Agreement (Class C)]
WHEREAS, the Underwriters and the Pass Through Trustee intend that the Net
Proceeds be held in escrow by the Escrow Agent pursuant to the Escrow and Paying
Agent Agreement, subject to withdrawal upon request of and proper certification
by the Pass Through Trustee for the purpose of purchasing Equipment Notes, and
that pending such withdrawal the Net Proceeds be deposited by the Escrow Agent
with the Depositary pursuant to this Agreement, which provides for the
Depositary to pay interest for distribution to the Investors and to establish
accounts from which the Escrow Agent shall make withdrawals upon request of and
proper certification by the Pass Through Trustee.
NOW, THEREFORE, in consideration of the obligations contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
FORMATION OF DEPOSITS
Section 1.1 Acceptance of Depositary. The Depositary hereby agrees to act
as depositary bank as provided herein and in connection therewith to accept all
amounts to be delivered to or held by the Depositary pursuant to the terms of
this Agreement. The Depositary further agrees to hold, maintain and safeguard
the Deposits and the Accounts (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Accounts except as permitted by this Agreement.
Section 1.2 Establishment of Accounts. The Escrow Agent hereby instructs
the Depositary, and the Depositary agrees, to establish the separate deposit
accounts listed on Schedule I hereto and to establish such additional separate
deposit accounts as may be required in connection with the deposits contemplated
by Section 2.4 hereof (each, an "Account" and collectively, the "Accounts"),
each in the name of the Escrow Agent and all on the terms and conditions set
forth in this Agreement.
2
<PAGE>
[Deposit Agreement (Class C)]
ARTICLE 2
MAINTENANCE OF DEPOSITS
Section 2.1 Deposits. The Escrow Agent shall direct the Underwriters to
deposit with the Depositary on the date of this Agreement (the "Deposit Date")
in Federal (same day) funds by wire transfer to: Federal Reserve Bank, New York,
ABN NY ABA #02609580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-1 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$74,140,000. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in Schedule I
hereto maturing on the respective dates (each such date, as it may be extended
from time to time in accordance with the Indemnity Agreement through the
Delivery Period Termination Date, a "Maturity Date") set forth therein
(including any deposit made pursuant to Section 2.4 hereof, individually, a
"Deposit" and, collectively, the "Deposits") and (ii) credit each Deposit to the
related Account as set forth therein. No amount shall be deposited in any
Account other than the related Deposit.
Section 2.2 Interest. Each Deposit shall bear interest from and including
the date of deposit to but excluding the earlier of (x) date of withdrawal and
(y) such Deposit's Maturity Date at the rate of 8.13% per annum (computed on the
basis of a year of twelve 30-day months) payable to the Paying Agent on behalf
of the Escrow Agent semiannually in arrears on each February 1 and August 1,
commencing on August 1, 1999 (each, an "Interest Payment Date"), and on the date
of the Final Withdrawal (as defined below), all in accordance with the terms of
this Agreement (whether or not any such Deposit is withdrawn on an Interest
Payment Date). Interest accrued on any Deposit that is withdrawn pursuant to a
Notice of Purchase Withdrawal (as defined below) shall be paid on the next
Interest Payment Date, notwithstanding any intervening Final Withdrawal (such
remaining interest being hereinafter referred to as a "Carryover Deposit").
Section 2.3 Withdrawals. On and after the date seven (7) days after the
establishment of any Deposit, the Escrow Agent may, by providing at least one
(1) Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw not less than the
entire balance of such Deposit, except that at any time prior to the actual
withdrawal of such Deposit, the Escrow Agent or the Pass Through Trustee may, by
notice to the Depositary, cancel such withdrawal (including on the scheduled
date therefor), and thereafter such Deposit shall continue to be maintained by
the Depositary in accordance with the original terms thereof. Following such
withdrawal the balance in the related Account shall be zero and the Depositary
shall close such Account. As used herein, "Business Day" means any day, other
than a Saturday, Sunday or other day on which commercial banks are authorized or
required by law to close in New York, New York, Minneapolis, Minnesota, Boston,
Massachusetts, Salt Lake City, Utah or Chicago, Illinois.
3
<PAGE>
[Deposit Agreement (Class C)]
(a) The Escrow Agent may, by providing at least fifteen (15) days'
prior notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits to but excluding the specified date of
withdrawal (a "Final Withdrawal"), on such date as shall be specified in such
Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been given
to the Depositary on or before February 1, 2000 and there are unwithdrawn
Deposits on such date, the Depositary shall pay the amount of the Final
Withdrawal to the Paying Agent on February 16, 2000.
(b) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
Section 2.4 Other Accounts. On the date of withdrawal of any Deposit, the
Escrow Agent, or the Pass Through Trustee on behalf of the Escrow Agent, shall
be entitled to re-deposit with the Depositary any portion thereof and the
Depositary shall accept the same for deposit hereunder. Any sums so received for
deposit shall be established as a new Deposit and credited to a new Account, all
as more fully provided in Section 2.1 hereof, and thereafter the provisions of
this Agreement shall apply thereto as fully and with the same force and effect
as if such Deposit had been established on the Deposit Date except that (i) such
Deposit may not be withdrawn prior to the date seven days after the
establishment thereof and (ii) such Deposit shall mature on February 1, 2000 and
bear interest as provided in Section 2.2. The Depositary shall promptly give
notice to the Escrow Agent of receipt of each such re-deposit and the account
number assigned thereto.
ARTICLE 3
TERMINATION
This Agreement shall terminate on the fifth (5th) Business Day after the
later of the date on which (i) all of the Deposits shall have been withdrawn and
paid as provided herein without any re-deposit and (ii) all accrued and unpaid
interest on the Deposits shall have been paid as provided herein, but in no
event prior to the date on which the Depositary shall have performed in full its
obligations hereunder.
ARTICLE 4
PAYMENTS
All payments (including, without limitation, those Payments made in
respect of Taxes (as defined and provided for below)) made by the Depositary
hereunder shall be paid in United
4
<PAGE>
[Deposit Agreement (Class C)]
States Dollars and immediately available funds by wire transfer (i) in the case
of accrued interest on the Deposits payable under Section 2.2 hereof or any
Final Withdrawal, directly to the Paying Agent on behalf of the Escrow Agent at
State Street Bank and Trust Company, Two International Place, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, Reference: Northwest
Airlines 1999-1 EETC, or to such other account as the Paying Agent may direct
from time to time in writing to the Depositary and the Escrow Agent and (ii) in
the case of any withdrawal of one or more Deposits pursuant to a Notice of
Purchase Withdrawal, directly to or as directed by the Pass Through Trustee as
specified and in the manner provided in such Notice of Purchase Withdrawal. The
Depositary hereby waives any and all rights of set-off, combination of accounts,
right of retention or similar right (whether arising under applicable law,
contract or otherwise) it may have against the Deposits howsoever arising.
Except as provided below, all payments on or in respect of each Deposit shall be
made free and clear of and without reduction for or on account of any and all
taxes, levies or other impositions or charges (collectively, "Taxes"). However,
if the Depositary or the Paying Agent (pursuant to Section 2.4 of the Escrow and
Paying Agent Agreement) shall be required by law to deduct or withhold any Taxes
from or in respect of any sum payable hereunder, the Depositary shall: (i) make
such deductions or withholding; (ii) pay the full amount deducted or withheld
(including in respect of such additional amounts) to the competent taxation
authority; and (iii) if the Taxes required to be deducted or withheld are
imposed by the Netherlands or any political subdivision thereof, pay such
additional amounts as may be necessary in order that the actual amount received
by the designated recipient of such sum under this Agreement or the Escrow and
Paying Agent Agreement after such deduction or withholding equals the sum it
would have received had no such deduction or withholding been required. If the
date on which any payment due on any Deposit would otherwise fall on a day which
is not a Business Day, such payment shall be made on the next succeeding
Business Day with the same force and effect as if made on such scheduled date,
and no additional interest shall accrue in respect of such extension.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Depositary hereby represents and warrants to Northwest, the Guarantor,
the Escrow Agent, the Pass Through Trustee and the Paying Agent that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the State of Illinois through its
Chicago branch;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and perform its
obligations under this Agreement;
5
<PAGE>
[Deposit Agreement (Class C)]
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it and do
not require any stockholder approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of it, and such document has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligations enforceable against it in accordance with the terms hereof;
(d) no authorization, consent or approval of, or other action by,
and no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts or
will conflict with or results or will result in, a breach or violation of any of
the terms, conditions or provisions of, or will require any consent or approval
under, any law, governmental rule or regulation or the charter documents, as
amended, or bylaws, as amended, of it or any similar instrument binding on it or
any order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which it is a party or
by which it or any of its properties is bound, or constitutes or will constitute
a default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf of
it) against or affecting it or any of its property before or by any court or
administrative agency which, if adversely determined, (i) would adversely affect
the ability of it to perform its obligations under this Agreement or (ii) would
call into question or challenge the validity of this Agreement or the
enforceability hereof in accordance with the terms hereof, nor is the Depositary
in default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its ability
to perform its obligations under this Agreement.
ARTICLE 6
TRANSFER
Neither party hereto shall be entitled to assign or otherwise transfer
this Agreement (or any interest herein) other than (in the case of the Escrow
Agent) to a successor escrow agent under Section 1.7 of the Escrow and Paying
Agent Agreement, and any purported assignment in violation thereof shall be
void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
6
<PAGE>
[Deposit Agreement (Class C)]
ARTICLE 7
AMENDMENT
This Agreement may not be amended, waived or otherwise modified except by
an instrument in writing signed by the party against whom the amendment, waiver
or other modification is sought to be enforced and by the Pass Through Trustee.
ARTICLE 8
NOTICES
Unless otherwise expressly provided herein, any notice or other
communication under this Agreement shall be in writing (including by facsimile)
and shall be deemed to be given and effective upon receipt thereof. All notices
shall be sent to (x) in the case of the Depositary, ABN AMRO BANK N.V., Chicago
Branch, 135 South LaSalle Street, Suite 660, Chicago, IL 60674-9135, Attention:
Claudia Heldring (Telecopier: 312-606-8428) and ABN AMRO BANK N.V., Chicago
Branch, 181 W. Madison Street, Chicago, IL 60602, Attention: Money Markets Desk
(Telecopier: 312-904-9106) or (y) in the case of the Escrow Agent, First
Security Bank, National Association 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate-Trust Services (Telecopier: (801) 246-5053), in each
case, with a copy to the Pass Through Trustee, State Street Bank and Trust
Company, 2 International Place, 4th Floor, Boston, MA 02110 (Telecopier: (617)
664-5151) and to Northwest, Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the parties hereto). On or prior to the
execution of this Agreement, the Escrow Agent has delivered to the Depositary a
certificate containing specimen signatures of the representatives of the Escrow
Agent who are authorized to give notices and instructions with respect to this
Agreement. The Depositary may conclusively rely on such certificate until the
Depositary receives written notice from the Escrow Agent to the contrary.
ARTICLE 9
OBLIGATIONS UNCONDITIONAL
The Depositary hereby acknowledges and agrees that its obligation to repay
each Deposit together with interest thereon as provided herein is absolute,
irrevocable and unconditional and constitutes a full recourse obligation of the
Depositary enforceable against it to the full extent of all of its assets and
properties.
7
<PAGE>
[Deposit Agreement (Class C)]
ARTICLE 10
ENTIRE AGREEMENT
This Agreement (including all attachments hereto) sets forth all of the
promises, covenants, agreements, conditions and understandings between the
Depositary and the Escrow Agent with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and undertakings,
inducements or conditions, express or implied, oral or written.
ARTICLE 11
GOVERNING LAW
THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE DEPOSITARY AND THE
ESCROW AGENT WITH RESPECT TO THE DEPOSITS, SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND SUBJECT TO THE
PROVISIONS OF REGULATION D OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM (OR ANY SUCCESSOR), AS THE SAME MAY BE MODIFIED AND SUPPLEMENTED AND IN
EFFECT FROM TIME TO TIME.
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT
EACH OF THE DEPOSITARY AND THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT
IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
ARTICLE 13
COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of which
taken together shall constitute one instrument.
* * *
8
<PAGE>
[Deposit Agreement (Class C)]
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused this
Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By: /s/ Greg A. Hawley
-------------------------------
Name: Greg A. Hawley, Esq.
Title: Vice President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Depositary
By: /s/ Claudia Heldring
-------------------------------
Name: Claudia Heldring
Title: Vice President
By: /s/ Carla Waggoner
-------------------------------
Name: Carla Waggoner
Title: Assistant Vice President
9
<PAGE>
Schedule I
SCHEDULE OF DEPOSITS
(Class C)
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. MATURITY DATE
- ---- -------- -------------- ----------- -------------
2/16/99 671US $18,640,000 178320 3/15/99
2/16/99 672US $18,500,000 178341 7/15/99
2/16/99 673US $18,500,000 178390 8/15/99
2/16/99 674US $18,500,000 178456 10/15/99
<PAGE>
[Deposit Agreement (Class C)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., Chicago Branch, as
Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. ________.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposit to _________________, Account No. __________, Reference: ___________ on
__________,____, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
<PAGE>
[Deposit Agreement (Class C)]
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
ABN AMRO BANK N.V., Chicago Branch
135 South LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: 312-606-8428
ABN AMRO BANK N.V., Chicago Branch
181 W. Madison Street
Chicago, IL 60602
Attention: Money Markets Desk
Telecopier: 312-904-9106
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of February
16, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V., Chicago Branch (the
"Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of the
Deposits and accrued interest thereon to the Paying Agent at [NAME], ABA
#___________, Account #_________, Attention: ___________________, Reference:
[Northwest Airlines 1999-1 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:
-------------------------
Name:
-------------------
Title:
------------------
Dated:____________, ____
ESCROW AND PAYING AGENT AGREEMENT
(Class A)
Dated as of February 16, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
ABN AMRO INCORPORATED
CHASE SECURITIES INC.
AND
SALOMON SMITH BARNEY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-1A
as Pass Through Trustee,
AND
STATE STREET BANK AND TRUST COMPANY,
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Escrow Agent...................................................2
Section 1.1 Appointment of Escrow Agent................................2
Section 1.2 Instruction, Etc...........................................3
Section 1.3 Initial Escrow Amount; Issuance of Escrow Receipts.........3
Section 1.4 Payments to Receiptholders.................................4
Section 1.5 Mutilated, Destroyed, Lost or Stolen Escrow Receipt........4
Section 1.6 Additional Escrow Amounts..................................5
Section 1.7 Resignation or Removal of Escrow Agent.....................5
Section 1.8 Persons Deemed Owners......................................5
Section 1.9 Further Assurances.........................................5
SECTION 2. Paying Agent...................................................6
Section 2.1 Appointment of Paying Agent................................6
Section 2.2 Establishment of Paying Agent Account......................6
Section 2.3 Payments from Paying Agent Account.........................6
Section 2.4 Withholding Taxes..........................................7
Section 2.5 Resignation or Removal of Paying Agent.....................7
Section 2.6 Notice of Final Withdrawal.................................8
SECTION 3. Payments.......................................................8
SECTION 4. Other Actions..................................................8
SECTION 5. Representations and Warranties of the Escrow Agent.............9
SECTION 6. Representations and Warranties of the Paying Agent............10
SECTION 7. Indemnification...............................................11
SECTION 8. Amendment, Etc................................................11
SECTION 9. Notices.......................................................11
SECTION 10. Transfer......................................................12
SECTION 11. Entire Agreement..............................................12
SECTION 12. Governing Law.................................................12
SECTION 13. WAIVER OF JURY TRIAL RIGHT....................................12
SECTION 14. Counterparts..................................................12
-i-
<PAGE>
EXHIBITS
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
-ii-
<PAGE>
This ESCROW AND PAYING AGENT AGREEMENT (Class A) dated as of
February 16, 1999 (as amended, modified or supplemented from time to time, this
"Agreement") among First Security Bank, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc.
and Salomon Smith Barney Inc., as Underwriters of the Certificates referred to
below (the "Underwriters" and together with their respective transferees and
assigns as registered owners of the Certificates, the "Investors") under the
Underwriting Agreement referred to below, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") under the Pass
Through Trust Agreement referred to below, and State Street Bank and Trust
Company, a Massachusetts trust company, as paying agent hereunder (in such
capacity, together with its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and the Pass Through
Trustee have entered into a Trust Supplement, dated as of the date hereof (the
"Trust Supplement"), to the Pass Through Trust Agreement, dated as of June 3,
1996, by and among Holdings, Northwest and the Pass Through Trustee, as amended
by the Supplemental Agreement, dated as of November 20, 1998, among the
Guarantor, Holdings, Northwest and the Pass Through Trustee (the "Basic
Agreement") (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Northwest Airlines Pass Through Trust 1999-1A (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1A
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of February 4, 1999 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Underwriting Agreement") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Northwest, as lessee or
as owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note
<PAGE>
2
Purchase Agreement for the purpose of purchasing Equipment Notes, and that
pending such withdrawal the Net Proceeds be deposited on behalf of the Escrow
Agent with ABN AMRO Bank N.V., Chicago Branch, as Depositary (the "Depositary")
under the Deposit Agreement, dated as of the date hereof, between the Depositary
and the Escrow Agent relating to the Pass Through Trust (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Deposit Agreement") pursuant to which, among other things, the Depositary will
pay interest for distribution to the Investors and establish accounts from which
the Escrow Agent shall make withdrawals upon request of and proper certification
by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the respective meanings set forth or incorporated by reference in the Pass
Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.1 Appointment of Escrow Agent. Each of the Underwriters,
for and on behalf of each of the Investors, hereby irrevocably appoints,
authorizes and directs the Escrow Agent to act as escrow agent and fiduciary
hereunder and under the Deposit Agreement for such specific purposes and with
such powers as are specifically delegated to the Escrow Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in escrow
by the Escrow Agent under this Agreement or the Deposit Agreement shall only be
as provided under the terms and conditions of this Agreement and the Deposit
Agreement. The Escrow Agent (which term as used in this sentence shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement;
(b) shall not be responsible to the Pass Through Trustee or the
Investors for any recitals, statements, representations or warranties of
any person other than itself contained in this Agreement or the Deposit
Agreement or for the failure by the Pass Through Trustee, the Investors or
any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and
<PAGE>
3
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith,
except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 1.2 Instruction, Etc. The Underwriters, for and on behalf of
each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees: (a) to enter into the Deposit Agreement; (b) to appoint the
Paying Agent as provided in this Agreement; (c) upon receipt at any time and
from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal" and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal; and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) January 31, 2000 and (ii) the day on
which the Escrow Agent receives notice from the Pass Through Trustee that the
Pass Through Trustee's obligation to purchase Equipment Notes under the Note
Purchase Agreement has terminated, to give notice to the Depositary (with a copy
to the Paying Agent) substantially in the form of Exhibit B to the Deposit
Agreement requesting a withdrawal of all of the remaining Deposits, together
with accrued and unpaid interest on such Deposits to the date of withdrawal, on
the 15th day after the date that such notice of withdrawal is given to the
Depositary (or, if not a Business Day, on the next succeeding Business Day) (a
"Final Withdrawal"), provided that if the day scheduled for the Final Withdrawal
in accordance with the foregoing is within ten (10) days before or after a
Regular Distribution Date, then the Escrow Agent shall request that such
requested Final Withdrawal be made on such Regular Distribution Date (the date
of such requested withdrawal, the "Final Withdrawal Date"). If for any reason
the Escrow Agent shall have failed to give the Final Withdrawal Notice to the
Depositary on or before February 1, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be February 16, 2000.
Section 1.3 Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $235,505,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
("Escrow Interest") in the Account Amounts (as defined below) as the Fractional
Undivided Interest in the Pass Through Trust evidenced by the Certificate to
which it
<PAGE>
4
is to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.4 Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Northwest, the
Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.5 Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If
(a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.5, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.5
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
<PAGE>
5
The provisions of this Section 1.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.6 Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.7 Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Investors, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within thirty (30) days
after the retiring Escrow Agent's giving of notice of resignation or the removal
of the retiring Escrow Agent, then the retiring Escrow Agent may appoint a
successor Escrow Agent. Any successor Escrow Agent shall be a bank which has an
office in the United States with a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Escrow Agent hereunder
by a successor Escrow Agent, such successor Escrow Agent shall enter into such
documents as the Pass Through Trustee shall require and shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations hereunder. No resignation or removal of the Escrow
Agent shall be effective unless a written confirmation shall have been obtained
from each of Moody's Investors Service, Inc. and Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc., that the replacement of
the Escrow Agent with the successor Escrow Agent will not result in (a) a
reduction of the rating for the Certificates below the then current rating for
the Certificates or (b) a withdrawal or suspension of the rating of the
Certificates.
Section 1.8 Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.9 Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
<PAGE>
6
SECTION 2. Paying Agent.
Section 2.1 Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent;
(b) shall not be responsible to the Escrow Agent for any recitals,
statements, representations or warranties of any person other then itself
contained in this Agreement or for the failure by the Escrow Agent or any other
person or entity (other than the Paying Agent) to perform any of its obligations
hereunder (whether or not the Paying Agent shall have any knowledge thereof);
and
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith, except
for its own willful misconduct or gross negligence (or simple negligence in
connection with the handling of funds).
Section 2.2 Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at State Street
Bank and Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.3 Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt in
the Paying Agent Account from the Depositary of any amount in respect of accrued
interest on the Deposits, the Paying Agent shall distribute out of the Paying
Agent Account the entire amount deposited therein by the Depositary. There shall
be so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding such Interest Payment Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount of interest deposited by the Depositary in
the Paying Agent Account on such date, except that, with respect to Escrow
Receipts registered on the Record Date in the name of The Depository Trust
Company, a New York corporation ("DTC"), such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
<PAGE>
7
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount of the
Final Withdrawal deposited therein by the Depositary. There shall be so
distributed to each Receiptholder of record on the 15th day (whether or not a
Business Day) preceding the Final Withdrawal Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account of
such Final Withdrawal, except that, with respect to Escrow Receipts registered
on the Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five (5) days of the
applicable date when due, then it shall be distributed to Receiptholders after
actual receipt by the Paying Agent on the same basis as a Special Payment is
distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through Trust
Agreement that is furnished to the Paying Agent by the Pass Through Trustee.
Section 2.4 Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Receiptholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Receiptholder may reasonably request from time to
time. The Paying Agent agrees to file any other information reports as it may be
required to file under United States law.
Section 2.5 Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Escrow Agent, but may not otherwise be removed except for
cause by the Escrow Agent. Upon any such resignation or removal, the Escrow
Agent shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and shall have accepted such
appointment within thirty (30) days after the retiring Paying Agent's giving of
notice of resignation or the removal of the retiring Paying Agent, then the
retiring Paying Agent may appoint a successor Paying Agent. Any Successor Paying
Agent shall be a bank which has an office in the United States with a combined
capital and surplus of at least US$100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying
<PAGE>
8
Agent shall enter into such documents as the Escrow Agent shall require and
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Paying Agent, and the retiring Paying
Agent shall be discharged from its duties and obligations hereunder.
Section 2.6 Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than fifteen (15) days prior to the Final Withdrawal Date.
Such notice shall set forth:
(a) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal;
(b) the amount of the payment in respect of the Final Withdrawal for
each $1,000 face amount Certificate (based on information provided by the
Pass Through Trustee) and the amount thereof constituting unused Deposits
(as defined in the Deposit Agreement) and interest thereon; and
(c) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Article
IV of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
<PAGE>
9
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Northwest, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(a) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(c) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
<PAGE>
10
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Northwest, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(a) it is a trust company duly organized and validly existing in
good standing under the laws of the Commonwealth of Massachusetts;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if
<PAGE>
11
adversely determined, (A) would adversely affect the ability of it to
perform its obligations under this Agreement or (B) would call into
question or challenge the validity of this Agreement or the enforceability
hereof in accordance with the terms hereof, nor is the Paying Agent in
default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its
ability to perform its obligations under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Northwest requests any amendment to any
Operative Document (as defined in the Note Purchase Agreement), the Pass Through
Trustee agrees to pay all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and the
Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(a) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(b) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(c) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Security Bank, National Association, 79 South Main
Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier: (801) 246-5053), (c) in the case of the Pass Through Trustee, State
Street Bank and Trust Company, 2 International Place,
<PAGE>
12
4th Floor, Boston, MA 02110, Attention: Corporate Trust Administration
(Telecopier: (617) 664-5151) or (d) in the case of the Paying Agent, State
Street Bank and Trust Company, 2 International Place, 4th Floor, Boston, MA
02110, Attention: Corporate Trust Administration (Telecopier: (617) 664-5151),
in each case with a copy to Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the other parties). On or prior to the
execution of this Agreement, the Pass Through Trustee has delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and instructions
with respect to this Agreement. The Escrow Agent may conclusively rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.7 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.5 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. WAIVER OF JURY TRIAL RIGHT. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
<PAGE>
13
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Underwriters and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class A) to be duly executed as of the day and year first above
written.
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity, but solely as Pass
Through Trustee for and on behalf
of Northwest Airlines Pass
Through Trust 1999-1A
By: /s/ Donald Smith
-----------------------------
Name: Donald Smith
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By: /s/ Greg A. Hawley
-----------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By: /s/ Donald Smith
-----------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
14
MORGAN STANLEY & CO. INCORPORATED,
CREDIT SUISSE FIRST BOSTON CORPORATION,
ABN AMRO INCORPORATED,
CHASE SECURITIES INC. and
SALOMON SMITH BARNEY INC., as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Christopher Chaput
--------------------------------------
Name: Christopher Chaput
Title: Vice President
<PAGE>
EXHIBIT A
Northwest Airlines 1999-1A Escrow Receipt No. ____
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class A) dated as of February 16, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit Suisse First
Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and Salomon
Smith Barney Inc., as Underwriters, State Street Bank and Trust Company, as Pass
Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and State Street Bank and Trust Company,
as paying agent (in such capacity, together with its successors in such
capacity, the "Paying Agent"). Capitalized terms not defined herein shall have
the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Northwest, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of
<PAGE>
2
the Pass Through Trustee, the holder hereof will return this Escrow Receipt to
the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: February 16, 1999
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT B
Withdrawal Certificate
(Class A)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Telecopier: (801) 246-5053
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of February 16, 1999 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.2(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (312)
606-8428.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity but solely as Pass
Through Trustee
By:
--------------------------
Name:
Title:
Dated: _________, ____
<PAGE>
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO Bank N.V., Chicago Branch
135 S. LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
February 16, 1999 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and ABN AMRO Bank N.V., Chicago Branch,
as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. __________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. ___________, Reference: ___________
on __________, _____, upon the telephonic request of a representative of the
Pass Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
------------------------------
Name:
Title:
Dated: ___________, ____
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of February 16, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
ABN AMRO INCORPORATED
CHASE SECURITIES INC.
AND
SALOMON SMITH BARNEY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-1B
as Pass Through Trustee,
AND
STATE STREET BANK AND TRUST COMPANY,
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent...................................................2
Section 1.1 Appointment of Escrow Agent................................2
Section 1.2 Instruction, Etc...........................................3
Section 1.3 Initial Escrow Amount; Issuance of Escrow Receipts.........3
Section 1.4 Payments to Receiptholders.................................4
Section 1.5 Mutilated, Destroyed, Lost or Stolen Escrow Receipt........4
Section 1.6 Additional Escrow Amounts..................................5
Section 1.7 Resignation or Removal of Escrow Agent.....................5
Section 1.8 Persons Deemed Owners......................................5
Section 1.9 Further Assurances.........................................5
SECTION 2. Paying Agent...................................................6
Section 2.1 Appointment of Paying Agent................................6
Section 2.2 Establishment of Paying Agent Account......................6
Section 2.3 Payments from Paying Agent Account.........................6
Section 2.4 Withholding Taxes..........................................7
Section 2.5 Resignation or Removal of Paying Agent.....................7
Section 2.6 Notice of Final Withdrawal.................................8
SECTION 3. Payments.......................................................8
SECTION 4. Other Actions..................................................8
SECTION 5. Representations and Warranties of the Escrow Agent.............9
SECTION 6. Representations and Warranties of the Paying Agent............10
SECTION 7. Indemnification...............................................11
SECTION 8. Amendment, Etc................................................11
SECTION 9. Notices.......................................................11
SECTION 10. Transfer......................................................12
SECTION 11. Entire Agreement..............................................12
SECTION 12. Governing Law.................................................12
SECTION 13. WAIVER OF JURY TRIAL RIGHT....................................12
SECTION 14. Counterparts..................................................12
-i-
<PAGE>
EXHIBITS
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
-ii-
<PAGE>
This ESCROW AND PAYING AGENT AGREEMENT (Class B) dated as of
February 16, 1999 (as amended, modified or supplemented from time to time, this
"Agreement") among First Security Bank, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc.
and Salomon Smith Barney Inc., as Underwriters of the Certificates referred to
below (the "Underwriters" and together with their respective transferees and
assigns as registered owners of the Certificates, the "Investors") under the
Underwriting Agreement referred to below, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") under the Pass
Through Trust Agreement referred to below, and State Street Bank and Trust
Company, a Massachusetts trust company, as paying agent hereunder (in such
capacity, together with its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and the Pass Through
Trustee have entered into a Trust Supplement, dated as of the date hereof (the
"Trust Supplement"), to the Pass Through Trust Agreement, dated as of June 3,
1996, by and among Holdings, Northwest and the Pass Through Trustee, as amended
by the Supplemental Agreement, dated as of November 20, 1998, among the
Guarantor, Holdings, Northwest and the Pass Through Trustee (the "Basic
Agreement") (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Northwest Airlines Pass Through Trust 1999-1B (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1B
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of February 4, 1999 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Underwriting Agreement") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Northwest, as lessee or
as owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note
<PAGE>
2
Purchase Agreement for the purpose of purchasing Equipment Notes, and that
pending such withdrawal the Net Proceeds be deposited on behalf of the Escrow
Agent with ABN AMRO Bank N.V., Chicago Branch, as Depositary (the "Depositary")
under the Deposit Agreement, dated as of the date hereof, between the Depositary
and the Escrow Agent relating to the Pass Through Trust (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Deposit Agreement") pursuant to which, among other things, the Depositary will
pay interest for distribution to the Investors and establish accounts from which
the Escrow Agent shall make withdrawals upon request of and proper certification
by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the respective meanings set forth or incorporated by reference in the Pass
Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.1 Appointment of Escrow Agent. Each of the Underwriters,
for and on behalf of each of the Investors, hereby irrevocably appoints,
authorizes and directs the Escrow Agent to act as escrow agent and fiduciary
hereunder and under the Deposit Agreement for such specific purposes and with
such powers as are specifically delegated to the Escrow Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in escrow
by the Escrow Agent under this Agreement or the Deposit Agreement shall only be
as provided under the terms and conditions of this Agreement and the Deposit
Agreement. The Escrow Agent (which term as used in this sentence shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement;
(b) shall not be responsible to the Pass Through Trustee or the
Investors for any recitals, statements, representations or warranties of
any person other than itself contained in this Agreement or the Deposit
Agreement or for the failure by the Pass Through Trustee, the Investors or
any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and
<PAGE>
3
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith,
except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 1.2 Instruction, Etc. The Underwriters, for and on behalf of
each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees: (a) to enter into the Deposit Agreement; (b) to appoint the
Paying Agent as provided in this Agreement; (c) upon receipt at any time and
from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal" and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal; and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) January 31, 2000 and (ii) the day on
which the Escrow Agent receives notice from the Pass Through Trustee that the
Pass Through Trustee's obligation to purchase Equipment Notes under the Note
Purchase Agreement has terminated, to give notice to the Depositary (with a copy
to the Paying Agent) substantially in the form of Exhibit B to the Deposit
Agreement requesting a withdrawal of all of the remaining Deposits, together
with accrued and unpaid interest on such Deposits to the date of withdrawal, on
the 15th day after the date that such notice of withdrawal is given to the
Depositary (or, if not a Business Day, on the next succeeding Business Day) (a
"Final Withdrawal"), provided that if the day scheduled for the Final Withdrawal
in accordance with the foregoing is within ten (10) days before or after a
Regular Distribution Date, then the Escrow Agent shall request that such
requested Final Withdrawal be made on such Regular Distribution Date (the date
of such requested withdrawal, the "Final Withdrawal Date"). If for any reason
the Escrow Agent shall have failed to give the Final Withdrawal Notice to the
Depositary on or before February 1, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be February 16, 2000.
Section 1.3 Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $111,555,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
("Escrow Interest") in the Account Amounts (as defined below) as the Fractional
Undivided Interest in the Pass Through Trust evidenced by the Certificate to
which it
<PAGE>
4
is to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.4 Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Northwest, the
Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.5 Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If
(a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.5, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.5
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
<PAGE>
5
The provisions of this Section 1.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.6 Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.7 Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Investors, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within thirty (30) days
after the retiring Escrow Agent's giving of notice of resignation or the removal
of the retiring Escrow Agent, then the retiring Escrow Agent may appoint a
successor Escrow Agent. Any successor Escrow Agent shall be a bank which has an
office in the United States with a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Escrow Agent hereunder
by a successor Escrow Agent, such successor Escrow Agent shall enter into such
documents as the Pass Through Trustee shall require and shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations hereunder. No resignation or removal of the Escrow
Agent shall be effective unless a written confirmation shall have been obtained
from each of Moody's Investors Service, Inc. and Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc., that the replacement of
the Escrow Agent with the successor Escrow Agent will not result in (a) a
reduction of the rating for the Certificates below the then current rating for
the Certificates or (b) a withdrawal or suspension of the rating of the
Certificates.
Section 1.8 Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.9 Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
<PAGE>
6
SECTION 2. Paying Agent.
Section 2.1 Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent;
(b) shall not be responsible to the Escrow Agent for any recitals,
statements, representations or warranties of any person other then itself
contained in this Agreement or for the failure by the Escrow Agent or any other
person or entity (other than the Paying Agent) to perform any of its obligations
hereunder (whether or not the Paying Agent shall have any knowledge thereof);
and
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith, except
for its own willful misconduct or gross negligence (or simple negligence in
connection with the handling of funds).
Section 2.2 Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at State Street
Bank and Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.3 Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt in
the Paying Agent Account from the Depositary of any amount in respect of accrued
interest on the Deposits, the Paying Agent shall distribute out of the Paying
Agent Account the entire amount deposited therein by the Depositary. There shall
be so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding such Interest Payment Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount of interest deposited by the Depositary in
the Paying Agent Account on such date, except that, with respect to Escrow
Receipts registered on the Record Date in the name of The Depository Trust
Company, a New York corporation ("DTC"), such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
<PAGE>
7
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount of the
Final Withdrawal deposited therein by the Depositary. There shall be so
distributed to each Receiptholder of record on the 15th day (whether or not a
Business Day) preceding the Final Withdrawal Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account of
such Final Withdrawal, except that, with respect to Escrow Receipts registered
on the Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five (5) days of the
applicable date when due, then it shall be distributed to Receiptholders after
actual receipt by the Paying Agent on the same basis as a Special Payment is
distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through Trust
Agreement that is furnished to the Paying Agent by the Pass Through Trustee.
Section 2.4 Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Receiptholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Receiptholder may reasonably request from time to
time. The Paying Agent agrees to file any other information reports as it may be
required to file under United States law.
Section 2.5 Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Escrow Agent, but may not otherwise be removed except for
cause by the Escrow Agent. Upon any such resignation or removal, the Escrow
Agent shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and shall have accepted such
appointment within thirty (30) days after the retiring Paying Agent's giving of
notice of resignation or the removal of the retiring Paying Agent, then the
retiring Paying Agent may appoint a successor Paying Agent. Any Successor Paying
Agent shall be a bank which has an office in the United States with a combined
capital and surplus of at least US$100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying
<PAGE>
8
Agent shall enter into such documents as the Escrow Agent shall require and
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Paying Agent, and the retiring Paying
Agent shall be discharged from its duties and obligations hereunder.
Section 2.6 Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than fifteen (15) days prior to the Final Withdrawal Date.
Such notice shall set forth:
(a) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal;
(b) the amount of the payment in respect of the Final Withdrawal for
each $1,000 face amount Certificate (based on information provided by the
Pass Through Trustee) and the amount thereof constituting unused Deposits
(as defined in the Deposit Agreement) and interest thereon; and
(c) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Article
IV of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
<PAGE>
9
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Northwest, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(a) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(c) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
<PAGE>
10
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Northwest, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(a) it is a trust company duly organized and validly existing in
good standing under the laws of the Commonwealth of Massachusetts;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if
<PAGE>
11
adversely determined, (A) would adversely affect the ability of it to
perform its obligations under this Agreement or (B) would call into
question or challenge the validity of this Agreement or the enforceability
hereof in accordance with the terms hereof, nor is the Paying Agent in
default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its
ability to perform its obligations under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Northwest requests any amendment to any
Operative Document (as defined in the Note Purchase Agreement), the Pass Through
Trustee agrees to pay all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and the
Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(a) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(b) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(c) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Security Bank, National Association, 79 South Main
Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier: (801) 246-5053), (c) in the case of the Pass Through Trustee, State
Street Bank and Trust Company, 2 International Place,
<PAGE>
12
4th Floor, Boston, MA 02110, Attention: Corporate Trust Administration
(Telecopier: (617) 664-5151) or (d) in the case of the Paying Agent, State
Street Bank and Trust Company, 2 International Place, 4th Floor, Boston, MA
02110, Attention: Corporate Trust Administration (Telecopier: (617) 664-5151),
in each case with a copy to Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the other parties). On or prior to the
execution of this Agreement, the Pass Through Trustee has delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and instructions
with respect to this Agreement. The Escrow Agent may conclusively rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.7 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.5 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. WAIVER OF JURY TRIAL RIGHT. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
<PAGE>
13
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Underwriters and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class B) to be duly executed as of the day and year first above
written.
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity, but solely as Pass
Through Trustee for and on behalf
of Northwest Airlines Pass
Through Trust 1999-1B
By: /s/ Donald Smith
-----------------------------
Name: Donald Smith
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By: /s/ Greg A. Hawley
-----------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By: /s/ Donald Smith
-----------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
14
MORGAN STANLEY & CO. INCORPORATED,
CREDIT SUISSE FIRST BOSTON CORPORATION,
ABN AMRO INCORPORATED,
CHASE SECURITIES INC. and
SALOMON SMITH BARNEY INC., as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Christopher Chaput
--------------------------------------
Name: Christopher Chaput
Title: Vice President
<PAGE>
EXHIBIT A
Northwest Airlines 1999-1B Escrow Receipt No. ____
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class B) dated as of February 16, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit Suisse First
Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and Salomon
Smith Barney Inc., as Underwriters, State Street Bank and Trust Company, as Pass
Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and State Street Bank and Trust Company,
as paying agent (in such capacity, together with its successors in such
capacity, the "Paying Agent"). Capitalized terms not defined herein shall have
the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Northwest, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of
<PAGE>
2
the Pass Through Trustee, the holder hereof will return this Escrow Receipt to
the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: February 16, 1999
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
--------------------------
Name:
Title:
<PAGE>
EXHIBIT B
Withdrawal Certificate
(Class B)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Telecopier: (801) 246-5053
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of February 16, 1999 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.2(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (312)
606-8428.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity but solely as Pass
Through Trustee
By:
--------------------------
Name:
Title:
Dated: _________, ____
<PAGE>
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO Bank N.V., Chicago Branch
135 S. LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
February 16, 1999 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and ABN AMRO Bank N.V., Chicago Branch,
as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. __________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. ___________, Reference: ___________
on __________, _____, upon the telephonic request of a representative of the
Pass Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
------------------------------
Name:
Title:
Dated: ___________, ____
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of February 16, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
ABN AMRO INCORPORATED
CHASE SECURITIES INC.
AND
SALOMON SMITH BARNEY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-1C
as Pass Through Trustee,
AND
STATE STREET BANK AND TRUST COMPANY,
as Paying Agent
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent...................................................2
Section 1.1 Appointment of Escrow
Agent......................................................2
Section 1.2 Instruction, Etc...........................................3
Section 1.3 Initial Escrow Amount;
Issuance of Escrow
Receipts...................................................3
Section 1.4 Payments to
Receiptholders.............................................4
Section 1.5 Mutilated, Destroyed,
Lost or Stolen Escrow
Receipt....................................................4
Section 1.6 Additional Escrow
Amounts....................................................5
Section 1.7 Resignation or Removal
of Escrow Agent............................................5
Section 1.8 Persons Deemed Owners......................................5
Section 1.9 Further Assurances.........................................5
SECTION 2. Paying Agent...................................................6
Section 2.1 Appointment of Paying
Agent......................................................6
Section 2.2 Establishment of Paying
Agent Account..............................................6
Section 2.3 Payments from Paying
Agent Account..............................................6
Section 2.4 Withholding Taxes..........................................7
Section 2.5 Resignation or Removal
of Paying Agent............................................7
Section 2.6 Notice of Final
Withdrawal.................................................8
SECTION 3. Payments.......................................................8
SECTION 4. Other Actions..................................................8
SECTION 5. Representations and
Warranties of the Escrow
Agent..........................................................9
SECTION 6. Representations and
Warranties of the Paying
Agent.........................................................10
SECTION 7. Indemnification...............................................11
SECTION 8. Amendment, Etc................................................11
SECTION 9. Notices.......................................................11
SECTION 10. Transfer......................................................12
SECTION 11. Entire Agreement..............................................12
SECTION 12. Governing Law.................................................12
SECTION 13. WAIVER OF JURY TRIAL RIGHT....................................12
SECTION 14. Counterparts..................................................12
-i-
<PAGE>
EXHIBITS
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
-ii-
<PAGE>
This ESCROW AND PAYING AGENT AGREEMENT (Class C) dated as of
February 16, 1999 (as amended, modified or supplemented from time to time, this
"Agreement") among First Security Bank, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit
Suisse First Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc.
and Salomon Smith Barney Inc., as Underwriters of the Certificates referred to
below (the "Underwriters" and together with their respective transferees and
assigns as registered owners of the Certificates, the "Investors") under the
Underwriting Agreement referred to below, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity except as otherwise
expressly provided herein, but solely as trustee (in such capacity, together
with its successors in such capacity, the "Pass Through Trustee") under the Pass
Through Trust Agreement referred to below, and State Street Bank and Trust
Company, a Massachusetts trust company, as paying agent hereunder (in such
capacity, together with its successors in such capacity, the "Paying Agent").
W I T N E S S E T H
WHEREAS, Northwest Airlines Corporation, a Delaware corporation (the
"Guarantor"), Northwest Airlines Holdings Corporation, a Delaware corporation
(formerly known as Northwest Airlines Corporation, "Holdings"), Northwest
Airlines, Inc., a Minnesota corporation ("Northwest") and the Pass Through
Trustee have entered into a Trust Supplement, dated as of the date hereof (the
"Trust Supplement"), to the Pass Through Trust Agreement, dated as of June 3,
1996, by and among Holdings, Northwest and the Pass Through Trustee, as amended
by the Supplemental Agreement, dated as of November 20, 1998, among the
Guarantor, Holdings, Northwest and the Pass Through Trustee (the "Basic
Agreement") (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Northwest Airlines Pass Through Trust 1999-1C (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-1C
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of February 4, 1999 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Underwriting Agreement") pursuant to which the Pass Through Trustee will issue
and sell the Certificates to the Underwriters;
WHEREAS, Northwest, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Northwest, as lessee or
as owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Underwriters and the Pass Through Trustee intend that
the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note
<PAGE>
2
Purchase Agreement for the purpose of purchasing Equipment Notes, and that
pending such withdrawal the Net Proceeds be deposited on behalf of the Escrow
Agent with ABN AMRO Bank N.V., Chicago Branch, as Depositary (the "Depositary")
under the Deposit Agreement, dated as of the date hereof, between the Depositary
and the Escrow Agent relating to the Pass Through Trust (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Deposit Agreement") pursuant to which, among other things, the Depositary will
pay interest for distribution to the Investors and establish accounts from which
the Escrow Agent shall make withdrawals upon request of and proper certification
by the Pass Through Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the respective meanings set forth or incorporated by reference in the Pass
Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.1 Appointment of Escrow Agent. Each of the Underwriters,
for and on behalf of each of the Investors, hereby irrevocably appoints,
authorizes and directs the Escrow Agent to act as escrow agent and fiduciary
hereunder and under the Deposit Agreement for such specific purposes and with
such powers as are specifically delegated to the Escrow Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in escrow
by the Escrow Agent under this Agreement or the Deposit Agreement shall only be
as provided under the terms and conditions of this Agreement and the Deposit
Agreement. The Escrow Agent (which term as used in this sentence shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement;
(b) shall not be responsible to the Pass Through Trustee or the
Investors for any recitals, statements, representations or warranties of
any person other than itself contained in this Agreement or the Deposit
Agreement or for the failure by the Pass Through Trustee, the Investors or
any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and
<PAGE>
3
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith,
except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 1.2 Instruction, Etc. The Underwriters, for and on behalf of
each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees: (a) to enter into the Deposit Agreement; (b) to appoint the
Paying Agent as provided in this Agreement; (c) upon receipt at any time and
from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal" and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal; and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) January 31, 2000 and (ii) the day on
which the Escrow Agent receives notice from the Pass Through Trustee that the
Pass Through Trustee's obligation to purchase Equipment Notes under the Note
Purchase Agreement has terminated, to give notice to the Depositary (with a copy
to the Paying Agent) substantially in the form of Exhibit B to the Deposit
Agreement requesting a withdrawal of all of the remaining Deposits, together
with accrued and unpaid interest on such Deposits to the date of withdrawal, on
the 15th day after the date that such notice of withdrawal is given to the
Depositary (or, if not a Business Day, on the next succeeding Business Day) (a
"Final Withdrawal"), provided that if the day scheduled for the Final Withdrawal
in accordance with the foregoing is within ten (10) days before or after a
Regular Distribution Date, then the Escrow Agent shall request that such
requested Final Withdrawal be made on such Regular Distribution Date (the date
of such requested withdrawal, the "Final Withdrawal Date"). If for any reason
the Escrow Agent shall have failed to give the Final Withdrawal Notice to the
Depositary on or before February 1, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be February 16, 2000.
Section 1.3 Initial Escrow Amount; Issuance of Escrow Receipts. The
Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("Dollars")
and immediately available funds equal to $74,140,000 for deposit on behalf of
the Escrow Agent with the Depositary in accordance with Section 2.1 of the
Deposit Agreement. The Underwriters hereby instruct the Escrow Agent, upon
receipt of such sum from the Underwriters, to confirm such receipt by executing
and delivering to the Pass Through Trustee an Escrow Receipt in the form of
Exhibit A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through
Trustee to each Certificate and (b) to evidence the same percentage interest
("Escrow Interest") in the Account Amounts (as defined below) as the Fractional
Undivided Interest in the Pass Through Trust evidenced by the Certificate to
which it
<PAGE>
4
is to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.4 Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Northwest, the
Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.5 Mutilated, Destroyed, Lost or Stolen Escrow Receipt. If
(a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt has
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.5, the Escrow Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.5
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
<PAGE>
5
The provisions of this Section 1.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.6 Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.7 Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Investors, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within thirty (30) days
after the retiring Escrow Agent's giving of notice of resignation or the removal
of the retiring Escrow Agent, then the retiring Escrow Agent may appoint a
successor Escrow Agent. Any successor Escrow Agent shall be a bank which has an
office in the United States with a combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Escrow Agent hereunder
by a successor Escrow Agent, such successor Escrow Agent shall enter into such
documents as the Pass Through Trustee shall require and shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Escrow Agent, and the retiring Escrow Agent shall be discharged from
its duties and obligations hereunder. No resignation or removal of the Escrow
Agent shall be effective unless a written confirmation shall have been obtained
from each of Moody's Investors Service, Inc. and Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc., that the replacement of
the Escrow Agent with the successor Escrow Agent will not result in (a) a
reduction of the rating for the Certificates below the then current rating for
the Certificates or (b) a withdrawal or suspension of the rating of the
Certificates.
Section 1.8 Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.9 Further Assurances. The Escrow Agent agrees to take such
actions, and execute such other documents, as may be reasonably requested by the
Pass Through Trustee in order to effectuate the purposes of this Agreement and
the performance by the Escrow Agent of its obligations hereunder.
<PAGE>
6
SECTION 2. Paying Agent.
Section 2.1 Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for the Escrow Agent;
(b) shall not be responsible to the Escrow Agent for any recitals,
statements, representations or warranties of any person other then itself
contained in this Agreement or for the failure by the Escrow Agent or any other
person or entity (other than the Paying Agent) to perform any of its obligations
hereunder (whether or not the Paying Agent shall have any knowledge thereof);
and
(c) shall not be responsible for any action taken or omitted to be
taken by it hereunder or provided for herein or in connection herewith, except
for its own willful misconduct or gross negligence (or simple negligence in
connection with the handling of funds).
Section 2.2 Establishment of Paying Agent Account. The Paying Agent
shall establish a deposit account (the "Paying Agent Account") at State Street
Bank and Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.3 Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt in
the Paying Agent Account from the Depositary of any amount in respect of accrued
interest on the Deposits, the Paying Agent shall distribute out of the Paying
Agent Account the entire amount deposited therein by the Depositary. There shall
be so distributed to each Receiptholder of record on the 15th day (whether or
not a Business Day) preceding such Interest Payment Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount of interest deposited by the Depositary in
the Paying Agent Account on such date, except that, with respect to Escrow
Receipts registered on the Record Date in the name of The Depository Trust
Company, a New York corporation ("DTC"), such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
<PAGE>
7
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the Final
Withdrawal, the Paying Agent shall forthwith distribute the entire amount of the
Final Withdrawal deposited therein by the Depositary. There shall be so
distributed to each Receiptholder of record on the 15th day (whether or not a
Business Day) preceding the Final Withdrawal Date by check mailed to such
Receiptholder, at the address appearing in the Register, such Receiptholder's
pro rata share (based on the Escrow Interest in the Account Amounts held by such
Receiptholder) of the total amount in the Paying Agent Account on account of
such Final Withdrawal, except that, with respect to Escrow Receipts registered
on the Record Date in the name of DTC, such distribution shall be made by wire
transfer in immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five (5) days of the
applicable date when due, then it shall be distributed to Receiptholders after
actual receipt by the Paying Agent on the same basis as a Special Payment is
distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through Trust
Agreement that is furnished to the Paying Agent by the Pass Through Trustee.
Section 2.4 Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Receiptholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Receiptholder may reasonably request from time to
time. The Paying Agent agrees to file any other information reports as it may be
required to file under United States law.
Section 2.5 Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Escrow Agent, but may not otherwise be removed except for
cause by the Escrow Agent. Upon any such resignation or removal, the Escrow
Agent shall have the right to appoint a successor Paying Agent. If no successor
Paying Agent shall have been so appointed and shall have accepted such
appointment within thirty (30) days after the retiring Paying Agent's giving of
notice of resignation or the removal of the retiring Paying Agent, then the
retiring Paying Agent may appoint a successor Paying Agent. Any Successor Paying
Agent shall be a bank which has an office in the United States with a combined
capital and surplus of at least US$100,000,000. Upon the acceptance of any
appointment as Paying Agent hereunder by a successor Paying Agent, such
successor Paying
<PAGE>
8
Agent shall enter into such documents as the Escrow Agent shall require and
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Paying Agent, and the retiring Paying
Agent shall be discharged from its duties and obligations hereunder.
Section 2.6 Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than fifteen (15) days prior to the Final Withdrawal Date.
Such notice shall set forth:
(a) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal;
(b) the amount of the payment in respect of the Final Withdrawal for
each $1,000 face amount Certificate (based on information provided by the
Pass Through Trustee) and the amount thereof constituting unused Deposits
(as defined in the Deposit Agreement) and interest thereon; and
(c) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Article
IV of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
<PAGE>
9
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Northwest, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(a) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(c) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
<PAGE>
10
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Northwest, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(a) it is a trust company duly organized and validly existing in
good standing under the laws of the Commonwealth of Massachusetts;
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if
<PAGE>
11
adversely determined, (A) would adversely affect the ability of it to
perform its obligations under this Agreement or (B) would call into
question or challenge the validity of this Agreement or the enforceability
hereof in accordance with the terms hereof, nor is the Paying Agent in
default with respect to any order of any court, governmental authority,
arbitration board or administrative agency so as to adversely affect its
ability to perform its obligations under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Northwest requests any amendment to any
Operative Document (as defined in the Note Purchase Agreement), the Pass Through
Trustee agrees to pay all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and the
Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(a) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(b) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(c) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Security Bank, National Association, 79 South Main
Street, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telecopier: (801) 246-5053), (c) in the case of the Pass Through Trustee, State
Street Bank and Trust Company, 2 International Place,
<PAGE>
12
4th Floor, Boston, MA 02110, Attention: Corporate Trust Administration
(Telecopier: (617) 664-5151) or (d) in the case of the Paying Agent, State
Street Bank and Trust Company, 2 International Place, 4th Floor, Boston, MA
02110, Attention: Corporate Trust Administration (Telecopier: (617) 664-5151),
in each case with a copy to Northwest Airlines, Inc., Department A4010, 5101
Northwest Drive, St. Paul, MN 55111-3034, Attention: Treasurer (Telecopier:
(612) 726-0665) (or at such other address as any such party may specify from
time to time in a written notice to the other parties). On or prior to the
execution of this Agreement, the Pass Through Trustee has delivered to the
Escrow Agent a certificate containing specimen signatures of the representatives
of the Pass Through Trustee who are authorized to give notices and instructions
with respect to this Agreement. The Escrow Agent may conclusively rely on such
certificate until the Escrow Agent receives written notice from the Pass Through
Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.7 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.5 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. WAIVER OF JURY TRIAL RIGHT. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
<PAGE>
13
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Underwriters and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement (Class C) to be duly executed as of the day and year first above
written.
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity, but solely as Pass
Through Trustee for and on behalf of
Northwest Airlines Pass Through Trust
1999-1C
By: /s/ Donald Smith
----------------------------------------
Name: Donald Smith
Title: Vice President
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By: /s/ Greg A. Hawley
----------------------------------------
Name: Greg A. Hawley
Title: Vice President
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By: /s/ Donald Smith
----------------------------------------
Name: Donald Smith
Title: Vice President
<PAGE>
14
MORGAN STANLEY & CO. INCORPORATED, CREDIT
SUISSE FIRST BOSTON CORPORATION, ABN AMRO
INCORPORATED,
CHASE SECURITIES INC. and
SALOMON SMITH BARNEY INC., as Underwriters
By: MORGAN STANLEY &
CO.
INCORPORATED
By: /s/ Christopher Chaput
Name: Christopher Chaput
Title: Vice President
<PAGE>
EXHIBIT A
Northwest Airlines 1999-1C Escrow Receipt No. ____
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class C) dated as of February 16, 1999 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Security Bank, National Association, a national banking association, as
Escrow Agent (in such capacity, together with its successors in such capacity,
the "Escrow Agent"), Morgan Stanley & Co. Incorporated, Credit Suisse First
Boston Corporation, ABN AMRO Incorporated, Chase Securities Inc. and Salomon
Smith Barney Inc., as Underwriters, State Street Bank and Trust Company, as Pass
Through Trustee (in such capacity, together with its successors in such
capacity, the "Pass Through Trustee") and State Street Bank and Trust Company,
as paying agent (in such capacity, together with its successors in such
capacity, the "Paying Agent"). Capitalized terms not defined herein shall have
the meanings assigned to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Northwest, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of
<PAGE>
2
the Pass Through Trustee, the holder hereof will return this Escrow Receipt to
the Pass Through Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: February 16, 1999
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
Withdrawal Certificate
(Class C)
First Security Bank, National Association,
as Escrow Agent
79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust Services
Telecopier: (801) 246-5053
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of February 16, 1999 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.2(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at (312)
606-8428.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity
but solely as Pass Through Trustee
By:
-----------------------------------
Name:
Title:
Dated: _________, ____
<PAGE>
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO Bank N.V., Chicago Branch
135 S. LaSalle Street, Suite 611
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
February 16, 1999 (the "Deposit Agreement") between First Security Bank,
National Association, as Escrow Agent, and ABN AMRO Bank N.V., Chicago Branch,
as Depositary (the "Depositary").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$_________, Account No. __________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. ___________, Reference: ___________
on __________, _____, upon the telephonic request of a representative of the
Pass Through Trustee.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
---------------------------------------
Name:
Title:
Dated: ___________, ____
NOTE PURCHASE AGREEMENT
Dated as of February 16, 1999
Among
NORTHWEST AIRLINES, INC.,
STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee
under each of the Pass Through Trust Agreements
STATE STREET BANK AND TRUST COMPANY,
as Subordination Agent
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
and
STATE STREET BANK AND TRUST COMPANY,
as Paying Agent
<PAGE>
INDEX TO NOTE PURCHASE AGREEMENT
Page
Section 1. Definitions......................................................2
Section 2. Financing of New Aircraft........................................2
Section 3. Conditions Precedent.............................................6
Section 4. Representations and Warranties...................................6
Section 5. Covenants........................................................9
Section 6. Notices.........................................................10
Section 7. Expenses........................................................10
Section 8. Further Assurances..............................................11
Section 9. Miscellaneous...................................................11
Section 10. Indemnity......................................................12
Section 11. Termination....................................................15
Section 12. Governing Law..................................................15
SCHEDULES
Schedule I New Aircraft and Scheduled Closing Months
Schedule II Trust Supplements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
Schedule VII Aggregate Amortization Schedule
ANNEX
Annex A Definitions
i
<PAGE>
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Aircraft Purchase Agreement Assignment
Exhibit A-5 Form of Leased Aircraft Trust Agreement
Exhibit A-6 Form of Leased Aircraft Guarantee
Exhibit B Form of Closing Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
Exhibit C-3 Form of Owned Aircraft Guarantee
ii
<PAGE>
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of February 16, 1999, among
(i) Northwest Airlines, Inc., a Minnesota corporation (the "Company"), (ii)
State Street Bank and Trust Company, a Massachusetts trust company, not in its
individual capacity except as otherwise expressly provided herein, but solely as
trustee (in such capacity together with its successors in such capacity, the
"Pass Through Trustee") under each of the three separate Pass Through Trust
Agreements (as defined below), (iii) State Street Bank and Trust Company, a
Massachusetts trust company, as subordination agent and trustee (in such
capacity together with its successors in such capacity, the "Subordination
Agent") under the Intercreditor Agreement (as defined below), (iv) First
Security Bank, National Association, a national banking association, as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent"), under each of the Escrow and Paying Agent Agreements (as
defined below) and (v) State Street Bank and Trust Company, a Massachusetts
trust company, as Paying Agent (in such capacity together with its successors in
such capacity, the "Paying Agent") under each of the Escrow and Paying Agent
Agreements.
W I T N E S S E T H:
WHEREAS, Northwest Airlines, Inc. has obtained commitments from the
Seller pursuant to the Aircraft Purchase Agreement for the delivery of the four
(4) aircraft listed in Schedule I hereto (the "New Aircraft");
WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each
of the Trust Supplements set forth in Schedule II hereto, and concurrently with
the execution and delivery of this Agreement, separate grantor trusts
(collectively, the "Pass Through Trusts" and, individually, a "Pass Through
Trust") have been created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale of pass through
certificates pursuant thereto (collectively, the "Certificates") to provide for
a portion of the financing of the Aircraft;
WHEREAS, the Company has entered into the Underwriting Agreement
dated as of February 4, 1999 (the "Underwriting Agreement") with the several
underwriters (the "Underwriters") named therein, which provides that the Company
will cause the Pass Through Trustee of each of the Class A Trust, the Class B
Trust and the Class C Trust to issue and sell the Class A Certificates, the
Class B Certificates and the Class C Certificates to the Underwriters;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agents and the Depositaries entered into the Deposit
Agreements set forth in Schedule III hereto (the "Deposit Agreements") whereby
the applicable Escrow Agent agreed to direct the Underwriters to make certain
deposits referred to therein on the Issuance Date (the "Initial Deposits") and
to permit the applicable Pass Through Trustee to make additional deposits from
time to time thereafter (the Initial Deposits together with such additional
deposits are collectively referred to as the "Deposits") and (ii) the Pass
Through Trustees, the Underwriters, the Paying Agents and the Escrow Agents
entered into the Escrow and Paying Agent Agreements set forth in Schedule IV
hereto (the "Escrow and Paying Agent Agreements") whereby, among
<PAGE>
other things, (a) the applicable Escrow Agents have directed the Underwriters,
and the Underwriters agreed to deliver an amount equal to the amount of the
Initial Deposits to the applicable Depositary on behalf of the applicable Escrow
Agent and (b) the applicable Escrow Agent, upon the applicable Depositary
receiving such amount, has agreed to deliver escrow receipts to be affixed to
each Certificate;
WHEREAS, the Company will determine whether to enter into a
leveraged lease transaction as lessee with respect to such New Aircraft (a
"Leased Aircraft") or to issue secured equipment notes in order to finance such
New Aircraft (an "Owned Aircraft") and will give to the Pass Through Trustee a
Closing Notice (as defined below) specifying its election;
WHEREAS, upon receipt of a Closing Notice with respect to a New
Aircraft, subject to the terms and conditions of this Agreement, the applicable
Pass Through Trustees will enter into the applicable Financing Agreements
relating to such New Aircraft;
WHEREAS, on the Closing Date under the applicable Financing
Agreements, each Pass Through Trustee will fund its purchase of Equipment Notes
with the proceeds of one or more Deposits withdrawn by the applicable Escrow
Agent under the related Deposit Agreement bearing the same interest rate as the
Certificates issued by such Pass Through Trust; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) Citibank, N.A., a national banking association (the "Liquidity
Provider"), has entered into three (3) revolving credit agreements (each, a
"Liquidity Facility"), one each for the benefit of the Certificate Holders 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 have entered
into the Intercreditor Agreement, dated as of the date hereof (the
"Intercreditor Agreement").
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. Capitalized terms used but not defined
herein shall have the respective meanings set forth or incorporated by reference
in Annex A.
Section 2. Financing of New Aircraft. (a) The Company confirms that
it has entered into the Aircraft Purchase Agreement with the Seller pursuant to
which it has agreed to purchase, and the Seller has agreed to deliver, the New
Aircraft in the months specified in Schedule I hereto, all on and subject to
terms and conditions specified in the Aircraft Purchase Agreement. The Company
agrees to finance the New Aircraft in the manner provided herein, all on and
subject to the terms and conditions hereof and of the relevant Financing
Agreements.
(b) In furtherance of the foregoing, the Company agrees to give the
parties hereto, each Depositary and each of the Rating Agencies not less than
two (2) Business Days' prior notice (a "Closing Notice") of the scheduled
closing date (the "Scheduled Closing Date")
2
<PAGE>
(or, in the case of a Substitute Closing Notice under Section 2(f) or (g)
hereof, one (1) Business Day's prior notice) of a financing in respect of each
New Aircraft, which notice shall:
i. specify whether the Company has elected to treat such New
Aircraft as a Leased Aircraft or an Owned Aircraft;
ii. specify the Scheduled Closing Date on which the financing
therefor in the manner provided herein shall be consummated;
iii. instruct the Pass Through Trustees to instruct each Escrow
Agent to provide a Notice of Purchase Withdrawal to the Depositary with
respect to the Equipment Notes to be issued in connection with the
financing of such New Aircraft;
iv. instruct the Pass Through Trustees to enter into the
Participation Agreement with respect to such Aircraft in such form and at
such a time on or before the Scheduled Closing Date specified in such
Closing Notice and to perform its obligations thereunder;
v. specify the aggregate principal amount of each series of
Equipment Notes to be issued, and purchased by the Pass Through Trustees,
in connection with the financing of such New Aircraft on such Scheduled
Closing Date (which shall in all respects comply with the Mandatory
Economic Terms); and
vi. if such New Aircraft is to be a Leased Aircraft, certify that
the related Owner Participant (A) is not an Affiliate of the Company and
(B) based on the representations of such Owner Participant, is either (1)
a Qualified Owner Participant or (2) any other person the obligations of
which under the Owner Participant Documents (as defined in the applicable
Participation Agreement) are guaranteed by a Qualified Owner Participant.
Notwithstanding the foregoing, in the event the Scheduled Closing
Date for any Aircraft to be financed pursuant to the terms hereof is on or
within 3 business days following the date of issuance of the Certificates, the
Closing Notice therefor may be delivered to the parties hereto on such Scheduled
Closing Date.
(c) Upon receipt of a Closing Notice, the Pass Through Trustees
shall, and shall cause the Subordination Agent to, enter into and perform their
obligations under the Participation Agreement specified in such Closing Notice,
provided, however, that such Participation Agreement and the other Financing
Agreements to be entered into pursuant to such Participation Agreement shall be
in the forms thereof annexed hereto in all material respects with such changes
therein as shall have been requested by the related Owner Participant (in the
case of Lease Financing Agreements), agreed to by the Company and, if modified
in any material respect, as to which Rating Agency Confirmation shall have been
obtained from each Rating Agency by the Company (to be delivered by the Company
to the applicable Pass Through Trustee on or before the relevant Closing Date,
it being understood that if Rating Agency Confirmation shall have been received
with respect to any Financing Agreements and such Financing
3
<PAGE>
Agreements are utilized for subsequent New Aircraft without material
modifications, no additional Rating Agency Confirmation shall be required);
provided, however, that the relevant Financing Agreements as executed and
delivered shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms (as such Mandatory Document Terms may be modified in
accordance with Schedule V hereto). Notwithstanding the foregoing, if any
Financing Agreement annexed hereto shall not have been reviewed by either Rating
Agency prior to the Issuance Date, then, prior to the use thereof in connection
with the financing of any Aircraft hereunder, the Company shall obtain from each
Rating Agency a confirmation that the use of such Financing Agreement would not
result in (A) a reduction of the rating for any Class of Certificates below the
then current rating for such Class of Certificates or (B) a withdrawal or
suspension of the rating of any Class of Certificates.
(d) With respect to each New Aircraft, the Company shall cause (i)
State Street Bank and Trust Company (or such other person that meets the
eligibility requirements to act as loan trustee under the Leased Aircraft
Indenture or Owned Aircraft Indenture) to execute as Loan Trustee the Financing
Agreements relating to such Aircraft to which such Loan Trustee is intended to
be a party and (ii) Northwest Airlines Corporation to execute a Guarantee, and
shall concurrently therewith execute such Financing Agreements to which the
Company is intended to be a party and perform its respective obligations
thereunder. Upon the request of either Rating Agency, the Company shall deliver
or cause to be delivered to each Rating Agency a true and complete copy of each
Financing Agreement relating to the financing of each New Aircraft together with
a true and complete set of the closing documentation (including legal opinions)
delivered to the related Loan Trustee, Subordination Agent and Pass Through
Trustee under the related Participation Agreement.
(e) If after giving any Closing Notice, there shall be a delay in
the delivery of a New Aircraft, or if on the Scheduled Closing Date of a New
Aircraft the financing thereof in the manner contemplated hereby shall not be
consummated for whatever reason, the Company shall give the parties hereto
prompt notice thereof. Concurrent with the giving of such notice of postponement
or subsequent thereto, the Company shall give the parties hereto a substitute
Closing Notice specifying the date (the "Substitute Closing Date") to which the
applicable financing shall have been rescheduled which shall be a Business Day
before the Cut-Off Date on which the Escrow Agents shall be entitled to withdraw
one or more Deposits under each of the applicable Deposit Agreements to enable
each applicable Pass Through Trustee to fund its purchase of the related
Equipment Notes). Upon receipt of any such notice of postponement, each
applicable Pass Through Trustee shall comply with its obligations under Article
IV of each of the Trust Supplements and thereafter the financing of the relevant
New Aircraft shall take place on the Substitute Closing Date therefor (all on
and subject to the terms and conditions of the relevant Financing Agreements)
unless further postponed as provided herein.
(f) Anything in this Section 2 to the contrary notwithstanding, the
Company shall have the right at any time on or before the Scheduled Closing Date
of any New Aircraft, and subsequent to its giving a Closing Notice therefor, to
postpone the Scheduled Closing Date of such New Aircraft so as to enable the
Company to change its election to treat such New Aircraft as a Leased Aircraft
or an Owned Aircraft by written notice of such postponement to the other parties
hereto. The Company shall subsequently give the parties hereto a substitute
Closing
4
<PAGE>
Notice complying with the provisions of Section 2(b) hereof and specifying the
new Closing Date for such postponed New Aircraft (which shall be a Business Day
occurring before the Cut-Off Date and on which the Escrow Agents shall be
entitled to withdraw Deposits under each of the applicable Deposit Agreements
sufficient to enable each applicable Pass Through Trustee to fund its purchase
of the related Equipment Notes). In addition the Company shall have the further
right, anything in this Section 2 to the contrary notwithstanding, to accept
delivery of a New Aircraft under the Aircraft Purchase Agreement on the Closing
Date thereof by utilization of bridge financing of such New Aircraft and
thereafter give the parties hereto a Closing Notice specifying a Closing Date no
later than the Cut-Off Date and otherwise complying with the provisions of
Section 2(b) hereof. All other terms and conditions of this Note Purchase
Agreement shall apply to the financing of any such New Aircraft on the
re-scheduled Closing Date therefor except the re-scheduled Closing Date shall be
deemed the Closing Date of such New Aircraft for all purposes of this Section 2.
(g) Anything in this Section 2 to the contrary notwithstanding, the
Company shall have the right at any time to convert an Owned Aircraft to a
Leased Aircraft by entering into a sale/leaseback transaction; provided, that,
prior to, or concurrent with, such conversion, the Company must (i) comply with
the conditions set forth in the Leased Aircraft Participation Agreement with
respect to such aircraft and (ii) deliver an opinion of counsel that holders of
Certificates related to such Aircraft will not recognize income, gain or loss
for federal income tax purposes as a result of such conversion and will be
subject to federal income tax on the same amount and in the same manner and at
the same time as would have been the case if such conversion had not occurred
and that the Pass Through Trusts will not be subject to federal income tax as a
result of such conversion.
(h) The Company shall have no liability for the failure of the Pass
Through Trustees to purchase Equipment Notes with respect to any New Aircraft,
other than the Company's obligation, if any, to pay the Deposit Make-Whole
Amount pursuant to Section 5(a)(i) of this Agreement.
(i) The parties agree that if, in connection with the delivery of a
New Aircraft or the conversion of an Owned Aircraft to a Leased Aircraft, any
Owner Participant who is to be a party to any Lease Financing Agreements shall
not be a "citizen of the United States" within the meaning of 49 U.S.C. ss.
40102 (a)(15), then the applicable Lease Financing Agreements shall be modified,
consistent with the Mandatory Document Terms (as such Mandatory Document Terms
may be modified in accordance with Schedule V hereto), to require such Owner
Participant to enter into a voting trust, voting powers or similar arrangement
satisfactory to the Company that (A) enables such New Aircraft to be registered
in the United States and (B) complies with the FAA regulations issued under the
Act applicable thereto.
(j) Anything herein to the contrary notwithstanding, the Company
shall not have the right, and shall not be entitled, at any time to request the
issuance of Equipment Notes of any series to any Pass Through Trustee in an
aggregate principal amount in excess of the amount of the Deposits then
available for withdrawal by the Escrow Agent under and in accordance with the
provisions of the related Deposit Agreement.
5
<PAGE>
Section 3. Conditions Precedent. The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Closing Notice and to perform
its obligations under such Participation Agreement is subject to satisfaction of
the following conditions:
(a) no Triggering Event shall have occurred;
(b) the Company shall have delivered a certificate to each such Pass
Through Trustee and each Liquidity Provider stating that (i) such Participation
Agreement and the other Financing Agreements to be entered into pursuant to such
Participation Agreement do not vary the Mandatory Economic Terms and contain the
Mandatory Document Terms (as such Mandatory Document Terms may be modified in
accordance with Schedule V hereto) and (ii) any substantive modification of such
Financing Agreements from the forms thereof attached to this Agreement do not
materially and adversely affect the Certificate Holders, and such certification
shall be true and correct; and
(c) if required by Section 2(c) and in place of the statement in
clause (ii) of Section 3(b) above, Rating Agency Confirmation from each Rating
Agency.
Anything herein to the contrary notwithstanding, the obligation of
each Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-Off Date.
Section 4. Representations and Warranties.
(a) The Company represents and warrants on the date hereof and on
each Closing Date that:
i. the Company is duly incorporated, validly existing and in good
standing under the laws of the State of Minnesota and is a "citizen of the
United States" as defined in 49 U.S.C. ss. 40102 (a)(15), and has the full
corporate power, authority and legal right under the laws of the State of
Minnesota to execute and deliver this Agreement and each Financing
Agreement to which it will be a party and to carry out the obligations of
the Company under this Agreement and each Financing Agreement to which it
will be a party;
ii. the execution and delivery by the Company of this Agreement and
the performance by the Company of its obligations under this Agreement
have been duly authorized by the Company and will not violate its
Certificate of Incorporation or by-laws or the provisions of any material
indenture, mortgage, contract or other agreement to which it is a party or
by which it is bound; and
iii. this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it 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.
6
<PAGE>
(b) State Street Bank and Trust Company represents and warrants on
the date hereof and on each Closing Date that:
i. State Street Bank and Trust Company is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and is a "citizen of the United States" as defined in 49
U.S.C. ss. 40102 (a)(15), and has the full corporate power, authority and
legal right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver this Agreement and each Financing Agreement to which
it will be a party and to carry out the obligations of State Street Bank
and Trust Company, in its capacity as Subordination Agent, Pass Through
Trustee or Paying Agent, as the case may be, under this Agreement and each
Financing Agreement to which it will be a party;
ii. the execution and delivery by State Street Bank and Trust
Company, in its capacity as Subordination Agent, Pass Through Trustee or
Paying Agent, as the case may be, of this Agreement and the performance by
State Street Bank and Trust Company, in its capacity as Subordination
Agent, Pass Through Trustee or Paying Agent, as the case may be, of its
obligations under this Agreement have been duly authorized by State Street
Bank and Trust Company, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, and will not violate
its articles of association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by which
it is bound; and
iii. this Agreement constitutes the legal, valid and binding
obligation of State Street Bank and Trust Company in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the case may
be, enforceable against it 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.
(c) The Pass Through Trustee hereby confirms to each of the other
parties hereto that its representations and warranties set forth in Section 7.14
of the Basic Pass Through Trust Agreement are true and correct as of the date
hereof.
(d) The Subordination Agent represents and warrants that:
i. the Subordination Agent is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver this
Agreement and each Financing Agreement to which it is or will be a party
and to perform its obligations under this Agreement and each Financing
Agreement to which it is or will be a party;
ii. this Agreement has been duly authorized, executed and delivered
by the Subordination Agent; this Agreement constitutes the legal, valid
and binding obligations
7
<PAGE>
of the Subordination Agent enforceable against it 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. none of the execution, delivery and performance by the
Subordination Agent of this Agreement contravenes any law, rule or
regulation of the Commonwealth of Massachusetts 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 the
Subordination Agent's articles of association or by-laws or result in any
breach of, or constitute a default under, 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
this Agreement nor the consummation by the Subordination Agent of any of
the transactions contemplated hereby requires the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action with respect to, any Massachusetts governmental authority or agency
or any federal Governmental authority or agency regulating the
Subordination Agent's banking, trust or fiduciary powers;
v. there are no Taxes Payable by the Subordination Agent imposed by
the Commonwealth of Massachusetts or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this 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 Commonwealth of Massachusetts or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the Equipment
Notes (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
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.
(e) The Escrow Agent represents and warrants that:
i. the Escrow Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States and has the full corporate power, authority and legal right
under the laws of the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver this Agreement, each
8
<PAGE>
Deposit Agreement and each Escrow and Paying Agent Agreement
(collectively, the "Escrow Agent Agreements") and to carry out the
obligations of the Escrow Agent under each of the Escrow Agent Agreements;
ii. the execution and delivery by the Escrow Agent of each of the
Escrow Agent Agreements and the performance by the Escrow Agent of its
obligations hereunder and thereunder have been duly authorized by the
Escrow Agent and will not violate its articles of association or by-laws
or the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
iii. each of the Escrow Agent Agreements constitutes the legal,
valid and binding obligations of the Escrow Agent enforceable against it
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.
(f) The Paying Agent represents and warrants that:
i. the Paying Agent is duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has
the full corporate power, authority and legal right under the laws of the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver this Agreement and each Escrow and Paying Agent
Agreement (collectively, the "Paying Agent Agreements") and to carry out
the obligations of the Paying Agent under each of the Paying Agent
Agreements;
ii. the execution and delivery by the Paying Agent of each of the
Paying Agent Agreements and the performance by the Paying Agent of its
obligations hereunder and thereunder have been duly authorized by the
Paying Agent and will not violate its articles of association or by-laws
or the provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
iii. each of the Paying Agent Agreements constitutes the legal,
valid and binding obligations of the Paying Agent enforceable against it
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.
Section 5. Covenants. (a) The Company covenants with each of the
other parties hereto that:
i. on the date that the Depositary is obligated to pay the amount of
the Final Withdrawal to the Paying Agent pursuant to a Deposit Agreement
relating to any Trust, the Company shall pay to the Pass Through Trustee
of such Trust no later than 1:00 p.m. (New York time) an amount equal to
the Deposit Make-Whole Amount, if any, required to be paid in respect of
such Final Withdrawal amount;
9
<PAGE>
ii. subject to Section 5(a)(iv) of this Agreement, the Company shall
at all times maintain its corporate existence and shall not wind up,
liquidate or dissolve or take any action, or fail to take any action, that
would have the effect of any of the foregoing;
iii. the Company shall at all times remain a U.S. Air Carrier (as
defined in the Financing Agreements) and shall at all times be otherwise
certificated and registered to the extent necessary to entitle (i) in the
case of Leased Aircraft, the Owner Trustee (and the Indenture Trustee as
assignee of the Owner Trustee's rights under each Lease) to the rights
afforded to lessors of aircraft equipment under Section 1110 and (ii) in
the case of Owned Aircraft, the Indenture Trustee to the rights afforded
to secured parties of aircraft equipment under Section 1110;
iv. Section 8(y) of each Participation Agreement is hereby
incorporated by reference herein; and
v. the Company shall not issue Series D Equipment Notes pursuant to
any Indenture, unless it shall have received Rating Agency Confirmation.
If Series D Equipment Notes are initially issued to other than the pass
through trustee for the Class D Certificates, the Company will cause such
Series D Equipment notes to be subject to the provisions of the
Intercreditor Agreement that allow the "Controlling Party" (as defined in
the Intercreditor Agreement), during the continuance of an "Indenture
Default" (as defined in the Intercreditor Agreement), to direct the Loan
Trustee in taking action under the applicable Indenture.
(b) State Street Bank and Trust Company, in its individual capacity,
covenants with each of the other parties to this Agreement that it will,
immediately upon obtaining knowledge of any facts that would cast doubt upon its
continuing status as a "citizen of the United States" as defined in 49 U.S.C.
ss. 40102(a)(15) and promptly upon public disclosure of negotiations in respect
of any transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith. Upon
State Street Bank and Trust Company giving any such notice, State Street Bank
and Trust Company shall, subject to Section 9.01 of any Indenture then entered
into, resign as Trustee in respect of such Indenture.
Section 6. Notices. Unless otherwise specifically provided herein,
all notices required or permitted by the terms of this Agreement shall be in
English and in writing, and any such notice shall become effective upon being
delivered personally or, if promptly confirmed by mail, when dispatched by
facsimile or other written telecommunication, addressed to such party hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement.
Section 7. Expenses. (a) The Company agrees to pay to the
Subordination Agent when due an amount or amounts equal to the fees payable to
the Liquidity Provider under Section 2.03 of each Liquidity Facility multiplied
by a fraction the numerator of which shall be the then outstanding aggregate
amount of the Deposits under the Deposit Agreements and the denominator of which
shall be the sum of (x) the then outstanding aggregate principal amount of
10
<PAGE>
the Series A Equipment Notes, Series B Equipment Notes and Series C Equipment
Notes issued under all of the Indentures and (y) the then outstanding aggregate
amount of the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due (A)
the amount equal to interest on any Downgrade Advance (other than Applied
Downgrade Advance) payable under Section 3.07 of each Liquidity Facility minus
Investment Earnings while such Downgrade Advance shall be outstanding, (B) the
amount equal to interest on any Non-Extension Advance (other than an Applied
Non-Extension Advance) payable under Section 3.07 of each Liquidity Facility
minus Investment Earnings while such Non-Extension Advance shall be outstanding,
(C) any other amounts owed to the Liquidity Provider by the Subordination Agent
as borrower under each Liquidity Facility (other than amounts due as repayment
of advances thereunder or as interest on such advances, except to the extent
payable pursuant to clause (A) or (B)), (ii) all compensation and reimbursement
of expenses, disbursements and advances payable by the Company under the Pass
Through Trust Agreements, (iii) 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 and (iv) in the event the Company requests any amendment
to any Operative Document, all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and/or the
Paying Agent in connection therewith. For purposes of this Section 7(b), (i) the
terms "Applied Non-Extension Advance," "Downgrade Advance" and "Non-Extension
Advance" shall have the meanings specified in each Liquidity Facility and (ii)
the term "Investment Earnings" shall have the meaning specified in the
Intercreditor Agreement.
Section 8. Further Assurances. Each party hereto shall duly execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates or documents,
and shall do and cause to be done such further acts and things, in any case, as
any other party hereto shall reasonably request in connection with its
administration of, or to carry out more effectually the purposes of, or to
better assure and confirm unto it the rights and benefits to be provided under,
this Agreement.
Section 9. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's, the Escrow Agent's, the
Paying Agent's and the Pass Through Trustee's obligations under any and all
thereof, shall survive the expiration or other termination of this Agreement and
the other agreements referred to herein.
(b) This Agreement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Agreement, including a signature page
executed by each of the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute one
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended,
11
<PAGE>
supplemented, waived or modified orally, but only by an instrument in writing
signed by the party against which the enforcement of the termination, amendment,
supplement, waiver or modification is sought. The index preceding this Agreement
and the headings of the various Sections of this Agreement are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the Company and its successors and permitted
assigns, 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 Escrow Agent and its successors as Escrow Agent under the Escrow
and Paying Agent Agreements, the Paying Agent and its successors as Paying Agent
under the Escrow and Paying Agent Agreement and the Subordination Agent and its
successors as Subordination Agent under the Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not provide any
person not a party hereto (other than the Underwriters and each of the
beneficiaries of Section 7 hereof) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a party hereto (other than
the Underwriters and each of the beneficiaries of Section 7 hereof) shall have
any right, power or privilege in respect of, or have any benefit or interest
arising out of, this Agreement.
Section 10. Indemnity. The Company hereby agrees to indemnify each
Indemnitee against, and agrees to protect, defend, save and keep harmless each
thereof from any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, out-of-pocket costs, expenses, and disbursements, of
whatsoever kind and nature (collectively called "Expenses") imposed on, incurred
by or asserted against any Indemnitee, in any way relating to or arising out of
(A) any of the Financing Agreements or any lease or sublease of any Aircraft or
the enforcement of any of the terms thereof or any amendment, modification or
waiver in respect thereof, (B) the manufacture, purchase, acceptance or
rejection of the Airframe (as defined in the Participation Agreement) or any
Engine (as defined in the Participation Agreement), (C) the Aircraft (or any
portion thereof or any Engine or engine affixed to the Airframe) whether or not
arising out of the finance, refinance, ownership, delivery, nondelivery,
storage, lease, sublease, sub-sublease, possession, use, non-use, operation,
maintenance, registration, reregistration, condition, modification, alteration,
replacement, repair, substitution, sale, return or other disposition of the
Aircraft (or any portion thereof or any Engine or engine affixed to the
Airframe) including, without limitation, latent or other defects, whether or not
discoverable, strict tort liability and any claim for patent, trademark or
copyright infringement, or (D) the offer, sale or delivery of the Equipment
Notes (the indemnity in this clause (D) to extend also to any person who
controls an Indemnitee within the meaning of Section 15 of the Securities Act of
1933, as amended); provided that the foregoing indemnity as to any Indemnitee
shall not extend to any Expense resulting from or arising out of or which would
not have occurred but for one or more of the following: (A) any representation
or warranty by such Indemnitee (or any of its affiliates) in the Financing
Agreements or in connection therewith being incorrect in any material respect,
or (B) the failure by such Indemnitee (or any of its affiliates) to perform or
observe any agreement, covenant or condition in any of the Financing Agreements
applicable to it (except to the extent such failure was caused directly by the
failure of the Company to perform any obligation under a Financing Agreement),
or (C) the willful misconduct or the gross negligence of such Indemnitee
12
<PAGE>
(or any of its affiliates) other than gross negligence imputed to such
Indemnitee (or any of its affiliates) solely by reason of its interest in the
Aircraft), or (D) any Tax, or (E) the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Financing Agreements other than such as have been consented to, approved,
authorized or requested by the Company, or (F) subject to the next succeeding
paragraph, any loss of tax benefits or increase in tax liability under any tax
law whether or not the Company is required to indemnify therefor pursuant to
this Agreement, or (G) any Expense which is specified to be for the account of
an Indemnitee pursuant to any Financing Agreement without express right of
reimbursement under any Financing Agreement. The foregoing indemnity shall not
extend to any Expense to the extent that such Expense is not caused by, or does
not arise out of, an act, omission or event which occurs prior to the payment of
all payments required to be paid by the Company under the Financing Agreements.
The Company further agrees that any payment or indemnity pursuant to
this Section 10 in respect of any Expenses shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any Federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or possession of the United States or any international authority,
shall be equal to the excess, if any, of (A) the amount of such Expense over (B)
the net reduction in Taxes required to be paid by such recipient resulting from
the accrual or payment of such Expense.
If, by reason of any Expense payment made to or for the account of
an Indemnitee by the Company pursuant to this Section 10, such Indemnitee
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing such
payment, such Indemnitee shall promptly pay to the Company, but only if the
Company shall have made all payments then due and owing to such Indemnitee under
the Financing Agreements, an amount equal to the sum of (I) the actual reduction
in Taxes realized by such Indemnitee which is attributable to such deduction or
credit, and (II) the actual reduction in Taxes realized by such Indemnitee as a
result of any payment made by such Indemnitee pursuant to this sentence.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to the Company; provided
that the failure to provide such notice shall not release the Company from any
of its obligations to indemnify hereunder, and no payment by the Company to an
Indemnitee pursuant to this Section 10 shall be deemed to constitute a waiver or
release of any right or remedy which the Company may have against such
Indemnitee for any actual damages as a result of the failure by such Indemnitee
to give the Company such notice. The Company shall be entitled, at its sole cost
and expense, acting through counsel acceptable to the respective Indemnitee, (A)
so long as the Company has agreed in a writing acceptable to such Indemnitee
that the Company is liable to such Indemnitee for such Expense hereunder (unless
such Expense is covered by the proviso to the first paragraph of this Section
10), in any judicial or administrative proceeding that involves solely a claim
for one or more Expenses, to assume responsibility for and control thereof, (B)
so long as the Company has agreed in a writing acceptable to such Indemnitee
that the Company is liable to such Indemnitee for such Expense
13
<PAGE>
hereunder (unless such Expense is covered by the proviso to the first paragraph
of this Section 10), in any judicial or administrative proceeding involving a
claim for one or more Expenses and other claims related or unrelated to the
transactions contemplated by the Financing Agreements, to assume responsibility
for and control of such claim for Expenses to the extent that the same may be
and is severed from such other claims (and such Indemnitee shall use its best
efforts to obtain such severance), and (C) in any other case, to be consulted by
such Indemnitee with respect to judicial proceedings subject to the control of
such Indemnitee. Notwithstanding any of the foregoing to the contrary, the
Company shall not be entitled to assume responsibility for and control of any
such judicial or administrative proceedings (M) while an event of default shall
have occurred and be continuing under any of the Financing Agreements or (N) if
such proceeding could be in the good faith opinion of such Indemnitee entail any
material risk of criminal liability or present a conflict of interest making
separate representation necessary. The affected Indemnitee may participate at
its own expense and with its own counsel in any judicial proceeding controlled
by the Company pursuant to the preceding provisions.
The affected Indemnitee shall supply the Company with such
information reasonably requested by the Company as is necessary or advisable for
the Company to control or participate in any proceeding to the extent permitted
by this Section 10. Such Indemnitee shall not enter into a settlement or other
compromise with respect to any Expense without the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed, unless
such Indemnitee waives its right to be indemnified with respect to such Expense
under this Section 10.
The Company shall supply the affected Indemnitee with such
information reasonably requested by such Indemnitee as is necessary or advisable
for such Indemnitee to control or participate in any proceeding to the extent
permitted by this Section 10.
When the Company or the insurers under a policy of insurance
maintained by the Company undertakes the defense of an Indemnitee with respect
to an Expense, no additional legal fees or expenses of such Indemnitee in
connection with the defense of such Indemnitee shall be indemnified hereunder
unless such fees or expenses were incurred at the written request of the Company
or such insurers, provided that no such defense shall be compromised or settled
on a basis that admits any gross negligence or willful misconduct on the part of
such Indemnitee without such Indemnitee's prior consent.
In the event that the Company shall have paid an amount to an
Indemnitee pursuant to this Section 10, and such Indemnitee subsequently shall
be reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay to the Company an amount equal to the amount of
such reimbursement (but in no event more than such payment from the Company)
plus any net tax benefit (or minus any net tax detriment) realized by such
Indemnitee as a result of any reimbursement received and payment made by such
Indemnitee pursuant to this sentence, provided that (i) no event of default has
occurred and is continuing under any of the Financing Agreements and (ii) such
Indemnitee shall have no obligation to reimburse the Company if the Company has
not paid such Indemnitee all amounts required pursuant to this Section 10 and
any other amounts then due to such Indemnitee from the Company under any of the
Financing Agreements.
14
<PAGE>
The Company's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from the Company pursuant to this Section 10 may proceed
directly against the Company without first seeking to enforce any other right of
indemnification.
Section 11. Termination. This Agreement shall terminate on the
Delivery Period Termination Date; provided, that, the provisions of Sections 7
and 8 hereof shall survive any termination of this Agreement.
Section 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(This space intentionally left blank.)
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Note
Purchase Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.
By: /s/ Mickey P. Foret
---------------------------------------
Name: Mickey P. Foret
Title: Executive Vice President and
Chief Financial Officer
Address: 501 Northwest Drive
St. Paul, Minnesota 55111-3034
Attention:
Facsimile:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee
By: /s/ Donald Smith
---------------------------------------
Name: Donald Smith
Title: Vice President
Address:
Attention:
Facsimile:
16
<PAGE>
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent
By: /s/ Donald Smith
---------------------------------------
Name: Donald Smith
Title: Vice President
Address:
Attention:
Facsimile:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent
By: /s/ Greg A. Hawley
---------------------------------------
Name: Greg A. Hawle
Title: Vice President
Address:
Attention:
Facsimile:
STATE STREET BANK AND TRUST COMPANY, as
Paying Agent
By: /s/ Donald Smith
---------------------------------------
Name: Donald Smith
Title: Vice President
Address:
Attention:
Facsimile:
17
<PAGE>
SCHEDULE I TO
NOTE PURCHASE AGREEMENT
NEW AIRCRAFT AND SCHEDULED CLOSING MONTHS
- --------------------------------------------------------------------------------
Expected
Expected Manufacturer's Scheduled
New Aircraft Type Registration Number Serial Number Delivery Months
- --------------------------------------------------------------------------------
Boeing 747-400 N671US 26477 March 1999
- --------------------------------------------------------------------------------
Boeing 747-400 N672US 26475 July 1999
- --------------------------------------------------------------------------------
Boeing 747-400 N673US 26476 August 1999
- --------------------------------------------------------------------------------
Boeing 747-400 N674US 26478 October 1999
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE II TO
NOTE PURCHASE AGREEMENT
TRUST SUPPLEMENTS
Trust Supplement, dated as of the Issuance Date, among the Company,
Northwest Airlines Holdings Corporation, Northwest Airlines Corporation and the
Pass Through Trustee in respect of Northwest Airlines Pass Through Trust, Series
1999-1A.
Trust Supplement, dated as of the Issuance Date, among the Company,
Northwest Airlines Holdings Corporation, Northwest Airlines Corporation and the
Pass Through Trustee in respect of Northwest Airlines Pass Through Trust, Series
1999-1B.
Trust Supplement, dated as of the Issuance Date, among the Company,
Northwest Airlines Holdings Corporation, Northwest Airlines Corporation and the
Pass Through Trustee in respect of Northwest Airlines Pass Through Trust, Series
1999-1C.
<PAGE>
SCHEDULE III TO
NOTE PURCHASE AGREEMENT
DEPOSIT AGREEMENTS
Deposit Agreement (Class A), dated as of the Issuance Date, between
the Depositary and the Escrow Agent.
Deposit Agreement (Class B), dated as of the Issuance Date, between
the Depositary and the Escrow Agent.
Deposit Agreement (Class C), dated as of the Issuance Date, between
the Depositary and the Escrow Agent.
<PAGE>
SCHEDULE IV TO
NOTE PURCHASE AGREEMENT
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A), dated as of the
Issuance Date, among the Escrow Agent, the Underwriters, the Pass Through
Trustee and the Paying Agent.
Escrow and Paying Agent Agreement (Class B), dated as of the
Issuance Date, among the Escrow Agent, the Underwriters, the Pass Through
Trustee and the Paying Agent.
Escrow and Paying Agent Agreement (Class C), dated as of the
Issuance Date, among the Escrow Agent, the Underwriters, the Pass Through
Trustee and the Paying Agent.
<PAGE>
SCHEDULE V TO
NOTE PURCHASE AGREEMENT
MANDATORY DOCUMENT TERMS
The terms "Trust Indenture Form," "Lease Form" and "Participation
Agreement Form" shall have the respective meanings specified in Schedule VI to
the Note Purchase Agreement.
1. May not modify in any material adverse respect as regards the
interests of the Note Holders, the Subordination Agent, the Liquidity Provider
or the Indenture Trustee, the Granting Clause of the Trust Indenture Form so as
to deprive the Note Holders of a first priority security interest in and
mortgage lien on the Aircraft and, in the case of a Leased Aircraft Indenture,
the Lease or to eliminate any of the obligations intended to be secured thereby
or otherwise modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Provider or the
Indenture Trustee the provisions of Article II or III or Sections 4.02, 4.03,
4.04, 5.02, 5.06, 9.01 or the first sentence of Section 10.11 of the Leased
Aircraft Indenture Form for the Leased Aircraft or Article II or III or Sections
4.01, 4.02, 5.02, 7.06(a), 7.06(b), 10.01, or the first sentence of Section
11.11 of the Owned Aircraft Indenture Form for the Owned Aircraft.
2. May not modify in any material adverse respect as regards the
interests of the Note Holders, the Subordination Agent, the Liquidity Provider
or the Indenture Trustee the provisions of Section 3(d)(v), Section 3(f),
Section 7(a)(I)(i), clause (6) of the final paragraph of Section 10(a), Section
16, Section 18, the first and third sentences of Section 20 or the penultimate
sentence of Section 24 of the Lease Form or otherwise modify the terms of the
Lease Form so as to deprive the Indenture Trustee of rights expressly granted to
the "Indenture Trustee" therein.
3. May not modify in any material adverse respect as regards the
interests of the Note Holders, the Subordination Agent, the Liquidity Provider
or the Indenture Trustee the provisions of Section 4(a)(ix)(1), 4(a)(ix)(2),
4(a)(ix)(3), 4(a)(xxiii) to the extent such section requires special counsel for
the Lessee to deliver an opinion relating to Section 1110 of the Bankruptcy
Code, Sections 8(q), 8(cc), 11(b), 12 or the penultimate sentence of Section
15(c), 15(e) or the provisions of Sections 4(a)(xi), 4(a)(xii), 4(a)(xiii),
4(a)(xiv), 4(a)(xv) and 4(a)(xvi) of the Participation Agreement Form so as to
eliminate the requirement to deliver to the Loan Participant or the Indenture
Trustee, as the case may be, the legal opinions to be provided to such Persons
thereunder (recognizing that the lawyers rendering such opinions may be changed)
or the provisions of Section 8(f)(ii)(C) or otherwise modify the terms of the
Participation Agreement Form to deprive the Subordination Agent, the Liquidity
Provider or the Indenture Trustee of any indemnity or right of reimbursement in
its favor for Expenses or Taxes.
4. May not modify, in any material adverse respect as regards the
interests of the Note Holders, the Subordination Agent, the Liquidity Provider
or the Indenture Trustee, the definition of "Make-Whole Amount" in the Leased
Aircraft Indenture Form (with respect to
<PAGE>
Equipment Notes relating to Leased Aircraft) or in Annex A to the Owned Aircraft
Indenture Form (with respect to Equipment Notes relating to Owned Aircraft).
Notwithstanding the foregoing, any such Mandatory Document Term may
be modified to correct or supplement any such provision which may be defective
or to cure any ambiguity or correct any mistake, provided, however, that any
such action shall not materially adversely affect the interests of the Note
Holders, the Subordination Agent, the Liquidity Provider, the Indenture Trustee
or the Certificate Holders.
<PAGE>
SCHEDULE VI TO
NOTE PURCHASE AGREEMENT
MANDATORY ECONOMIC TERMS
EQUIPMENT NOTES
Obligor: Northwest Airlines, Inc. or an Owner Trust
Maximum Principal Amount:
The principal amount of all the Equipment Notes issued with respect
to an Aircraft shall not exceed the maximum principal amount of Equipment Notes
indicated for each such Aircraft as set forth in the Prospectus Supplement in
"Prospectus Supplement Summary--Equipment Notes and the Aircraft" under the
column "Maximum Principal Amount of Equipment Notes."
Initial Loan to Aircraft Value (with the value of any Aircraft for
these purposes equal to the value (the "Assumed Appraised Value") for such
Aircraft set forth in the Prospectus Supplement in "Prospectus Supplement
Summary--Equipment Notes and the Aircraft" under the column "Appraised Base
Value"):
Series A: not in excess of 38.3%
Series B: not in excess of 56.3%
Series C: not in excess of 70.0%
The Loan to Aircraft Value for each series of Equipment Notes issued
in respect of each Aircraft (computed as of the date of the issuance thereof on
the basis of the Assumed Appraised Value of such Aircraft and the Depreciation
Assumption (as defined in the Prospectus Supplement in "Description of the
Equipment Notes - Loan to Value Ratios of Equipment Notes")) will not exceed as
of any Regular Distribution Date thereafter (assuming no default in the payment
of the Equipment Notes) 38.0% in the case of the Series A Equipment Notes and
56.0% in the case of the Series B Equipment Notes and 68.0% in the case of the
Series C Equipment Notes. Initial Average Life (in years) of the Series A
Equipment Notes, the Series B Equipment Notes and the Series C Equipment Notes
on any Aircraft will not extend beyond 14.5 years, 14.0 years and 11.5 years,
respectively, from the Issuance Date.
<PAGE>
AVERAGE LIFE (IN YEARS)
As of the Delivery Period Termination Date, the average life of the
Class A Certificates, the Class B Certificates and the Class C Certificates
shall not be more than 13.9 years, 13.0 years and 10.0 years, respectively, from
the Issuance Date (computed without regard to the acceleration of any Equipment
Notes and after giving effect to any special distribution on the Certificates
thereafter required in respect of unused Deposits).
FINAL EXPECTED DISTRIBUTION DATE
Series A Certificates: February 1, 2020
Series B Certificates: February 1, 2020
Series C Certificates: February 1, 2014
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: February 1 and August 1, commencing with the first such date
after the applicable Equipment Notes are issued
Make-Whole Amounts: As provided in Article II of the form of Leased Aircraft
Indenture marked as Exhibit A-3 of the Note Purchase Agreement (the "Leased
Aircraft Indenture Form") or the form of Owned Aircraft Indenture marked as
Exhibit C-2 of the Note Purchase Agreement (the "Owned Aircraft Indenture Form",
together with the Leased Aircraft Indenture Form, the "Trust Indenture Form").
Redemption and Purchase: As provided in Article II of the Trust Indenture Form.
The original aggregate principal amount of all of the Equipment Notes of each
Series shall not exceed the original aggregate face amount of the Certificates
issued by the corresponding Trust.
The interest rate applicable to each Series of Equipment Notes must be equal to
the rate applicable to the Certificates issued by the corresponding Trust.
All-risk hull insurance: Not less than an amount equal to the stipulated
loss value (in the case of a Leased Aircraft) or
unpaid principal amount of the related Equipment
Notes (in the case of an Owned Aircraft).
LEASE
Term: The Basic Lease Term shall expire by its terms
on or after final maturity date of the related
Series A, Series B or Series C Equipment Notes.
Lease Period Dates: Each February 1 and August 1, commencing with
the first such date after the Lease is entered
into, to and including the last such date in the
Term.
Sch. VI-2
<PAGE>
Minimum Rent: Basic Rent (and supplemental rent, if any) due
and payable on each Lease Period Date shall be
at least sufficient to pay in full, as of such
Lease Period Date (assuming timely payment of
the related Equipment Notes prior to such Date),
the aggregate principal amount of scheduled
installments due on the related Equipment Notes
outstanding on such Lease Period Date, together
with accrued and unpaid interest thereon.
Termination Value At all times equal to or greater than the then
and Stipulated outstanding principal amount of the related
Loss Value: Equipment Notes together with accrued interest
thereon.
Minimum Liability $400,000,000 per occurrence.
Insurance Amount:
Past Due Rate: As set forth in the Lease Form (the "Lease
Form") marked as Exhibit A-2 to the Note
Purchase Agreement.
PARTICIPATION AGREEMENT
Loan Trustee, Subordination Agent, Liquidity Provider, Pass Through
Trustees and Note Holders shall be indemnified against Expenses and Taxes in a
manner no less favorable to the Loan Trustee, the Subordination Agent, the
Liquidity Provider, the Pass Through Trustees and the Note Holders than that set
forth in Sections 7(b) and 7(c) of the form of the Participation Agreement (the
"Participation Form") marked as Exhibit A-1 to the Note Purchase Agreement for
the Leased Aircraft or as Exhibit C-1 to the Note Purchase Agreement for the
Owned Aircraft.
Sch. VI-3
<PAGE>
SCHEDULE VII TO
NOTE PURCHASE AGREEMENT
AGGREGATE AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
1999-1A Trust 1991-1C Trust
Equipment 1999-1B Trust Equipment
Notes Equipment Notes Notes
Scheduled Scheduled Scheduled
Payments of Payments of Payments of
Principal Principal Principal
Date Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
August 1, 1999 $ 0.00 $ 0.00 $ 70,000.00
February 1, 2000 3,531,150.00 3,573,121.53 4,638,132.40
August 1, 2000 3,534,000.00 1,465,247.96 0.00
February 1, 2001 7,065,150.00 1,654,930.52 557,100.00
February 1, 2002 7,065.150.00 3,346,650.00 1,423,502.46
February 1, 2003 7,065,150.00 3,346,650.00 2,005,665.14
February 1, 2004 7,065,150.00 3,346,650.00 2,234,318.65
February 1, 2005 7,065,150.00 3,458,688.01 6,503,983.77
February 1, 2006 7,065,150.00 3,234,611.99 169,409.68
February 1, 2007 7,065,150.00 3,346,650.00 12,343,977.17
February 1, 2008 7,065,150.00 3,346,650.00 5,540,634.20
February 1, 2009 7,065,150.00 3,346,650.00 1,584,866.62
February 1, 2010 7,065,150.00 3,346,650.00 4,780,180.40
February 1, 2011 7,065,150.00 4,171,446.76 4,621,865.62
February 1, 2012 7,065,150.00 5,427,375.94 0.00
August 1, 2013 7,065,150.00 441,127.29 24,957,437.71
February 1, 2014 7,065,150.00 3,346,650.00 2,708,926.18
February 1, 2015 9,420,200.00 20,288,422.66 0.00
February 1, 2016 9,420,200.00 25,186,137.50 0.00
February 1, 2017 27,687,486.92 9,449,819.78 0.00
February 1, 2018 39,771,418.36 0.00 0.00
February 1, 2019 42,481,019.21 78,113.13 0.00
February 1, 2020 747,425.51 6,352,756.93 0.00
--------------- --------------- ---------------
Total $235,505,000.00 $111,555,000.00 $ 74,140,000.00
=============== =============== ===============
</TABLE>
<PAGE>
ANNEX A TO
NOTE PURCHASE AGREEMENT
DEFINITIONS
"Act" means 49 U.S.C. ss.ss. 40101-46507.
"Affiliate" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"Aircraft Purchase Agreement" means the Purchase Agreement No. 1630
dated as of December 1, 1989, between the Company and the Seller (including all
exhibits thereto, together with all letter Agreements entered into that by their
terms constitute part of any such Purchase Agreement).
"Aircraft Purchase Agreement Assignment" means a Purchase Agreement
Assignment substantially in the form of Exhibit A-4 to the Note Purchase
Agreement.
"Assumed Amortization Schedule" means Schedule VII to the Note
Purchase Agreement.
"Average Life Date" means, for any Equipment Note, the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
ss.ss. 101 et seq.
"Basic Pass Through Trust Agreement" means the Pass Through Trust
Agreement, dated as of June 3, 1996, between the Company, Northwest Airlines
Corporation and the Pass Through Trustee, as amended by the Supplemental
Agreement, dated as of November 20, 1998, among the Company, Northwest Airlines
Holdings Corporation, Northwest Airlines Corporation and the Pass Through
Trustee, as such agreement may be further supplemented, amended or modified, but
does not include any Trust Supplement.
"Business Day" means any day, other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Minneapolis, Minnesota, Chicago, Illinois, Boston, Massachusetts
or Salt Lake City, Utah.
"Certificate" has the meaning set forth in the recitals to the Note
Purchase Agreement.
Annex A-1
<PAGE>
"Certificate Holder" means the Person in whose name a Certificate is
registered in the Register.
"Class" means the class of Certificates issued by each Pass Through
Trust.
"Class A Certificates" means the Class A Certificates issued by the
Northwest Airlines Pass Through Trust, Series 1999-1A.
"Class A Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-1A formed pursuant to the Basic Pass Through Trust Agreement and
Class A Trust Supplement.
"Class B Certificates" means the Class B Certificates issued by the
Northwest Airlines Pass Through Trust, Series 1999-1B.
"Class B Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-1B formed pursuant to the Basic Pass Through Trust Agreement and
Class B Trust Supplement.
"Class C Certificates" means the Class C Certificates issued by the
Northwest Airlines Pass Through Trust, Series 1999-1C.
"Class C Purchase Agreement" has the meaning set forth in the
recitals to the Note Purchase Agreement.
"Class C Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-1C formed pursuant to the Basic Pass Through Trust Agreement and
Class C Trust Supplement.
"Class D Certificates" means the certificates, if any, issued by
Northwest Airlines, Inc. and designated Class D certificates, in connection with
a secured financing or leveraged lease transaction relating to an aircraft which
will be used in its operations.
"Closing Date" means the Business Day on which a closing occurs
under the Financing Agreements.
"Closing Notice" has the meaning set forth in Section 2(b) hereof.
"Company" means Northwest Airlines, Inc., a Minnesota corporation.
"Cut-Off Date" means the earlier of (a) the day after the Delivery
Period Termination Date and (b) the date on which a Triggering Event occurs.
"Delivery Period Termination Date" means the earlier of (a) January
31, 2000 and (b) the date on which Equipment Notes issued with respect to all of
the New Aircraft have been purchased by the Pass Through Trustees in accordance
with the Note Purchase Agreement.
Annex A-2
<PAGE>
"Deposit" has the meaning set forth in the recitals to the Note
Purchase Agreement.
"Deposit Agreement" has the meaning set forth in the recitals to the
Note Purchase Agreement.
"Deposit Make-Whole Amount" means, with respect to the distribution
of unused Deposits to holders of any Class of Certificates, as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the Equipment Notes, assuming the maximum principal amount thereof (the
"Maximum Amount") minus the Non-Premium Amount were issued, on each remaining
Regular Distribution Date for such Class under the Assumed Amortization Schedule
over (ii) the scheduled payment of principal and interest to maturity of the
Equipment Notes actually acquired by the Trustee for such Class on each such
Regular Distribution Date, such present value computed by discounting such
excess on a semiannual basis on each Regular Distribution Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield plus 193 basis points in the case of the Class A Certificates and
248 basis points in the case of the Class B Certificates and 325 basis points in
the case of Class C Certificates over (b) the amount of such unused Deposits to
be distributed to the holders of such Certificates, minus the Non-Premium Amount
plus accrued and unpaid interest on such net amount to but excluding the date of
determination from and including the preceding Regular Distribution Date (or if
such date of determination precedes the first Regular Distribution Date, the
Issuance Date).
"Depositary" means ABN AMRO Bank N.V., Chicago Branch, a banking
institution organized under the laws of The Netherlands.
"Equipment Notes" means and includes any secured certificates issued
under any Indenture in the form specified in Section 2.01 thereof (as such form
may be varied pursuant to the terms of such Indenture) and any Equipment Note
issued under any Indenture in exchange for or replacement of any other Equipment
Note.
"Escrow Agent" has the meaning set forth in the first paragraph of
the Note Purchase Agreement.
"Escrow and Paying Agent Agreement" has the meaning set forth in the
recitals to the Note Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United
States.
"Final Withdrawal" with respect to each Escrow and Paying Agent
Agreement, has the meaning set forth in Section 1.2 thereof.
"Financing Agreements" means, collectively, the Lease Financing
Agreements and the Owner Financing Agreements.
Annex A-3
<PAGE>
"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 a Guarantee whereby Northwest Airlines Corporation
guarantees (i) the Company's obligations under a Lease (in the case of a Leased
Aircraft) or (ii) the Company's obligations under an Owned Aircraft Indenture
(in the case of an Owned Aircraft).
"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.
"Indemnitee" means the Escrow Agent and the Paying Agent.
"Indentures" means, collectively, the Leased Aircraft Indentures and
the Owned Aircraft Indentures.
"Initial Deposits" has the meaning set forth in the recitals to the
Note Purchase Agreement.
"Intercreditor Agreement" has the meaning set forth in the recitals
to the Note Purchase Agreement.
"Issuance Date" means the date of the original issuance of the
Certificates.
"Law" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" means a Lease Agreement substantially in the form of Exhibit
A-2 to the Note Purchase Agreement.
"Lease Financing Agreements" means, collectively, the Aircraft
Purchase Agreement Assignment, the Leased Aircraft Participation Agreement, the
Lease, the Leased Aircraft Indenture, the Equipment Notes issued under the
Leased Aircraft Indenture, the Guarantee and the Trust Agreement relating to the
financing of a Leased Aircraft.
"Lease Period" has the meaning set forth in the Participation
Agreement.
"Leased Aircraft" means a New Aircraft subject to a Lease.
Annex A-4
<PAGE>
"Leased Aircraft Indenture" means a Trust Indenture and Security
Agreement substantially in the form of Exhibit A-3 to the Note Purchase
Agreement.
"Leased Aircraft Participation Agreement" means a Participation
Agreement substantially in the form of Exhibit A-1 to the Note Purchase
Agreement.
"Liquidity Facility" has the meaning set forth in the recitals to
the Note Purchase Agreement.
"Liquidity Provider" has the meaning set forth in the recitals to
the Note Purchase Agreement.
"Loan Trustee" means the "Indenture Trustee" as defined in the
Financing Agreements.
"Mandatory Document Terms" means the terms set forth on Schedule V
to the Note Purchase Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule VI
to the Note Purchase Agreement.
"Manufacturer" means The Boeing Company.
"New Aircraft" has the meaning set forth in the recitals to the Note
Purchase Agreement.
"Non-Premium Amount" means the amount equal to the sum of unused
Deposits to be distributed (i) due to the failure of an Aircraft to be delivered
prior to the Delivery Period Termination Date due to any reason not occasioned
by the Company's fault or negligence and (ii) in the case of Class C
Certificates, $5 million.
"Note Purchase Agreement" means the Note Purchase Agreement to which
this Annex A is attached.
"Notice of Purchase Withdrawal" with respect to each Deposit
Agreement, has the meaning set forth in Section 2.3 thereof.
"Operative Documents" means, collectively, the Pass Through Trust
Agreements, the Escrow and Paying Agent Agreements, the Deposit Agreements, the
Liquidity Facilities, the Intercreditor Agreement, the Certificates and the
Financing Agreements.
"Owned Aircraft" means a New Aircraft subject to an Owned Aircraft
Indenture.
"Owned Aircraft Indenture" means a Trust Indenture and Security
Agreement substantially in the form of Exhibit C-2 to the Note Purchase
Agreement.
Annex A-5
<PAGE>
"Owned Aircraft Participation Agreement" means a Participation
Agreement substantially in the form of Exhibit C-1 to the Note Purchase
Agreement.
"Owner Financing Agreements" means, collectively, the Owned Aircraft
Participation Agreement, the Guarantee, the Owned Aircraft Indenture and the
Equipment Notes issued thereunder.
"Owner Participant" means, with respect to any Leased Aircraft, the
Person named as the Owner Participant in the Participation Agreement with
respect to such Leased Aircraft.
"Owner Trust" means with respect to any Leased Aircraft, the trust
created by the "Trust Agreement" referred to in the Leased Aircraft Indenture
related thereto.
"Owner Trustee" means with respect to any Leased Aircraft, the
"Owner Trustee" party to the "Trust Agreement" referred to in the Leased
Aircraft Indenture related thereto
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreements and the Owned Aircraft Participation Agreements.
"Pass Through Trust" has the meaning set forth in the recitals to
the Note Purchase Agreement.
"Pass Through Trust Agreement" means each of the three separate
Trust Supplements, together in each case with the Basic Pass Through Trust
Agreement, each dated as of the Issuance Date, by and between the Lessee and
Pass Through Trustee.
"Pass Through Trustee" has the meaning set forth in the first
paragraph of the Note Purchase Agreement.
"Paying Agent" has the meaning set forth in the first paragraph of
the Note Purchase Agreement.
"Person" means any individual, firm, partnership, joint venture,
trust, trustee, Government Entity, organization, association, corporation,
government agency, committee, department, authority and other body, corporate or
incorporate, whether having distinct legal status or not, or any member of any
of the same.
"Qualified Owner Participant" means a Person which has a tangible
net worth (exclusive of goodwill) greater than $75,000,000.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. The initial Rating
Agencies will be Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services, a division of McGraw-Hill Inc.
Annex A-6
<PAGE>
"Rating Agency Confirmation" means, with respect to any Financing
Agreement that has been modified in any material respect from the forms thereof
attached to the Note Purchase Agreement or with respect to the issuance of Class
D Certificates or Series D Equipment Notes, a written confirmation from each of
the Rating Agencies that the use of such Financing Agreement with such
modifications or the issuance of such Class D Certificates or Series D Equipment
Notes, as the case may be, whichever of the foregoing shall in a particular case
require Rating Agency Confirmation, would not result in (i) a reduction of the
rating for any Class of Certificates below the then current rating for such
class of Certificates or (ii) a withdrawal or suspension of the rating of any
Class of Certificates.
"Register" means the register maintained pursuant to Sections 3.04
and 7.11 of the Basic Pass Through Trust Agreement with respect to each Pass
Through Trust.
"Regular Distribution Dates" shall mean February 1 and August 1 of
each year, commencing August 1, 1999.
"Remaining Weighted Average Life" means, on a given date with
respect to any Equipment Note, 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 scheduled payment of principal of such Equipment
Note, including the payment due on the maturity of such Equipment Note by (ii)
the number of payment due on the maturity of such Equipment Note by (ii) the
number days from and including such determination date to but excluding the date
on which such payment of principal is scheduled to be made, by (b) the then
outstanding principal amount of such Equipment Note.
"Scheduled Closing Date" has the meaning set forth in Section 2(b)
hereof.
"Section 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or
any successor or analogous Section of the federal bankruptcy law in effect from
time to time.
"Seller" means The Boeing Company.
"Series A Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series A" thereunder.
"Series B Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series B" thereunder.
"Series C Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series C" thereunder.
"Series D Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series D" thereunder.
"Subordination Agent" has the meaning set forth in the first
paragraph of the Note Purchase Agreement.
Annex A-7
<PAGE>
"Substitute Closing Date" has the meaning set forth in Section 2(e)
of the Note Purchase Agreement.
"Taxes" means all license, recording, documentary, registration and
other similar fees and all taxes, levies, imposts, duties, charges, assessments
or withholdings of any nature whatsoever imposed by any Taxing Authority,
together with any penalties, additions to tax, fines or interest thereon or
additions thereto.
"Taxing Authority" means any federal, state or local government or
other taxing authority in the United States, any foreign government or any
political subdivision or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"Treasury Yield" means, as of any date of determination, with
respect to any Equipment Note (utilizing the Assumed Amortization Schedule
applicable thereto), the interest rate (expressed 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 semi-annual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets 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 Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, 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 Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519).
"Triggering Event" has the meaning assigned to such term in the
Intercreditor Agreement.
"Trust Agreement" means a Trust Agreement substantially in the form
of Exhibit A-5 to the Note Purchase Agreement.
"Trust Supplement" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Certificates of a class, (ii) the issuance of
the Certificates of such class representing fractional undivided interests in
such trust is authorized and (iii) the terms of the Certificates of such class
are established.
"Underwriters" has the meaning set forth in the recitals to the Note
Purchase Agreement.
"Underwriting Agreement" has the meaning set forth in the recitals
to the Note Purchase Agreement.
Annex A-8
================================================================================
PARTICIPATION AGREEMENT
[NW 1999 _]
Dated as of
[_______________]
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
[_______________________________]
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,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
---------------------
One Boeing 747-451 Aircraft
N[_____]
Leased to Northwest Airlines, Inc.
================================================================================
<PAGE>
INDEX TO PARTICIPATION AGREEMENT
Page
SECTION 1. Participations in Lessor's Cost of the Aircraft ...................3
SECTION 2. Lessee's Notice of Delivery Date ..................................4
SECTION 3. Instructions to the Owner Trustee .................................4
SECTION 4. Conditions ........................................................5
(a) Conditions Precedent to the Participations in the
Aircraft ..................................................5
(b) Conditions Precedent to the Obligations of Lessee and
the Guarantor ............................................13
SECTION 5. [Intentionally Omitted] ..........................................15
SECTION 6. Extent of Interest of Certificate Holders ........................15
SECTION 7. Representations and Warranties of Lessee and the Guarantor;
Indemnities .....................................................15
(a) Representations and Warranties ............................15
(b) General Tax Indemnity .....................................18
(c) General Indemnity .........................................18
(d) Income Tax.................................................18
SECTION 8. Representations, Warranties and Covenants ........................18
SECTION 9. Reliance of Liquidity Provider ...................................37
SECTION 10. Other Documents .................................................37
SECTION 11. Certain Covenants of Lessee .....................................38
SECTION 12. Owner for Federal Tax Purposes ..................................39
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction ...........39
SECTION 14. Change of Situs of Owner Trust ..................................40
SECTION 15. Miscellaneous ...................................................41
SECTION 16. Expenses ........................................................42
SECTION 17. Refinancings ....................................................42
(i)
<PAGE>
SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B-1 - Form of Opinion of Simpson Thacher & Bartlett, special
counsel for the Lessee and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special
counsel for the Lessee and the Guarantor
Exhibit B-3 - Form of Opinion of Lessee's Legal Department
Exhibit C - Form of Opinion of in-house counsel for the Manufacturer
Exhibit D - Form of Opinion of Ray, Quinney & Nebeker, special counsel
for the Owner Trustee
Exhibit E-1 - Form of Opinion of [___________________], special counsel
for the Owner Participant
Exhibit E-2 - Form of Opinion of Owner Participant's in-house counsel
Exhibit F - Form of Opinion of Crowe & Dunlevy, P.C.
Exhibit G - Form of Opinion of Bingham Dana LLP, special counsel for
the Indenture Trustee
Exhibit H-1 - [Intentionally Omitted]
Exhibit H-2 - [Intentionally Omitted]
Exhibit I - Form of ss.1110 Opinion of Cadwalader, Wickersham & Taft,
special counsel for the Lessee
Exhibit J-1 - Form of Opinion of Bingham Dana LLP, special counsel for
the Pass Through Trustee
(ii)
<PAGE>
Exhibit J-2 - Form of Opinion of Bingham Dana LLP, special counsel for
the Subordination Agent
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
(iii)
<PAGE>
PARTICIPATION AGREEMENT
[NW 1999 _]
THIS PARTICIPATION AGREEMENT [NW 1999 _] dated as of
[_______________], among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the
"Guarantor"), (iii) [_________________________], a [__________] corporation (the
"Owner Participant"), (iv) 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, not in its individual capacity, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (defined below), and (vii) STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in
such latter capacity together with any successor indenture trustee, called the
"Indenture Trustee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is defined
in the Lease hereinafter referred to) between Lessee and the Manufacturer, the
Manufacturer has agreed to sell to Lessee, among other things, certain Boeing
747-451 aircraft, including the Aircraft which has been delivered by the
Manufacturer to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1999 _], 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
1999 _] (herein called the "Consent and Agreement"), substantially in the
form attached to the Purchase Agreement Assignment (herein called the
"Consent and Agreement");
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW 1999 _],
dated as of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "Trust Agreement", such
term to include, unless the context
<PAGE>
otherwise requires, any Trust Supplement referred to below), with the Owner
Trustee, pursuant to which Trust Agreement the Owner Trustee agrees, among other
things, to hold the Trust Estate defined in Section 1.01 thereof (herein called
the "Trust Estate") for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently
with the execution and delivery of this Agreement are entering into the Trust
Indenture and Security Agreement [NW 1999 _], dated as of the date hereof (said
Trust Indenture and Security Agreement, as the same may be amended or
supplemented from time to time, being herein called the "Trust Indenture", such
term to include, unless the context otherwise requires, the Trust Supplement
referred to below) pursuant to which the Owner Trustee will issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"Secured Certificates", and individually, a "Secured Certificate") in [three]
series, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"Trust Supplement") covering the Aircraft, supplementing the Trust Agreement and
the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW 1999 _], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "Lease", such term to
include, unless the context otherwise requires, the Lease Supplement referred to
below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "Delivery Date") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale, and
accepted by the Owner Trustee for all purposes of the Lease, such acceptance to
be evidenced by the execution of the Trust Supplement covering the Aircraft, and
such lease to be evidenced by the execution and delivery of a Lease Supplement
covering the Aircraft;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Tax Indemnity Agreement [NW
1999 _], dated as of the date hereof, with Lessee (the "Tax Indemnity
Agreement");
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW 1999 _], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of Lessee under the Operative Documents (the "Guarantee");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule III hereto
(collectively, the "Pass Through Trust Agreements"), on the Issuance Date
[three] separate trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") were created to facilitate
-2-
<PAGE>
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
on the Delivery Date to purchase from the Owner Trustee, on behalf of each Pass
Through Trust, all of the Secured Certificates bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, on the Issuance Date (i) Citibank, N.A. (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 February 16, 1999 (the "Intercreditor
Agreement");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated
hereby, Lessee and the Guarantor have entered into the Underwriting Agreement,
dated as of February 4, 1999, among Lessee, the Guarantor and the several
underwriters named therein (the "Underwriting Agreement"); and
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft. (a)
Participation by Pass Through Trustees. Subject to the terms and conditions of
this Agreement, the Pass Through Trustee for each Pass Through Trust agrees to
finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft
by paying to the Owner Trustee the aggregate purchase price of the Secured
Certificates being issued to such Pass Through Trustee as set forth on Schedule
II opposite the name of such Pass Through Trust. The Pass Through Trustees shall
make such payments to the Owner Trustee on a date to be designated pursuant to
Section 2 hereof, but in no event later than [__________], by transferring to
the account of the Owner Trustee at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, ABA No. 011-000-028, Account No.
9903-990-1, Reference: Northwest/NW 1999 _, not later than 9:30 a.m., New York
City time, on the Delivery Date in immediately available funds in Dollars, the
amount set forth opposite the name of such Pass Through Trust on Schedule II
hereto.
-3-
<PAGE>
Upon the occurrence of the above transfers by the Pass Through
Trustee for each Pass Through Trust to the Owner Trustee, the Owner Trustee, at
the direction of the Owner Participant, shall issue, pursuant to Article II of
the Trust Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Secured Certificates of the
maturity and aggregate principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the name of such Pass
Through Trust.
(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to participate
in the payment of Lessor's Cost for the Aircraft by making an equity investment
in the beneficial ownership of the Aircraft on a date to be designated pursuant
to Section 2 hereof, but in no event later than [__________], by transferring to
the account of the Owner Trustee at State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, ABA No. 011-000-028, Account No.
9903-990-1, Reference: Northwest/NW 1999 _, 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 on Schedule II hereto.
(c) General Provisions. The amount of the participation of each of
the Pass Through Trustee and the Owner Participant to be made as provided above
in the payment of Lessor's Cost for the Aircraft is hereinafter called such
party's "Commitment" for the Aircraft. In case any of the Pass Through Trustee
or the Owner Participant shall default in its obligation under the provisions of
this Section 1, no other such party shall have any obligation to make any
portion of such defaulted amount available or to increase the amount of its
Commitment and the obligation of such nondefaulting party shall remain subject
to the terms and conditions set forth in this Agreement. Upon receipt by the
Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant
to this Section 1 and the satisfaction of the conditions set forth in Section 4
hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner
Trustee, and the Owner Trustee shall purchase and take title to and accept
delivery of the Aircraft. In consideration of the transfer of title to and
delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee (from the
amounts so furnished it by the Participants) Lessor's Cost for the Aircraft.
SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to give
each Participant, the Owner Trustee and the Indenture Trustee at least two
Business Days' telecopy or other written notice of the Delivery Date for the
Aircraft, which Delivery Date shall be a Business Day, which notice shall
specify the amount of Lessor's Cost and the amount of each Participant's
Commitment for the Aircraft. As to each Participant, the making of its
Commitment for the Aircraft available in the manner required by Section 1 shall
constitute a waiver of such notice.
SECTION 3. Instructions to the Owner Trustee. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to
-4-
<PAGE>
satisfaction or waiver of the conditions set forth in Section 4(a), without
further act, authorization and direction by the Owner Participant to the Owner
Trustee:
(i) to pay to Lessee Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the Aircraft
on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill of
Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
(v) to borrow from the Pass Through Trustee to finance a portion of
the Lessor's Cost for the Aircraft and to execute and deliver to the
Subordination Agent on behalf of the Pass Through Trustee for each of the
Pass Through Trusts a principal amount of Secured Certificates bearing the
interest rate set forth opposite the name of such Pass Through Trust on
Schedule II hereto, which Secured Certificates shall be in the principal
amounts set forth on Schedule II hereto, pursuant hereto and to the Trust
Indenture; and
(vi) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative Document.
SECTION 4. Conditions. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of the
Pass Through Trustee and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(5), (xxi), (xxii) and
(xxiv) shall not be a condition precedent to the obligations of the Pass Through
Trustee, and paragraphs (iv), (vii)(D) and (xiv) shall not be a condition
precedent to the obligation of the Owner Participant:
(i) The Pass Through Trustee and the Owner Participant shall have
received due notice with respect to such participation pursuant to Section
2 hereof (or shall have waived such notice either in writing or as
provided in Section 2).
(ii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations thereof by appropriate regulatory
authorities which would make it a violation of law or regulations or
guidelines for the Pass Through Trustee or the Owner Participant to make
its Commitment available in accordance with Section 1 hereof.
-5-
<PAGE>
(iii) In the case of the Owner Participant, the Pass Through
Trustees shall have made available the amount of their Commitments for the
Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Pass Through Trustees, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto, shall
each be satisfactory in form and substance to the Pass Through Trustee and
the Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Pass Through Trustee and the
Owner Participant, or their respective counsel, provided that only the
Subordination Agent on behalf of each Pass Through Trustee shall receive
an executed original of such Pass Through Trustee's respective Secured
Certificate and provided, further, that an excerpted copy of the Purchase
Agreement shall only be delivered to and retained by the Owner Trustee
(but the Indenture Trustee shall also retain an excerpted copy of the
Purchase Agreement which may be inspected by the Owner Participant and its
counsel prior to the Delivery Date and subsequent to the Delivery Date may
be inspected and reviewed by the Indenture Trustee if and only if there
shall occur and be continuing an Event of Default), the chattel paper
counterpart of the Lease and the Lease Supplement covering the Aircraft
dated the Delivery Date shall be delivered to the Indenture Trustee, and
the Tax Indemnity Agreement need only be satisfactory to the Owner
Participant and Lessee and shall only be delivered to Lessee and the Owner
Participant and their respective counsel:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
-6-
<PAGE>
(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;
(12) the Secured Certificates;
(13) the Consent and Agreement; and
(14) the Guarantee.
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "Operative Documents"
and, individually, as an "Operative Document".
In addition, the Pass Through Trustee and the Owner Participant each
shall have received executed counterparts or conformed copies of the
following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Pass Through
Trusts.
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture that are not covered by the recording system
established by the Federal Aviation Act, shall have been executed and
delivered by the Owner Trustee, and such financing statement or statements
shall have been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing statements deemed advisable
by the Owner Participant or the Pass Through Trustee shall have been
executed and delivered by Lessee or the Owner Trustee and duly filed.
(vii) The Pass Through Trustee and the Owner Participant shall have
received the following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to
execute and deliver this Agreement, the Lease, the Lease Supplement
covering the Aircraft, the Bill of Sale, the FAA Bill of Sale, the
Purchase Agreement Assignment, the Tax Indemnity Agreement, the Pass
Through Trust Agreements, the Guarantee and any other documents to
be executed on behalf of Lessee or the Guarantor (as the
-7-
<PAGE>
case may be) in connection with the transactions contemplated hereby
and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of Lessee and
the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of Lessee or the Guarantor (as the case may be) in connection
with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of Lessee and
the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of Lessee and certified by the Secretary of
State of the State of Delaware in the case of the Guarantor, a copy
of the by-laws of Lessee and the Guarantor, certified by the
Secretary or Assistant Secretary of Lessee and the Guarantor (as the
case may be), and a certificate or other evidence from the Secretary
of State of the State of Minnesota in the case of Lessee and from
the Secretary of State of the State of Delaware in the case of the
Guarantor, dated as of a date reasonably near the Delivery Date, as
to the due incorporation and good standing of Lessee or the
Guarantor (as the case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, the Pass Through Trust Agreements
and any other documents to be executed on behalf of the Indenture
Trustee in connection with the transactions contemplated hereby and
the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture Trustee, duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Delivery Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
-8-
<PAGE>
(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 Purchase Agreement
Assignment and any other documents to be executed on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary
of the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the documents
required to be executed and delivered on behalf of the Owner Trustee
in connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) are correct as though
made on and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties are correct on and as
of such earlier date).
(D)(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and any
other documents to be executed on behalf of the Owner Participant in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a certificate signed by the Secretary or an Assistant
Secretary of the Owner Participant, to the effect that the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Owner Participant in connection with the transactions
contemplated hereby have been duly authorized;
(3) a copy of the articles of association and by-laws of the
Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the Owner
Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Delivery
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
-9-
<PAGE>
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 clause (4)
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; and
(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).
(x) Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements.
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner
-10-
<PAGE>
Participant and the Owner Trustee, and reasonably satisfactory as to scope
and substance to the Pass Through Trustee and the Owner Participant, an
opinion substantially in the form of Exhibit B-1 hereto from Simpson
Thacher & Bartlett, special counsel for Lessee and the Guarantor, an
opinion substantially in the form of Exhibit B-2 hereto from Cadwalader,
Wickersham & Taft, special counsel for Lessee and the Guarantor, and an
opinion substantially in the form of Exhibit B-3 hereto from Lessee's
legal department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit C hereto from in-house counsel to the
Manufacturer, with respect to the Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit D hereto from Ray, Quinney & Nebeker,
special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, the Guarantor and Lessee, an
opinion substantially in the form of Exhibit E-1 hereto from
[________________], special counsel for the Owner Participant, and an
opinion substantially in the form of Exhibit E-2 hereto from the Owner
Participant's in-house counsel.
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit F hereto from Crowe & Dunlevy, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory
as to scope and substance to the Pass Through Trustee, the Owner
Participant, the Guarantor and Lessee, an opinion substantially in the
form of Exhibit G hereto from Bingham Dana LLP, special counsel for the
Indenture Trustee.
(xvii) [Intentionally Omitted].
-11-
<PAGE>
(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 $[______________].
(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
[___________________], 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 hereof, no amendment,
modification, addition, or change in or to the provisions of the Internal
Revenue Code of 1986, as amended through the date hereof, and the
regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or
Executive Orders of the President of the United States, all as in effect
on the date hereof, the effect of which might preclude the Owner
Participant from obtaining any of the income tax benefits and consequences
assumed to be available to the Owner Participant as set forth in Section 2
of the Tax Indemnity Agreement.
(xxiii) The Pass Through Trustee and the Owner Participant shall
have received a favorable opinion substantially in the form of Exhibit I
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
-12-
<PAGE>
representations and warranties are correct on and as of such earlier
date), (B) an opinion substantially in the form of Exhibit J-1 hereto
addressed to the Owner Participant, the Guarantor and Lessee of Bingham
Dana 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) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Indenture 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-2 hereto from Bingham Dana LLP,
special counsel to the Subordination Agent.
Promptly upon the registration of the Aircraft and the recording of
the Trust Indenture, the Lease, the Lease Supplement covering the Aircraft and
the Trust Supplement covering the Aircraft pursuant to the Federal Aviation Act,
Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee and Lessee an opinion as to the due and
valid registration of the Aircraft in the name of the Owner Trustee, the due
recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement,
such Trust Supplement and the Lease and the filing of the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor. It is agreed that (A) the obligations of Lessee to sell the Aircraft
to the Owner Trustee and to accept delivery of the Aircraft under the Lease, and
(B) the obligations of Lessee and the Guarantor to enter into the other
Operative Documents, are all subject to the fulfillment to the satisfaction of
Lessee and the Guarantor prior to or on the Delivery Date of the following
conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, exemptions, authorizations and approvals shall
be in full force and effect on the Delivery Date.
-13-
<PAGE>
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and
4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee and the Guarantor) in the manner specified in
Section 4(a)(v), shall each be satisfactory in form and substance to
Lessee and the Guarantor, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof (other than the
Secured Certificates) shall have been delivered to Lessee or its special
counsel and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xxiv)(A), and (C) such other documents and evidence with
respect to the Pass Through Trustee as Lessee or its special counsel and
the Guarantor or its special counsel may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all corporate proceedings in connection therewith
and compliance with the conditions herein set forth.
(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv), 4(a)(xvi),
4(a)(xxiv)(B) and 4(a)(xxv) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and
the Guarantor and its special counsel.
(vi) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee
or the Guarantor to enter into any transaction contemplated by the
Operative Documents.
(viii) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of
-14-
<PAGE>
the United States which might give rise to an indemnity obligation of
Lessee under any of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. [Intentionally Omitted].
SECTION 6. Extent of Interest of Certificate Holders. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full. Each Pass Through Trustee and, by its acceptance of a
Secured Certificate, each Certificate Holder agrees that it will look solely to
the income and proceeds from the Trust Indenture Estate to the extent available
for distribution to such Certificate Holder as provided in Article III of the
Trust Indenture and that neither the Owner Participant nor the Owner Trustee
shall be personally liable to the Pass Through Trustees or any Certificate
Holder for any amounts payable under the Secured Certificates, the Trust
Indenture or hereunder, except as expressly provided in the Operative Documents.
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities. (a) Representations and Warranties. Lessee and the
Guarantor represent and warrant to the Pass Through Trustee, the Owner Trustee,
the Indenture Trustee, the Liquidity Provider, the Subordination Agent and the
Owner Participant that as of the Delivery Date:
(i) each of Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to own
or hold under lease its properties, has, or had on the respective dates of
execution thereof, the corporate power and authority to enter into and
perform its obligations under (i) in the case of Lessee, the Lessee
Documents, the Pass Through Trust Agreements, the Underwriting Agreement
and the other Operative Documents to which it is a party and (ii) in the
case of the Guarantor, this Agreement, the Pass Through Trust Agreements,
the Underwriting Agreement and the other Operative Documents to which it
is a party, and is duly qualified to do business as a foreign corporation
in each state in which its operations or the nature of its business
requires other than failures to so qualify which would not have a material
adverse effect on the condition (financial or otherwise), consolidated
business or properties of it and its subsidiaries considered as one
enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief executive
office (as such term is used in Article 9 of the Uniform Commercial Code
in effect in the State of Minnesota) is located at Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as
-15-
<PAGE>
the case may be) is a party, and the performance of the obligations of
Lessee or the Guarantor (as the case may be) under the Lessee Documents,
the Pass Through Trust Agreements, the Underwriting Agreement and each
other Operative Document to which Lessee or the Guarantor (as the case may
be) is a party, have been duly authorized by all necessary corporate
action on the part of Lessee or the Guarantor, do not require any
stockholder approval, or approval or consent of any trustee or holder of
any material indebtedness or material obligations of Lessee or the
Guarantor, except such as have been duly obtained and are in full force
and effect, and do not contravene any law, governmental rule, regulation
or order binding on Lessee or the Guarantor (as the case may be) or the
certificate of incorporation or by-laws of Lessee or the Guarantor (as the
case may be), or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien (other than Permitted Liens)
upon the property of Lessee or the Guarantor (as the case may be) under,
any indenture, mortgage, contract or other agreement to which Lessee or
the Guarantor (as the case may be) is a party or by which it may be bound
or affected which contravention, default or Lien, individually or in the
aggregate, would be reasonably likely to have a material adverse effect on
the condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, nor the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement or the other Operative Documents to which Lessee or
the Guarantor (as the case may be) is a party, requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of Transportation, the
FAA, or any other federal, state or foreign governmental authority having
jurisdiction over Lessee or the Guarantor, other than (A) the registration
of the Certificates under the Securities Act of 1933, as amended, and
under the securities laws of any state in which the Certificates may be
offered for sale if the laws of such state require such action, (B) the
qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, pursuant to an order of the Securities
and Exchange Commission, (C) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee or any Sublessee
required to be obtained on or prior to the Delivery Date, which orders,
permits, waivers, exemptions, authorizations and approvals have been duly
obtained and are, or on the Delivery Date will be, in full force and
effect (other than a flying time wire, all steps to obtain the issuance of
which will have been, on the Delivery Date, taken or caused to be taken by
Lessee), (D) the registration of the Aircraft referred to in Section
4(a)(ix)(3), (E) the registrations and filings referred to in Section
7(a)(vi), and (F) authorizations, consents, approvals, actions, notices
and filings required to be obtained, taken, given or made either only
after the date hereof or the failure of which to obtain, take, give or
make would not be reasonably likely to
-16-
<PAGE>
have a material adverse effect on the condition (financial or otherwise),
business or properties of the Guarantor and its subsidiaries considered as
one enterprise;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee constitute the legal, valid and
binding obligations of Lessee or the Guarantor (as the case may be)
enforceable against Lessee or the Guarantor (as the case may be) in
accordance with their respective terms, except as the same may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in the
case of the Lease, as limited by applicable laws which may affect the
remedies provided in the Lease, which laws, however, do not make the
remedies provided in the Lease inadequate for practical realization of the
benefits intended to be afforded thereby;
(vi) except for (A) the filing of the Trust Agreement with the FAA,
(B) the registration of the Aircraft pursuant to the Federal Aviation Act,
(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 4(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;
-17-
<PAGE>
(ix) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of time;
(xi) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of Lessee
will not be unreasonably small for the conduct of the business in which
Lessee is engaged or is about to engage; Lessee has no intention or belief
that it is about to incur debts beyond its ability to pay as they mature;
and Lessee's sale of the Aircraft is made without any intent to hinder,
delay or defraud either present or future creditors;
(xii) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation U of the Board of Governors of the Federal
Reserve System; and
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
(b) General Tax Indemnity. Exhibit K, 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 L, 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].
-18-
<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,
-19-
<PAGE>
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 other
than in a manner in compliance with, and which does not require registration
under, the Securities Act of 1933, as amended, or the rules and regulations
thereunder.
(f) The Owner Participant and the Indenture Trustee agree that, at
any time after the Depreciation Period, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner Trustee approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of the
Aircraft, and if the country of registry is Taiwan, the United States maintains
diplomatic relations at least as good as those in effect on the Delivery Date;
and (ii) the Owner Trustee and the Indenture Trustee shall have received
favorable opinions (subject to customary exceptions) addressed to each such
party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of
Lessee, and the rights and remedies of the Owner Trustee, under the Lease
shall remain valid, binding and (subject to customary bankruptcy and
equitable remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction (or
the laws of the jurisdiction to which the laws of such jurisdiction would
refer as the applicable governing law), (C) after giving effect to such
change in registration, the Lien of the Trust Indenture on the Owner
Trustee's right, title and interest in and to the Aircraft and the Lease
shall continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion cannot be given
at the time of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) the Owner Trustee
and the Indenture Trustee shall have received a certificate from Lessee
that all possible preparations to accomplish such filing,
-20-
<PAGE>
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, moratorium or other
similar laws affecting the rights of creditors generally and by general
principles of equity, whether considered in
-21-
<PAGE>
a proceeding at law or in equity; and it has a tangible net worth
(exclusive of goodwill) greater than $75,000,000;
(ii) neither (A) the execution and delivery by the Owner Participant
of the Owner Participant Documents nor (B) compliance by it with all of
the provisions thereof, (x) will contravene any law or order of any court
or governmental authority or agency applicable to or binding on the Owner
Participant (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation or to
the nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of the
Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, or result in the creation of any Lien (other than Liens
provided for in the Operative Documents) upon any property of the Owner
Participant under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property may
be bound or affected;
(iii) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is required for the due execution, delivery or
performance by it of the Owner Participant Documents;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the Participation Agreement,
the Tax Indemnity Agreement and the Trust Agreement;
(v) neither the Owner Participant nor anyone authorized by it to act
on its behalf (it being understood that in proposing, facilitating and
otherwise taking any action in connection with the financing contemplated
hereby and agreed to herein by the Owner Participant, Lessee has not acted
as agent of the Owner Participant) has directly or indirectly offered any
Secured Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person; the Owner
Participant's interest in the Trust Estate and the Trust Agreement is
being acquired for its own account and is being purchased for investment
and not with a view to any resale or distribution thereof;
(vi) on the Delivery Date, the Trust Estate shall be free of Lessor
Liens (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).
-22-
<PAGE>
(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 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 to be issued to it pursuant to the Trust Indenture is being acquired
by it for investment and not with a view to resale or distribution (it being
understood that such Loan Participant may pledge or assign as security its
interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its control,
except that the Loan Participants may sell, transfer or otherwise dispose of any
Secured Certificate or any portion thereof, or grant participations therein, in
a manner which in itself does not require registration under the Securities Act
of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered
-23-
<PAGE>
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 the
full corporate power, authority and legal right under the laws of the
Commonwealth of Massachusetts and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver each of this
Agreement, the Trust Indenture and each other Operative Document to which
it is a
-24-
<PAGE>
party and to carry out its obligations under this Agreement, the Trust
Indenture, each other Operative Document to which it is a party and to
authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly
authorized by the Indenture Trustee and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound;
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in equity;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity or
as Indenture Trustee as the case may be, to perform its obligations under
the Operative Documents to which it is a party; and
(v) there are no Indenture Trustee'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 risk of loss of tax benefits to, or
any increase in the tax liability of, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any loss of tax benefits to, and increase in
the tax liability of, Lessee, and (iii) the Owner Participant sells, assigns,
conveys or otherwise transfers all of its right, title and interest in and to
this Agreement, the Trust Estate, the Trust Agreement and the proceeds therefrom
to a single entity. A "Transferee" shall mean either (A) a bank or other
financial institution with a combined capital, surplus and undivided profits of
at least $75,000,000 or a corporation whose tangible net worth is at least
$75,000,000, exclusive of goodwill, in either case as of the proposed date of
such transfer, as determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial
-25-
<PAGE>
institution or corporation, provided that such bank, financial institution or
corporation furnishes to the Owner Trustee, the Indenture Trustee and Lessee a
guaranty with respect to the Owner Participant's obligations, in the case of the
Owner Trustee, under the Trust Agreement and, in the case of the Indenture
Trustee and Lessee, the Owner Participant's obligations hereunder, including but
not limited to, under Section 8(c) and Section 8(h) hereof, in form and
substance reasonably satisfactory to Lessee, the Owner Trustee and the Indenture
Trustee; provided, however, that any Transferee shall not be an airline, a
commercial air carrier, an air freight forwarder, an entity engaged in the
business of parcel transport by air or other similar person or a corporation or
other entity controlling, controlled by or under common control with such an
airline, a commercial air carrier, an air freight forwarder, an entity engaged
in the business of parcel transport by air or other similar person. Each such
transfer to a Transferee shall be subject to the conditions that (M) upon giving
effect to such transfer, the Transferee is a Citizen of the United States
(without making use of a voting trust agreement, voting powers agreement or
other similar arrangement unless approved by Lessee), and has full power and
authority to enter into the transactions contemplated hereby, (N) the Transferee
has the requisite power and authority to enter into and carry out the
transactions contemplated hereby and such Transferee shall have delivered to
Lessee, the Owner Trustee and the Indenture Trustee an opinion of counsel in
form and substance reasonably satisfactory to such persons as to the due
authorization, delivery, legal, valid and binding effect and enforceability of
the agreement or agreements referred to in the next clause with respect to the
Transferee and any guaranty provided pursuant to the provisions of this Section
8(n) as to the guarantor, (O) the Transferee enters into an agreement or
agreements, in form and substance reasonably satisfactory to the Owner Trustee,
Lessee and the Indenture Trustee, whereby the Transferee confirms that it shall
be deemed a party to this Agreement and a party to the Trust Agreement and
agrees to be bound by all the terms of, and to undertake all of the obligations
of the transferor Owner Participant contained in, the Owner Participant
Documents (to the extent of the participation so transferred to it) and makes
the representations and warranties made by the Owner Participant thereunder, (P)
such transfer does not affect registration of the Aircraft under the Federal
Aviation Act, or any rules or regulations promulgated thereunder or create a
relationship which would be in violation thereof or violate any provision of the
Securities Act of 1933, as amended, or any other applicable Federal or state
law, (Q) the transferor Owner Participant assumes the risk of any loss of
Interest Deductions, Amortization Deductions and MACRS Deductions, the risk of
any Inclusion Event (each as defined in the Tax Indemnity Agreement), and the
risk 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 costs and expenses of the Owner
Trustee, the Indenture Trustee, Lessee and the Loan Participants in connection
therewith, and (S) the terms of the Operative Documents and the Overall
Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents arising after the date of such
transfer except to the extent fully
-26-
<PAGE>
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 non-exempt
prohibited transaction (under Section 4975 of the Code and Section 406 of
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 non-exempt
prohibited transaction (under Section 4975 of the Code and Section 406 of
ERISA). The Pass Through Trustee agrees that it will not agree to any amendment,
modification or waiver of Section 1.01(e)(i) of the Trust Supplement to each
Pass Through Trust Agreement specified in Schedule III hereto 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
-27-
<PAGE>
Documents (including any transfer of Secured Certificates (including by way of
participation or assignment of an interest, provided such participant or
assignee agrees to hold such terms confidential to the same extent as herein
provided) or the Owner Participant's beneficial interest in the Trust Estate and
any exercise of remedies under the Lease and the Trust Indenture), (C) with the
prior written consent of the Manufacturer and Lessee, (D) to the Owner
Trustee's, the Indenture Trustee's and each Participant's counsel or special
counsel, independent insurance brokers or other agents who agree to hold such
information confidential, or (E) in the case of the Owner Participant and/or the
Owner Trustee, it may disclose so much of the Purchase Agreement as has been
assigned to the Owner Trustee under the Purchase Agreement Assignment to bona
fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the Pass
Through Trustee pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation U of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent that it relates to the Owner Trustee, clauses
(ii), (ix) and (xi) below) as Owner Trustee, represents and warrants to Lessee,
the Guarantor, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant that:
-28-
<PAGE>
(i) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good standing
under the laws of the United States, has full corporate power and
authority to carry on its business as now conducted, has the corporate
power and authority to execute and deliver the Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has (assuming the authorization, execution and delivery of
the Trust Agreement by the Owner Participant), as Owner Trustee, and to
the extent expressly provided herein or therein, in its individual
capacity, the corporate power and authority to execute and deliver and to
carry out the terms of this Agreement, the Trust Indenture, the Secured
Certificates, the Lease and each other Operative Document (other than the
Trust Agreement) to which it is a party;
(ii) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement, in its individual
capacity, has duly authorized, executed and delivered the Trust Agreement
and in its trust capacity, except as expressly provided therein, has duly
authorized, executed and delivered the other Owner Trustee Documents and
(assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant) this Agreement and each of the other
Owner Trustee Documents constitute the legal, valid and binding
obligations of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, enforceable against it in its individual
capacity or as Owner Trustee, as the case may be, in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Delivery Date shall have duly issued, executed and
delivered to the Indenture Trustee for authentication, the Secured
Certificates pursuant to the terms and provisions hereof and of the Trust
Indenture, and each Secured Certificate on the Delivery Date will
constitute the valid and binding obligation of the Owner Trustee and will
be entitled to the benefits and security afforded by the Trust Indenture
in accordance with the terms of such Secured Certificate and the Trust
Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any Owner
Trustee Document, nor the consummation by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of the
transactions contemplated thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, with any of the terms and provisions thereof, (A) requires or will
require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or by-laws, or
contravenes or will contravene any provision of,
-29-
<PAGE>
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, would materially adversely affect
the ability of the Owner Trustee, in its individual
-30-
<PAGE>
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 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 to terminate the
Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, then
each of the parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee (including,
without limitation, such bills of sale and other instruments and documents
-31-
<PAGE>
as Lessee shall reasonably request to evidence (on the public record or
otherwise) such transfer and the vesting of all right, title and interest in and
to the Aircraft in Lessee), and if Lessee, in connection with such purchase,
elects to assume the obligations of the Owner Trustee pursuant to the Trust
Indenture and the Secured Certificates each of the parties will execute and
deliver appropriate documentation permitting Lessee to assume such obligations
on the basis of full recourse to Lessee, maintaining the security interest in
the Aircraft created by the Trust Indenture, releasing the Owner Participant and
the Owner Trustee from all future obligations in respect of the Secured
Certificates, the Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of the Owner Trustee in respect of the Secured
Certificates unless Lessee causes to be delivered to the Indenture Trustee an
opinion of counsel to the effect that (i) the Lien of the Trust Indenture
continues to be a valid and duly perfected first priority security interest in
and to the Aircraft, (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 and (iii)
the Pass Through Trusts will not be subject to Federal income taxation and the
Certificate Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such assumption and will be subject to Federal
income tax in the same amounts, in the same manner, and at the same time as
would have been the case if such assumption had not occurred.
(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
-32-
<PAGE>
(iv) Lessee shall have delivered to the Owner Trustee, the Indenture
Trustee and the Owner Participant a certificate signed by the President,
any Executive Vice President, any Senior Vice President, the Treasurer 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) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, the Special Purchase Price, [the Initial Installment, the Remaining
Installments,] Stipulated Loss Value percentages and Termination Value
percentages, and the Owner Participant hereby agrees to make such recalculations
as and when contemplated by the Lease and subject to all the terms and
-33-
<PAGE>
conditions of the Lease and promptly to take such further actions as may be
necessary or desirable to give effect to and to cause the Owner Trustee to give
effect to the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee 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.
(cc) Each Loan Participant hereby represents, warrants and agrees
that it shall not transfer any interest in any Secured Certificate unless and
until the transferee agrees in writing (copies of which shall be provided by the
Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant) to
make the representations contemplated to be made by a Loan Participant in this
Agreement and to be bound by the terms of this Agreement and the Trust Indenture
(including, without limitation, the representations and covenants set forth in
Sections 8(e), 8(k), 8(l), 8(q), and 8(t) hereof and this Section 8(cc) and
Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(dd) The Pass Through Trustee represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Subordination Agent, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) the Pass Through Trustee is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each of the
Pass Through Trust Agreements, the Intercreditor Agreement and this
Agreement and to perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement and this Agreement;
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Pass Through Trustee
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this 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
-34-
<PAGE>
agency regulating the Pass Through Trustee's banking, trust or fiduciary
powers or any judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any breach of, or
constitute a default under, the Pass Through Trustee's articles of
association or by-laws or any agreement or instrument to which the Pass
Through Trustee is a party or by which it or any of its properties may be
bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement
or this Agreement, nor the consummation by the Pass Through Trustee of any
of the transactions contemplated hereby or thereby, requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Massachusetts governmental
authority or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Pass Through Trustee imposed
by the Commonwealth of Massachusetts or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political subdivision
thereof in connection with the acquisition, possession or ownership by the
Pass Through Trustee of any of the Secured Certificates (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and, assuming that the trusts created by the Pass Through
Trust Agreements will not be taxable as corporations, but rather, each
will be characterized as a grantor trust under subpart E, Part I, of
Subchapter J of the Code such trusts will not be subject to any Taxes
imposed by the Commonwealth of Massachusetts or any political subdivision
thereof;
(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, 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
-35-
<PAGE>
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.
(ee) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) the Subordination Agent is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each of the
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
Commonwealth of Massachusetts or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or fiduciary
powers or any judgment or order applicable to or binding on the
Subordination Agent and do not contravene or result in any breach of, or
constitute a default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties may
be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any Massachusetts governmental
authority or agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or fiduciary powers;
-36-
<PAGE>
(v) there are no Taxes payable by the Subordination Agent imposed by
the Commonwealth of Massachusetts 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 Commonwealth of Massachusetts or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Secured Certificates
(other than franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly offered
any Secured Certificate for sale to any Person or solicited any offer to
acquire any Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Secured Certificate for sale to any Person, or
to solicit any offer to acquire any Secured Certificate from any Person;
and the Subordination Agent is not in default under any Liquidity
Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
SECTION 9. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. Lessee agrees and acknowledges that the
Liquidity Provider shall be a third party beneficiary of the indemnities
contained in Section 7(c) hereof, and may rely on such indemnities to the same
extent as if such indemnities were made to the Liquidity Provider directly.
SECTION 10. Other Documents. Each of the 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
-37-
<PAGE>
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 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
-38-
<PAGE>
Federal Aviation Administration in the following order of priority; first, the
FAA Bill of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the
Trust Indenture, with the Trust Supplement attached.
SECTION 12. Owner for Federal Tax Purposes. It is hereby agreed
among Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft to
be delivered under the Lease and Lessee will be the lessee thereof, and each
party hereto agrees to characterize the Lease as a lease for Federal income tax
purposes.
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease. The
term "Trust Office" shall have the meaning set forth in the Trust Agreement.
Unless the context otherwise requires, any reference herein to any of the
Operative Documents refers to such document as it may be amended from time to
time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 13(b). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) as follows: (A) if to Lessee, the Guarantor, the Owner Trustee, the
Pass Through Trustee, the Subordination Agent, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures of
such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto, or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(c) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York 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
-39-
<PAGE>
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Agreement, the Lease, the Tax Indemnity
Agreement or any other Operative Document or the subject matter of any thereof
or any of the transactions contemplated hereby or thereby may not be enforced in
or by such courts. Lessee hereby generally consents to service of process at
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of Lessee in New York City as from
time to time may be designated by Lessee in writing to the Owner Participant,
the Owner Trustee and the Indenture Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the situs
of the trust may be moved with the written consent of the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Indenture Trustee may
reasonably request, (B) the rights and obligations under the Operative Documents
of the Owner Participant and the Indenture Trustee shall not be altered as a
result of the taking of such action, (C) the lien of the Trust Indenture on the
Trust Indenture Estate shall not be adversely affected by such action, and (D)
the Owner Participant and the Indenture Trustee shall have received an opinion
or opinions of counsel (satisfactory to the Owner Participant and the Indenture
Trustee), in scope, form and substance satisfactory to the Owner Participant and
the Indenture Trustee to the effect that (I) the trust, as thus removed, shall
remain a validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to indemnify the Owner Participant, the
Indenture Trustee, the Owner Trustee or the Trust Estate pursuant to Section
7(b) hereof (taking into account any additional indemnification provided by
Lessee pursuant to clause (A) of this sentence), (IV) such removal will not
result in any loss of Interest Deductions or MACRS Deductions or an Inclusion
Event (as defined in the Tax Indemnity Agreement) with respect to which Lessee
is not required to indemnify the Owner Participant pursuant to Section 4 of the
Tax Indemnity Agreement (taking into account any additional indemnification
provided by Lessee pursuant to clause (A) of this sentence) and (V) if such
removal involves the replacement of the Owner Trustee, an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
the Indenture Trustee and to the Owner Participant covering the matters
described in the opinion delivered pursuant to Section 4(a)(xiii) hereof and
such other matters as the Indenture Trustee and the Owner Participant may
reasonably request, and (E) Lessee shall indemnify and hold 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.
-40-
<PAGE>
SECTION 15. Miscellaneous. (a) The Owner Participant covenants and
agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Trustee, as Lessor, under the terms of the Lease which by
its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant provided
for in this Agreement, and Lessee's, the Guarantor's, the Owner Trustee's, the
Indenture Trustee's, the Subordination Agent's, the Pass Through Trustee's and
the Owner Participant's obligations under any and all thereof, shall survive the
making available of the respective Commitments by the Pass Through Trustee and
the Owner Participant, the delivery or return of the Aircraft, the transfer of
any interest of the Owner Participant in the Trust Estate or the Aircraft or any
Engine or the transfer of any interest by any Loan Participant in any Secured
Certificate or the Trust Indenture Estate and the expiration or other
termination of this Agreement or any other Operative Document.
(c) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Agreement shall be binding upon, and
inure to the benefit of, Lessee and, subject to the terms of this Agreement, its
successors and permitted assigns, the Guarantor, the Pass Through Trustee and
its successors as Pass Through Trustee (and any additional trustee appointed)
under any of the Pass Through Trust Agreements, the Owner Participant and,
subject to the terms of this Agreement, its successors and permitted assigns,
each Certificate Holder and its successors and registered assigns, the Indenture
Trustee and its successors as Indenture Trustee under the Trust Indenture and
the Owner Trustee and its successors as Owner Trustee under the Trust Agreement.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless 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
-41-
<PAGE>
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 Chapter 11 of the Bankruptcy Code.
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
[________________]). The Owner Participant agrees to transfer to the Owner
Trustee promptly but in any event no later than [______________] 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 [___]% 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 [____]% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the transaction
contemplated by this Participation Agreement fails to close as a result of the
Owner Participant's failure to negotiate in good faith or to comply with the
terms and conditions upon which its participation in the transaction was
predicated, the Owner Participant will be responsible for all of its fees and
expenses, including but not limited to the fees, expenses and disbursements of
its special counsel.
SECTION 17. Refinancings.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than all)
of the Secured Certificates no more than three times by giving written notice to
the Owner Participant and the Owner Trustee that there be effected a voluntary
redemption of the Secured Certificates by the Owner Trustee, whereupon the Owner
Participant agrees to negotiate promptly in good faith to
-42-
<PAGE>
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.
Upon such agreement:
(1) within ten Business Days after the reaching of such agreement,
the Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "Refinancing Certificate") setting
forth (i) the proposed date on which the outstanding Secured Certificates will
be redeemed, any new debt will be issued and the other aspects of such
refinancing will be consummated (such date, the "Refinancing Date") and (ii) the
following information calculated pursuant to the provisions of paragraph (6) of
this Section 17(a): (A) subject to the limitations set forth in this Section 17,
the proposed adjusted debt/equity ratio, (B) the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date, (C) the amount, if any, by
which the Owner Participant's aggregate investment in the beneficial interest in
the Aircraft is to be decreased and (D) the proposed revised schedules of Basic
Rent percentages, debt amortization, Special Purchase Price, [Initial
Installment, Remaining Installments,] Stipulated Loss Value percentages and
Termination Value percentages. The Refinancing Certificate shall not provide for
a debt/equity ratio of more than 4:1. Within fourteen days of its receipt of the
Refinancing Certificate, Lessee may demand a verification pursuant to Exhibit E
to the Lease of the information set forth in the Refinancing Certificate. Upon
the acceptance by Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such verification
procedures), as to the debt/equity ratio, the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date and the revised Basic Rent
percentages, debt amortization, Special Purchase Price, [Initial Installment,
Remaining Installments,] Stipulated Loss Value percentages and Termination Value
percentages (such information, whether as set forth or as so determined, the
"Refinancing Information") the appropriate parties will take the actions
specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate and/or
the Aircraft and its resale to the Owner Trustee) with the institution or
institutions to be named therein providing for (i) the issuance and sale by the
Owner Trustee to such institution or institutions on the Refinancing Date of
debt securities in an aggregate principal amount specified in the Refinancing
Information which amount shall be equal to the aggregate principal amount of all
Secured Certificates outstanding on the Refinancing Date (such debt securities,
the "New Debt") except that the principal amount of New Debt may exceed the
principal amount of all outstanding Secured Certificates in connection with the
first refinancing under this Section 17, (ii) the application of the proceeds of
the sale of the New Debt to the redemption of all such Secured Certificates on
the Refinancing Date and (iii) the payment of the excess, if any, of such
proceeds over the amounts necessary to effect such redemption to the Owner
Trustee;
-43-
<PAGE>
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the period
from and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of Stipulated Loss Value and
Termination Value from and after the Refinancing Date shall be as provided in
the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses (other than
those of Lessee) of such refinancing (including, but not limited to, the fees,
expenses and disbursements of counsel and any placement or underwriting fees)
and such expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set forth
in a Refinancing Certificate, the Owner Participant shall make such calculations
in a manner which (A) maintains the Owner Participant's Net Economic Return
(except to the extent the assumptions referred to in the definition of "Net
Economic Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions
are the subject of the recalculations being conducted by the Owner Participant),
and (B) minimizes the Net Present Value of Rents to Lessee to the extent
possible consistent with clause (A).
(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.
-44-
<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:
----------------------------------------
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010) St.
Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Treasurer
Telecopy No.: (612) 726-0665
NORTHWEST AIRLINES CORPORATION,
Guarantor
By:
----------------------------------------
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010) St.
Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Treasurer
Telecopy No.: (612) 726-0665
-Signature Page-
<PAGE>
[--------------------------],
Owner Participant
By:
----------------------------------------
Name:
Title:
Address:
Attn:
Telecopy No.:
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
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:
----------------------------------------
Name:
Title:
Address: Two International Plaza 4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity, except as otherwise
provided herein, but solely as Subordination
Agent,
Subordination Agent
By:
----------------------------------------
Name:
Title:
Address: 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: Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
USBank, Minneapolis
ABA No. 091000022
Acct. No. 150250099440
Owner Participant: [__________________________]
Attn:
Telecopy No.:
with a copy to:
[Address]
Attn: ________________
Telecopy No.: ________________
Payments made
to the Owner Participant as provided in
Section 3.06 of the Trust
Indenture shall be made to:
[Bank]
[Address] New York, New York
ABA No. _______________
Account No. ____________
Account Name: _________
Reference: ______________
<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. 011-000-028
for credit to State Street Bank and Trust Company
Acct. No. 9903-990-1
Attn: Corporate Trust Department
Reference: Northwest/NW 1999 _
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 1999 _
Loan Participant: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Subordination Agent: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
SCHEDULE I - PAGE 2
<PAGE>
SCHEDULE II
Commitments
Interest Rate Percentage of
Purchasers and Maturity Purchase Price Lessor's Cost
---------- ------------ -------------- -------------
Northwest Airlines
Pass Through Trust
1999-1A 6.81% Series A Secured $[___________] [___________]%
Certificates due
[___________]
1999-1B 7.36% Series B Secured $[___________] [___________]%
Certificates due
[___________]
1999-1C 8.13% Series C Secured $[___________] [___________]%
Certificates due
[___________]
Owner Participant Equity Investment
----------------- -----------------
[___________] $[___________] [___________]%
Total Commitments $[___________] 100%
<PAGE>
SCHEDULE III
Pass Through Trust Agreements
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1A, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1B, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1C, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1999 _]
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 Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
- -----------
* 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 B-1 to Participation Agreement
[Form of Opinion of Simpson Thatcher & Bartlett
special counsel for the Lessee and the Guarantor]
________ ___, 1999
The Persons Listed on
Annex A hereto
Ladies and Gentlemen:
We have acted as counsel to Northwest Airlines Corporation, a
Delaware corporation ("NWA Corp."), and Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), in connection with the issuance and sale of (i)
$235,505,000 aggregate principal amount of 6.81% Pass Through Trust
Certificates, Series 1999-1A (the "Class A Certificates"), (ii) $111,555,000
aggregate principal amount of 7.36% Pass Through Trust Certificates, Series
1999-1B (the "Class B Certificates") and (iii) $74,140,000 aggregate principal
amount of 8.13% Pass Through Trust Certificates, Series 1999-1C (the "Class C
Certificates" and, together with the Class A Certificates and the Class B
Certificates, the "Certificates") pursuant to the Underwriting Agreement, dated
as of February 4, 1999 (the "Underwriting Agreement"), by and among Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Chase Securities Inc. and Salomon Smith Barney Inc., as
underwriters, and the Company and NWA Corp. Capitalized terms used herein unless
otherwise defined herein have the respective meanings given them in the
Underwriting Agreement.
<PAGE>
The Persons Listed on Annex A hereto ______ ___, 1999
In connection with this opinion we have examined the following:
(i) the Pass Through Trust Agreement dated as of June 3, 1996 by and
among Northwest Airlines Holdings Corporation (formerly known as Northwest
Airlines Corporation, "Holdings"), the Company and State Street Bank and
Trust Company ("State Street"), as trustee (the "Trustee"), as amended by
the Supplemental Agreement, dated as of November 20, 1998, among the
Company, NWA Corp. Holdings and the Trustee (the "Basic Agreement");
(ii) the Trust Supplement No. 1999-1A, dated as of February 16,
1999, to the Basic Agreement, by and among NWA Corp., the Company,
Holdings and the Trustee (the Basic Agreement as so supplemented, the
"1999-1A Pass Through Trust Agreement"); the Trust Supplement No. 1999-1
B, dated as of February 16, 1999, to the Basic Agreement, by and among NWA
Corp., the Company, Holdings and the Trustee (the Basic Agreement as so
supplemented, the "1999-1B Pass Through Trust Agreement"); and the Trust
Supplement No. 1999-1C, dated as of February 16, 1999, to the Basic
Agreement, by and among NWA Corp., the Company, Holdings and the Trustee
(the Basic Agreement as so supplemented, the "1999-1C Pass Through Trust
Agreement" and, together with the 1999-1A Pass Through Trust Agreement and
the 1999-1B Pass Through Trust Agreement, the "Pass Through Trust
Agreements"; the Pass Through Trust Agreement related to a Certificate
being referred to as the "Applicable Pass Through Trust Agreement");
(iii) the Intercreditor Agreement dated as of February 16, 1999 (the
"Intercreditor Agreement"), by and among the Trustee, Citibank, N.A. (the
"Liquidity Provider"), and State Street Bank and Trust Company, not in its
individual capacity, except as set forth therein, but solely as
subordination agent (the "Subordination Agent");
(iv) the Revolving Credit Agreement, Class A Certificates, the
Irrevocable Revolving Credit Agreement, Class B Certificates and the
Irrevocable Revolving Credit Agreement, Class C Certificates
(collectively, the "Liquidity Facilities"), each dated as of February 16,
1999, by and between the Subordination Agent and the Liquidity Provider;
(v) the Indemnity Agreement, dated as of February 16, 1999, between
ABN AMRO Bank, N.Y., acting through its Chicago Branch, and the Company;
and
(vi) the form of each of the other agreements listed on Schedule I
to this opinion (such agreements being collectively referred to as the
"Operative Sale-Leaseback Documents").
-2-
<PAGE>
The Persons Listed on Annex A hereto ______ ___, 1999
In addition, we have examined, and have relied as to matters of fact
upon, the documents delivered to you at the closing, and upon originals or
copies, certified or otherwise identified to our satisfaction, of such corporate
records, agreements, documents and other instruments and such certificates or
comparable documents of public officials and of officers and representatives of
the Company and NWA Corp., and have made such other and further investigations,
as we have deemed relevant and necessary as a basis for the opinions hereinafter
set forth. Our opinion set forth in paragraph 4 is based on oral advice from the
staff of the Commission that the Registration Statement has been declared
effective under the Securities Act.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Basic Agreement and each Pass Through Trust Agreement
have been duly authorized, executed and delivered by Holdings and NWA
Corp. and, assuming due authorization, execution and delivery thereof by
the Company and the Trustee, constitute valid and legally binding
obligations of NWA Corp., the Company, Holdings and the Trustee in
accordance with their terms.
2. The Basic Agreement has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
3. Assuming the Certificates have been duly authorized,
executed, authenticated and issued by the Trustee, upon payment and
delivery therefor in accordance with the Underwriting Agreement, the
Certificates will constitute valid and
-3-
<PAGE>
The Persons Listed on Annex A hereto ______ ___, 1999
legally binding obligations of the Trustee enforceable against the Trustee
in accordance with their terms and entitled to the benefits of the
Applicable Pass Through Trust Agreement.
4. No consent, approval, authorization, order, registration or
qualification of or with any Federal or New York governmental agency or
body or any Delaware governmental agency or body acting pursuant to the
Delaware General Corporation Law or, to our knowledge, any Federal or New
York court or any Delaware court acting pursuant to the Delaware General
Corporation Law is required for the valid authorization, issuance and
delivery of the Certificates, the valid authorization, execution and
delivery by the Company, Holdings or NWA Corp. of, and the performance by
the Company, Holdings and NWA Corp. of their respective obligations under,
the Basic Agreement, the Pass Through Trust Agreements and the
Underwriting Agreement, except such as have been obtained and made under
the Securities Act and the Trust Indenture Act and such as may be required
under state securities laws or the Federal Aviation Act of 1958, as
amended (the "Federal Aviation Act").
Our opinions set forth in paragraphs 1 and 3 above are subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law), an implied covenant of good faith and fair dealing and, in
the case of indemnification and contribution provisions therein, considerations
of public policy.
Our opinion is subject to the following additional qualifications:
(a) We express no opinion with respect to the creation, perfection
or priority of any security interest, mortgage, pledge or other lien
purported to be created by the Operative Sale-Leaseback Documents.
(b) We express no opinion with respect to the enforceability of
provisions of the Operative Sale-Leaseback Documents providing for default
interest rates to the extent that such rates would be deemed to be the
imposition of a penalty.
(c) We express no opinion with respect to the rights of any party to
collect or enforce, any insurance maintained by the Company, any proceeds
thereof or payments or refunds of any premiums in respect thereof.
-4-
<PAGE>
The Persons Listed on Annex A hereto ______ ___, 1999
(d) We express no opinion with respect to the right, title or
interest of any Owner Trustee in or to any of the Trust Indenture Estates
(as defined in the Operative Sale-Leaseback Documents).
(e) We express no opinion with respect to matters governed by the
Federal Aviation Act and the rules and regulations promulgated thereunder.
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the federal law of the United States and the Delaware General
Corporation Law.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
-5-
<PAGE>
Annex A
[_____________], as Owner Participant
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Pass Through Trustee
and Indenture Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Schedule 1
OPERATIVE SALE-LEASEBACK DOCUMENTS
<PAGE>
Exhibit B-2 to Participation Agreement
[Form of Opinion of Cadwalader, Wickersham & Taft,
Special Counsel for the Lessee and the Guarantor]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc. [NW 1999__]
Opinion of Special Counsel to Lessee and Guarantor
Gentlemen:
We have acted as special counsel for Northwest Airlines, Inc., a
Minnesota corporation ("Lessee") and Northwest Airlines Corporation, a Delaware
corporation ("Guarantor"), in connection with the transactions contemplated by
the Participation Agreement [NW 1999 __]. dated as of [___________ ___, ___]
(the "Participation Agreement"), among Lessee, Guarantor, First Security Bank,
National Association, as Owner Trustee under the Trust Agreement referred to
therein, State Street Bank and Trust Company, as Pass Through Trustee under each
of the Pass Through Trust Agreements referred to therein, the Owner Participant
named therein, State Street Bank and Trust Company, as Subordination Agent, and
State Street Bank and Trust Company, as Indenture Trustee under the Indenture
referred to therein. Capitalized terms used herein without definition shall have
the respective meanings ascribed to them in or by reference to the Participation
Agreement, unless the context otherwise requires. This opinion is delivered
pursuant to Section 4(a)(xi) of the Participation Agreement.
In rendering this opinion, we have examined, among other things,
executed counterparts of the Participation Agreement, the Lease, the Lease
Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement, the
Trust Indenture, the Secured Certificates, the Tax Indemnity Agreement, the
Purchase Agreement Assignment, the Bill of Sale, the FAA Bill of Sale and the
Guarantee. As to any facts material to our opinions expressed herein, we have,
without independent investigation, relied upon the representations and
warranties contained in the Participation Agreement and the other Operative
Documents (including, without limitation, in Sections 7 and 8 of the
Participation Agreement) and upon originals or copies (certified or otherwise
identified to our satisfaction) of such corporate records, documents and other
instruments as, in our judgment, are necessary or appropriate to enable us to
render this opinion. We have assumed that all documents executed and delivered
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ______________ ___, ____
by Lessee and Guarantor and referred to herein have been duly authorized,
executed and delivered pursuant to adequate corporate power and authority. We
have also assumed that Lessee is an air carrier within the meaning of the
Federal Aviation Act. We have also assumed, and have not independently verified,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity with the originals of all documents submitted
to us as copies, and the accuracy of all factual statements of parties made on
or before the date hereof (and have relied thereon as we have deemed
appropriate). Based upon and subject to the foregoing, and subject further to
the assumptions, limitations and qualifications set forth below, it is our
opinion that:
1. The execution, delivery and performance of the Participation
Agreement, the Lease, the Lease Supplement covering the Aircraft, the Bill of
Sale, the FAA Bill of Sale, the Tax Indemnity Agreement and the Purchase
Agreement Assignment (collectively, the "Lessee Documents") by Lessee do not
contravene any New York law, governmental rule or regulation applicable to or
binding on Lessee, and the execution, delivery and performance of the Guarantee
by Guarantor does not contravene any New York law, governmental rule or
regulation applicable to or binding on Guarantor.
2. Neither the execution and delivery by Lessee of any of the Lessee
Documents or the execution and delivery by Guarantor of the Guarantee, nor the
performance by Lessee or Guarantor of their respective obligations thereunder,
requires the consent or approval of, or the giving of notice to, or the
registration with, or the taking of any other action in respect of, any New York
governmental authority, except for such consents, approvals, notices,
registrations and other actions required by the terms of the Operative Documents
after the Delivery Date.
3. The Lessee Documents constitute the legal, valid and binding
obligations of Lessee enforceable against Lessee in accordance with their
respective terms and the Guarantee constitutes the legal, valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its
terms, except as enforceability may be limited by (A) general principles of
equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of creditors or
lessors generally, (C) applicable laws which may affect the remedies provided in
the Lease, which laws, however, do not, in our opinion, make the remedies
provided in the Lease inadequate for the practical realization of the benefits
provided thereby, except that no opinion is expressed as to the amount or
priority of any recovery under any particular circumstances and, in particular,
no opinion is expressed as to the effect on such remedies of Section 1-201(37)
of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the
case of indemnity provisions contained in such documents, public policy
considerations.
4. Subject to the registration of the Aircraft with the Federal
Aviation Administration in the name of the Owner Trustee, and assuming the due
and timely filing or filing for recordation in accordance with the provisions of
the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease, with the
Lease Supplement covering the Aircraft, the Trust
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ______________ ___, ____
Indenture and the Trust Supplement attached thereto and made a part thereof, (C)
the Trust Indenture, with the Trust Supplement attached thereto and made a part
thereof, (D) the Trust Agreement, and (E) the termination of the Mortgage and
the Predecessor Lease, with respect to such portion of the Aircraft as is
covered by the recording system established by the Federal Aviation
Administration pursuant to Section 44107 of Title 49 of the United States Code
by virtue of the same constituting an "aircraft" or an "aircraft engine" as
defined in the Federal Aviation Act, no further filing or recording of any
document (including any financing statement with respect to the Lease under
Article 9 of the Uniform Commercial Code of Minnesota or Utah) is necessary in
any applicable jurisdiction within the United States in order (x) to establish
the Owner Trustee's title to such portion of the Aircraft as against Lessee or
any third parties or (y) to create and perfect the Indenture Trustee's security
interest in such portion of the Aircraft as against the Owner Trustee or any
third parties. With respect to such portion of the Aircraft, if any, as may not
be deemed to constitute an "aircraft" or "aircraft engine" as defined in the
Federal Aviation Act, except for the filing of financing statements in the
appropriate filing offices in the State of Utah and the State of Minnesota (as
to the filing of which we refer you to the opinion of corporate counsel of
Lessee, delivered to you on the date hereof) and the filing of periodic
continuation statements with respect to such filings, as and when required, (x)
under the federal laws of the United States and the laws of the State of New
York, no filing or recording of any document (including any financing statement)
is necessary under Article 9 of the Uniform Commercial Code in order to
establish the Owner Trustee's title in such portion of the Aircraft as against
Lessee and any third parties in any applicable jurisdiction within the United
States, and (y) under the federal laws of the United States and the laws of the
State of New York, no filing or recording of any document (including any
financing statement) is necessary or advisable under Article 9 of the Uniform
Commercial Code in order to create or perfect the Indenture Trustee's security
interest in such portion of the Aircraft as against the Owner Trustee and any
third parties in any applicable jurisdiction within the United States.
In rendering the opinions expressed herein, we have relied
exclusively, and without independent investigation, on the following opinions of
counsel (being furnished to you today) as to all matters stated in such opinions
(including the qualifications and exceptions therein): (i) the opinion of Crowe
& Dunlevy, P.C., referred to in Section 4(a)(xv) of the Participation Agreement,
and (ii) with respect to the opinions in paragraphs 4 above, the opinion of Ray,
Quinney & Nebeker, referred to in Section 4(a)(xiii) of the Participation
Agreement.
In addition, in rendering our opinions expressed herein, we have
assumed that each agreement referred to herein constitutes the legal, valid and
binding obligation of each party thereto, other than Lessee and Guarantor,
enforceable against each such party in accordance with its terms. We have also
assumed that, except for the filings and recordations contemplated or referred
to herein, there are no filings or recordations with respect to the Aircraft
(other than the previous recordation of title in the name of Lessee [and the
Mortgage, and a UCC-l financing statement filed in the Office of the Secretary
of State of the State of Minnesota on ___________, filing number _________,
naming Lessee as Debtor and [
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ______________ ___, ____
______________], as Secured Party (as to which a UCC-3 termination statement is
being filed on the date hereof))], the Lease, the Lease Supplement covering the
Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with
the Federal Aviation Administration, or of Uniform Commercial Code financing
statements naming the Owner Trustee as a debtor in the filing offices of the
Secretary of State of the State of Utah or in any other filing office in the
State of Utah or in the filing offices of the Secretary of State of the State of
Minnesota or in any other filing office in the State of Minnesota. We have
further assumed that each of the documents and Uniform Commercial Code financing
statements referred to in Paragraph 4 above to be recorded with the Federal
Aviation Administration or filed with the appropriate filing office in the State
of Minnesota and the State of Utah was in due form for such recording or filing
and that each of the above-mentioned documents has been duly and timely recorded
or filed, as the case may be, under the Federal Aviation Act and under the laws
of the State of Minnesota and the State of Utah. Except as expressly set forth
in paragraph 4 above, we express no opinion as to the right, title or interest
in or to the Trust Estate or the Trust Indenture Estate on the part of any
Person. Moreover, the opinions expressed herein relating to the enforceability
of any agreement or instrument are subject to the further qualification that no
opinion is expressed as to the specific remedy or remedies that any court,
governmental authority, board of arbitration or arbitrator may grant, impose or
render under particular circumstances. In particular, no opinion is expressed
concerning the availability of equitable remedies, as such, for the enforcement
of any provision of any such agreement or instrument.
Finally, we call to your attention that, in connection with our
opinions expressed above, we do not purport to be experts with respect to, or
express any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment acquired by the Owner
Trustee, as contemplated in the Participation Agreement, and which may require
the consent or approval of, the giving of notice to, the registration with or
the taking of any other action in respect of, any federal or state governmental
authority in connection with the operation or maintenance of such equipment on
an ongoing basis, in accordance with the Owner Trustee's, Lessee's or
Guarantor's undertakings in the Operative Documents. We are qualified to
practice law in the State of New York, and we do not purport to be experts on,
or to express any opinion concerning, any laws except the laws of the State of
New York and the federal laws of the United States. Further, we do not purport
to give any opinion regarding the securities laws in any jurisdiction or with
respect to the Employee Retirement Income Security Act of 1974, as amended. All
references in this opinion to federal laws are to the federal laws of the United
States of America. We express no opinions except as expressly set forth herein,
and no opinion is implied or may be inferred beyond the opinions expressly
stated herein. We assume no obligation to supplement the opinions expressed
herein if any applicable laws change after the date hereof or if we become aware
of any facts that might change such opinions after the date hereof.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ______________ ___, ____
This opinion is being delivered for your sole benefit, and no other
person or entity shall be entitled to rely upon this opinion without our express
written consent.
Very truly yours,
<PAGE>
Annex A
[ ], as Owner Participant
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Pass Through Trustee and Indenture
Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
<PAGE>
Exhibit B-3 to Participation Agreement
[Form of Opinion of Northwest]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc. [NW 1999 __]
Opinion of Counsel to Lessee and Guarantor
Gentlemen:
I act as legal counsel for Northwest Airlines, Inc., a Minnesota
corporation ("Lessee"), and Northwest Airlines Corporation, a Delaware
corporation ("Guarantor"), and in such capacity am familiar with the
transactions contemplated by the Participation Agreement [NW 1999 __], dated as
of [_______ __, ____], (the "Participation Agreement"), among Lessee, Guarantor,
First Security Bank, National Association, as Owner Trustee under the Trust
Agreement referred to therein, State Street Bank and Trust Company, as Pass
Through Trustee under each of the Pass Through Trust Agreements referred to
therein, the Owner Participant named therein, State Street Bank and Trust
Company, as Subordination Agent, and State Street Bank and Trust Company, as
Indenture Trustee under the Indenture referred to therein. Capitalized terms
used herein without definition shall have the respective meanings ascribed to
them in or by reference to the Participation Agreement, unless the context
otherwise requires. This opinion is delivered pursuant to Section 4(a)(xi) of
the Participation Agreement.
In rendering this opinion, I, or lawyers under my direction, have
examined, among other things, executed counterparts of the Participation
Agreement, the Lease, the Lease Supplement covering the Aircraft, the Trust
Agreement, the Trust Supplement, the Trust Indenture, the Secured Certificates,
the Tax Indemnity Agreement, the Purchase Agreement Assignment, the Bill of
Sale, the FAA Bill of Sale and the Guarantee. As to any facts material to my
opinions expressed herein, I have relied upon the representations and warranties
contained in the Operative Documents (including, without limitation, in Sections
7 and 8 of the Participation Agreement) and upon originals or copies (certified
or otherwise identified to my satisfaction) of such corporate records, documents
and other instruments as, in my judgment, are necessary or appropriate to enable
me to render this opinion. I have assumed, and have not independently verified,
the genuineness of all signatures, the authenticity of all documents submitted
to me as originals, the conformity with the originals of
<PAGE>
To the Addressees listed in
Schedule A hereto
_____________ ___,___
Page 2
all documents submitted to me as copies, and the accuracy of all factual
statements of parties made on or before the date hereof (and have relied thereon
as I have deemed appropriate).
Based upon and subject to the foregoing, and subject further to the
assumptions, limitations and qualifications set forth below, it is my opinion
that:
1. Lessee is a corporation duly organized and validly existing
pursuant to the laws of the State of Minnesota, has the corporate power and
authority to carry on its business as now conducted and to enter into and
perform its obligations under the Participation Agreement, the Lease, the Lease
Supplement covering the Aircraft, the Bill of Sale, the FAA Bill of Sale, the
Tax Indemnity Agreement and the Purchase Agreement Assignment (collectively, the
"Lessee Documents"), and is duly qualified to transaction business in each
jurisdiction in which the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified would not have a
material adverse effect on Lessee and its subsidiaries, taken as a whole. Lessee
is a Certificated Air Carrier. Guarantor is a corporation duly organized and
validly existing pursuant to the laws of the State of Delaware and has the
corporate power and authority to enter into and perform its obligations under
the Guarantee.
2. The execution, delivery and performance of the Lessee Documents
by Lessee and of the Guarantee by Guarantor have been duly authorized by all
necessary corporate action on the part of Lessee and Guarantor, as the case may
be, do not require any approval of stockholders of Lessee or Guarantor, as the
case may be, or, to my knowledge after due inquiry and investigation, any
approval or consent of any trustee of holders of any indebtedness or obligations
of Lessee or Guarantor, as the case may be (other than any such approval or
consent as has been obtained), and the execution and delivery of any thereof by
Lessee or Guarantor, as the case may be, nor the performance by Lessee or
Guarantor, as the case may be, of its obligations thereunder does not (A)
contravene any law, governmental rule or regulation or, to my knowledge after
due inquiry and investigation, judgment or order applicable to or binding on
Lessee or Guarantor, as the case may be, or (B) to my knowledge after due
inquiry and investigation, contravene or result in any breach of, or constitute
any default under or result in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee or Guarantor, as the case may be, under, (i)
Lessee's or Guarantor's corporate charter or by-laws or (ii) any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other agreement or instrument, or permit issued by
any Minnesota or United States governmental authority to which Lessee or
Guarantor, as the case may be, is a party or by which Lessee or Guarantor, as
the case may be, or its properties may be bound or affected.
3. Neither the execution and delivery by Lessee of any of the Lessee
Documents or by Guarantor of the Guarantee, nor the performance by Lessee or
Guarantor of their respective obligations thereunder, requires the consent or
approval of, or the giving of
<PAGE>
To the Addressees listed in
Schedule A hereto
_____________ ___,___
Page 3
notice to, or the registration with, or the taking of any other action in
respect of, any federal or state governmental authority in the United States,
except for (A) the registration of the Aircraft (including the placement on
board of the owner's copy of the application for registration of the Aircraft
and, if necessary, a flying time wire), recordations, and other actions referred
to in Paragraph 5 below, and (B) such consents, approvals, notices,
registrations and other actions required by the terms of the Lessee Documents or
the Guarantee after the Delivery Date.
4. The Guarantee has been duly entered into and delivered by
Guarantor, and each of the Lessee Documents has been duly entered into and
delivered by Lessee.
5. Subject to the registration of the Aircraft with the Federal
Aviation Administration in the name of the Owner Trustee, and assuming the due
and timely filing for recordation in accordance with the provisions of the
Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached thereto and made a part thereof, (C) the Trust Indenture, with the
Trust Supplement attached thereto and made a part thereof, and (D) the Trust
Agreement, with respect to such portion of the Aircraft as is covered by the
recording system established by the Federal Aviation Administration pursuant to
Section 44107 of Title 49 of the United States Code by virtue of the same
constituting an "aircraft" or an "aircraft engine" as defined in the Federal
Aviation Act, no further filing or recording of any document (including any
financing statement with respect to the Lease under Article 9 of the Uniform
Commercial Code of Minnesota or Utah) is necessary in any applicable
jurisdiction within the United States in order (x) to establish the Owner
Trustee's title to such portion of the Aircraft as against Lessee or any third
parties or (y) to create and perfect the Indenture Trustee's security interest
in such portion of the Aircraft as against the Owner Trustee or any third
parties. With respect to such portion of the Aircraft, if any, as may not be
deemed to constitute an "aircraft" or "aircraft engine," as defined in the
Federal Aviation Act, except for the filing of financing statements in the
appropriate filing offices in the State of Utah and the State of Minnesota,
which filing has been made, and the filing of periodic continuation statements
with respect to such filings, as and when required, (x) under Minnesota law no
filing or recording of any document (including any financing statement) is
necessary under Article 9 of the Uniform Commercial Code in order to establish
the Owner Trustee's title in such portion of the Aircraft as against Lessee and
any third parties in any applicable jurisdiction within the United States, and
(y) under Minnesota law no filing or recording of any document (including any
financing statement) is necessary under Article 9 of the Uniform Commercial Code
in order to create or perfect the Indenture Trustee's security interest in such
portion of the Aircraft as against the Owner Trustee and any third parties in
any applicable jurisdiction within the United States.
6. Under Minnesota law the transfer to the Owner Trustee of title to
the Aircraft and the contemporaneous lease of the Aircraft to Lessee under
circumstances
<PAGE>
To the Addressees listed in
Schedule A hereto
_____________ ___,___
Page 4
involving fair consideration but not involving an ostensible surrender of
possession of the Aircraft by Lessee is not void against or voidable by present
or subsequent creditors of Lessee by reason thereof.
7. There are no legal or governmental proceedings pending or, to the
best of my knowledge, threatened to which Lessee or Guarantor or any of their
respective subsidiaries is a party or to which any of the properties of Lessee
or Guarantor or any of their respective subsidiaries is subject other than those
proceedings summarized in the Guarantor's publicly filed annual, quarterly and
other reports filed with the Securities and Exchange Commission, and proceedings
which I believe would not reasonably be expected to have a material adverse
effect on Lessee and its subsidiaries, taken as a whole, or on the power or
ability of Lessee to perform its obligations under the Lessee Documents.
In rendering the opinions expressed herein, I have relied
exclusively, and without independent investigation, on the opinion (being
furnished to you today) of (i) Crowe & Dunlevy, P.C., referred to in Section
4(a)(xv) of the Participation Agreement and (ii) with respect to the opinion in
paragraph 5 above, Ray, Quinney & Nebeker, referred to in Section 4(a)(xiii) of
the Participation Agreement, as to all matters stated in such opinions,
including the qualifications and exceptions therein.
In addition, in rendering the opinions expressed herein, I have
assumed that each agreement referred to herein constitutes the legal, valid and
binding obligation of each party thereto, other than Lessee and Guarantor,
enforceable against each such party in accordance with its terms. I have also
assumed that, except for the filings and recordations contemplated or referred
to herein, there are no filings or recordations with respect to the Aircraft
(other than the previous recordation of title in the name of Lessee) [and the
Mortgage, and a UCC-l financing statement filed in the Office of the Secretary
of the State of Minnesota on ___________, filing number _________,naming Lessee
as Debtor and [_______________], as Secured Party (as to which a UCC-3
termination statement is being filed on the date hereof))], the Lease, the Lease
Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or
the Trust Indenture with the Federal Aviation Administration not shown on the
indices of filed but unrecorded documents maintained by the Federal Aviation
Administration and made available to Crowe & Dunlevy, P.C., for purposes of
their aforesaid opinion, or of Uniform Commercial Code financing statements
naming the Owner Trustee as a debtor in the filing offices of the Secretary of
State of the State of Utah or in any other filing office in the State of Utah or
in the filing offices of the Secretary of State of the State of Minnesota or in
any other filing office in the State of Minnesota. I have further assumed that
each of the documents and Uniform Commercial Code financing statements referred
to in Paragraph 5 above to be recorded with the Federal Aviation Administration
or filed with the appropriate filing office in the State of Utah was in due form
for such recording or filing and that each of such documents has been duly and
timely recorded or filed, as the case may be, under the Federal Aviation Act and
under the laws of the State of Utah.
<PAGE>
To the Addressees listed in
Schedule A hereto
_____________ ___,___
Page 5
I am qualified to practice law in the State of Minnesota, and I do
not purport to be an expert on, or to express any opinion concerning, any laws
except the laws of the State of Minnesota, the Delaware General Corporation Law
and the federal laws of the United States. Further, I do not purport to give any
opinion regarding the securities laws in any jurisdiction or with respect to the
Employee Retirement Income Security Act of 1974, as amended. All references in
this opinion to federal laws are to the Federal laws of the United States.
I assume no obligations to supplement the opinions expressed herein
if any applicable laws change after the date hereof or if I become aware of any
facts that might change such opinions after the date hereof.
I express no opinions except as expressly set forth herein, and no
opinion is implied or may be inferred beyond the opinions expressly stated
herein. This opinion is being delivered for your sole benefits and no other
person or entity shall be entitled to rely upon this opinion without my express
written consent.
Very truly yours,
NORTHWEST AIRLINES, INC.
_________________________________
_________________________________
Associate General Counsel
<PAGE>
SCHEDULE A
Citibank, N.A.
[_________________], as Owner Participant
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Pass Through Trustee and Indenture
Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit C to Participation Agreement
[Form of opinion of in-house counsel to the Manufacturer]
_______________, 1999
To the Addressees Listed
in the Attached Schedule
Subject: One Boeing Model 747-451 Aircraft
Bearing Manufacturer's Serial No. ______
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am licensed to
practice law in the State of Washington. As such, I have represented Boeing in
connection with the sale of the Boeing Model 747-451 aircraft bearing
Manufacturer's Serial No. ________ (including the engines installed thereon but
excluding equipment furnished by Northwest Airlines Inc. ("Northwest") (the
"Aircraft")), pursuant to Purchase Agreement No. 1630 between Boeing and
Northwest, dated December 1, 1989, as subsequently amended (the "Purchase
Agreement") and as assigned by the Purchase Agreement Assignment [NW 1999],
dated as of [_____] between Northwest, as Assignor, and First Security Bank,
National Association, not in its individual capacity but solely as Owner
Trustee, as Assignee (the "Purchase Agreement Assignment").
For the purpose of this opinion, I have examined and relied upon originals, or
copies certified to my satisfaction, of the Purchase Agreement and of the
Consent and Agreement [NW 1999], dated as of [_____] to the Purchase Agreement
Assignment executed by Boeing (the "Consent and Agreement").
I have also examined such other documents and records as I have deemed relevant
or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Purchase Agreement and the Consent and Agreement have been duly
authorized, executed and delivered by, and constitute the legal, valid, and
binding obligations of Boeing enforceable against it in accordance with the
respective terms thereof, except as may
<PAGE>
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors' rights in general and
except as the enforceability of such obligations may be subject to general
principles of equity.
(c) Boeing has the full power, authority, and legal right to enter into
and perform its obligations under the Purchase Agreement and the Consent and
Agreement and Boeing's execution, performance, and delivery of such documents
have been duly authorized by all necessary corporate action, and do not
contravene the Restated Certificate of Incorporation or By-Laws of Boeing, or
any indenture, mortgage, contract, instrument, or other agreement, in each case
known to me, to which Boeing is a party or by which it or any of its properties
is bound.
With respect to the conclusions set forth herein, I express no opinion as to any
laws other than the laws of the State of Washington, the corporate laws of the
State of Delaware, and the federal laws of the United States.
Very truly yours,
Craig R. Heyamoto
Counsel
-3-
<PAGE>
SCHEDULE
Northwest Airlines, Inc.
Northwest Airlines Corporation
First Security Bank, National Association,
not in its individual capacity but solely as Owner Trustee
State Street Bank and Trust Company,
not in its individual capacity but solely as Indenture Trustee
State Street Bank and Trust Company,
as Pass Through Trustee
[__________], as Owner Participant
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit D to Participation Agreement
[Form of Opinion of Ray, Quinney & Nebeker]
__________ ___, 1999
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO:
Re: Northwest Airlines, Inc. [NW 1999__]
Dear Sir or Madam:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("First
Security") and in its capacity as trustee (the "Owner Trustee") under the Trust
Agreement [NW 1999 __] dated as of [________] (the "Trust Agreement") between
First Security and [_______], as beneficiary (the "Owner Participant"), in
connection with the transactions contemplated by the Participation Agreement (as
defined below). Except as otherwise defined herein, the terms used herein shall
have the meanings specified in, or by reference in, Section 13 of the
Participation Agreement [NW 1999 __], dated as of [________] among the Owner
Participant, First Security, not in its individual capacity except as provided
therein, but as Owner Trustee, Northwest Airlines, Inc., as Lessee, Northwest
Airline Corporation, as Guarantor, State Street Bank and Trust Company, as
Subordination Agent and State Street Bank and Trust Company, not in its
individual capacity except as expressly provided therein, but solely as
Indenture Trustee and as Pass Through Trustee under each of the Pass Through
Agreements (the "Participation Agreement"). This opinion is furnished pursuant
to Section 4(a)(xii) of the Participation Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or advisable for the purpose of
rendering this opinion.
Based upon the foregoing, we are of the opinion that:
(1) First Security is a national banking association duly organized,
validly existing and in good standing under the laws of the United States,
is a "citizen of the United States" within the meaning of Section
40102(a)(15) of the Act and has the full power and authority to enter into
and perform its obligations under the Trust
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ______________ ___, ____
Agreement and each other Operative Document to which it, in its individual
capacity or as Owner Trustee, as the case may be, is a party and, as Owner
Trustee, to issue, execute, and deliver and perform the Secured
Certificates.
(2) The Owner Trustee is the duly appointed trustee under the Trust
Agreement and the Trust Agreement creates a legal and valid trust under
the laws of the State of Utah; the trust created by the Trust Agreement
has been duly created and exists for the benefit of the Owner Participant,
and the Trust Agreement creates for the benefit of the Owner Participant
the rights and interests in the Trust Estate which the Trust Agreement by
its terms purports to create; and assuming the Trust Agreement was
properly authorized, executed and delivered by the Owner Participant and
that the terms of the Trust Agreement are not in violation of any laws,
documents, judgments, regulations or other provisions applicable to the
Owner Participant, the Trust Agreement constitutes, under the laws of the
State of Utah, a legal, valid and binding obligation of the Owner
Participant enforceable against the Owner Participant in accordance with
its terms.
(3) The Trust Agreement, the Participation Agreement, and each other
Operative Document to which First Security or the Owner Trustee, as the
case may be, is a party, and the Secured Certificates, have been duly
authorized, executed and delivered by First Security, or the Owner
Trustee, as the case may be, and assuming due authorization, execution and
delivery by the other parties thereto is a legal, valid and binding
obligation of First Security, or the Owner Trustee, as the case may be,
enforceable in accordance with their respective terms.
(4) The execution and delivery by First Security of the Trust
Agreement and the Participation Agreement and the execution and delivery
by the Owner Trustee of the Operative Documents to which it is a party is
not, and the performance by First Security, or the Owner Trustee, as the
case may be, of its respective obligations under each such agreements will
not be, inconsistent with the articles of association or bylaws of First
Security, do not and will not contravene any federal law or law of the
State of Utah, or any rule or regulation of the State of Utah or the
federal governmental rule, or any judgment or order of which we have
knowledge and which is applicable to it and do not and will not contravene
any provision of, or result in the creation of any lien upon any property
of First Security, or constitute a default under, any indenture, mortgage,
contract or other instrument of which we have knowledge and to which First
Security or the Owner Trustee is a party or by which either is bound or
require the consent or approval of, the giving of notice to, or the
registration with, or the taking of any action in respect of, or under
federal law or the laws of the State of Utah or any subdivision or agency
thereof.
(5) There are no fees, taxes or other charges, except taxes imposed
on fees payable to First Security, required to be paid under the laws,
ordinances or regulations of the State of Utah or any political
subdivision thereof, including, without limitation,
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ______________ ___, ____
Salt Lake City, in connection with the execution, delivery or performance
by the Lessee, Owner Trustee, Indenture Trustee or any Participant of the
Operative Documents solely because First Security, or the Owner Trustee as
the case may be, performs certain of its obligations under the Operative
Documents in the State of Utah.
(6) There are no pending or threatened actions or proceedings
against or affecting First Security or the Owner Trustee, as the case may
be, before any court, governmental authority or administrative agency
which, if adversely determined, could materially adversely affect the
right, power or ability, either in its individual capacity or as Owner
Trustee, or both, as the case may be, to enter into or perform its
obligations under the Operative Documents.
(7) The Trust Indenture (or financing statements or other notices
with respect thereto) has been filed for record or recorded with the
Division of Corporations and Commercial Code in the State of Utah and such
offices are all the places in the State of Utah wherein such filing or
recordation is necessary and no other actions or filings are necessary in
the State of Utah to perfect the lien and security interest of the
Indenture Trustee in the Trust Estate as against creditors of or
purchasers from the Owner Trustee or the Lessee, or both.
(8) The Owner Trustee has received such right, title and interest in
and to the Aircraft as was conveyed to the Owner Trustee on the date
hereof, subject to (i) the right of the Lessee under the Lease and the
Lease Supplement; (ii) the beneficial interest of the Owner Participant in
the Aircraft; and (iii) the Lien created pursuant to the Trust Indenture
and the Trust Indenture Supplement; and to our knowledge there exist no
Liens affecting the right, title or interest of the Owner Trustee in and
to the Trust Estate resulting from claims against First Security, not
related to the ownership of the Trust Estate or the administration of the
Trust Estate or any other transaction contemplated by the Operative
Documents.
(9) Assuming that (i) the Aircraft is not physically located in the
State of Utah at the commencement or termination of the Term, (ii) in
connection with any sale of the Aircraft, such Aircraft will not be
physically delivered in the State of Utah to a buyer, and (iii) the trust
created by the Trust Agreement is treated as a grantor trust under subpart
E, Part 1 of Subchapter J of the Internal Revenue Code of 1986, as
amended, there are no fees, taxes or other charges (except taxes imposed
on fees payable to the Owner Trustee) payable to the State of Utah or any
political subdivision thereof in connection with the execution, delivery
or performance by the Owner Trustee, the Indenture Trustee, the Lessee or
any Participant of the Operative Documents or in connection with the
making by the Owner Participant of its investment in the Aircraft or its
acquisition of the beneficial interest in the Trust Estate or in
connection with the issuance and acquisition of the Secured Certificates,
and neither the Owner Trustee, the Trust Estate nor the trust created by
the Trust Agreement will be subject to any fee, tax or other governmental
charge (except taxes on fees payable to
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO 4- ______________ ___, ____
the Owner Trustee) under the laws of the State of Utah or any political
subdivision thereof on, based on or measured by, directly or indirectly,
the gross receipts, net income or value of the Trust Estate by reason of
the creation or continued existence of the trust under the terms of the
Trust Agreement pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement within such
State.
(10) Neither a Utah court nor a federal court applying Utah law or
federal law, if properly presented with the issue and after having
properly considered such issue, would permit the Owner Participant to
terminate the Trust Agreement, except in accordance with its terms.
(11) Although there is no Utah case directly on point, under the
laws of the State of Utah, so long as the Trust Agreement has not been
terminated in accordance with its terms, creditors of any person that is
an Owner Participant, holders of a lien against the assets of any such
person that is an Owner Participant, such as trustees, receivers or
liquidators (whether or not an insolvency proceeding has been commenced)
(collectively, the "Creditors") may acquire valid claims and liens, as to
the Trust Estate, only against the rights of such Owner Participant under
the Trust Agreement or in the Trust Estate, and do not have, and may not
through the enforcement of such Creditors' rights acquire, any greater
rights than such Owner Participant with respect to the Trust Agreement or
the Trust Estate.
The foregoing opinions are subject to the following assumptions,
exception and qualifications:
A. The foregoing opinions are limited to the laws of the State of Utah and
the federal laws of the United States of America governing the banking and
trust powers of First Security and Title II of the United States Code
entitled "Bankruptcy". In addition, we express no opinion with respect to
(i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Trust
Indenture Act of 1939, as amended; (ii) the Federal Aviation Act of 1958,
as amended (except with respect to the opinion set forth in paragraph 1
above concerning the citizenship of First Security); or (iii) state
securities or blue sky laws. Insofar as the foregoing opinions relate to
the legality, validity, binding effect and enforceability of the documents
involved in these transactions, which by their terms are governed by the
laws of a state other than Utah, we have assumed that such documents
constitute legal, valid, binding and enforceable agreements under the laws
of such state, as to which we express no opinion.
B. The foregoing opinions regarding enforceability of any document or
instrument are subject (i) except as otherwise set forth in the opinions
in paragraphs 10 and 11, to applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ______________ ___, ____
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law. We call to your attention
that bankruptcy courts are courts in equity with wide discretion in
applying the provisions of the Bankruptcy Code.
C. As to the documents involved in these transactions, we have assumed
that each is a legal, valid and binding obligation of each party thereto,
other than First Security or the Owner Trustee, and is enforceable against
each such party in accordance with their respective terms.
D. The opinion in paragraph 1 above concerning the citizenship of First
Security is based upon the facts contained in an affidavit of First
Security, made by its authorized officer, which facts we have not
independently verified.
E. We have assumed that all signatures, other than those of the Owner
Trustee or First Security, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to
us as originals are authentic, and that all documents and instruments
submitted to us conform with the originals, which facts we have not
independently verified.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature
of the equipment involved in these transactions.
G. We have made no investigation of, and express no opinion concerning,
the nature of the title to any part of the equipment involved in these
transactions or the priority of any mortgage or security interest.
H. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
I. In addition to any other limitation by operation of law upon the scope,
meaning or purpose of this opinion, this opinion speaks only as of the
date hereof. We have no obligation to advise the recipients of this
opinion (or any third party) of changes of law or fact that may occur
after the date hereof, even though the change may affect the legal
analysis, a legal conclusion or any information contained herein.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -6- ______________ ___, ____
J. The opinions expressed in this letter are solely for the use of the
parties to which it is addressed in matters directly related to the
Participation Agreement and the transactions contemplated thereunder and
these opinions may not be relied on by any other persons or for any other
purpose without our prior written approval. The opinions expressed in this
letter are limited to the matters set forth in this letter and no other
opinions should be inferred beyond the matters expressly stated.
Very truly yours,
RAY, QUINNEY & NEBEKER
[_____________________]
<PAGE>
SCHEDULE A
First Security Bank, National Association
Northwest Airlines, Inc.
State Street Bank and Trust Company
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
[ ], as Owner Participant
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit E-1 to Participation Agreement
[Form of Opinion of special counsel for the Owner Participant]
___________ __, 1999
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Boeing 747-451 with Registration Mark N[ ]
Ladies and Gentlemen:
We have acted as special counsel to [__________________], a
[________] corporation (the "Owner Participant"), in connection with the
transactions contemplated by the Participation Agreement [NW 1999 __] dated as
of [______________] (the "Participation Agreement") among Northwest Airlines,
Inc., Northwest Airlines Corporation, the Owner Participant, First Security
Bank, National Association, as Owner Trustee under the Trust Agreement referred
to therein, State Street Bank and Trust Company, as Pass Through Trustee under
each of the Pass Through Trust Agreements referred to therein, State Street Bank
and Trust Company, as Subordination Agent, and State Street Bank and Trust
Company, as Indenture Trustee under the Indenture referred to therein.
Capitalized terms used but not defined in this opinion letter shall have the
meanings set forth in, or by reference in, the Participation Agreement. This
opinion is delivered pursuant to Section 4(a)(xiv) of the Participation
Agreement.
We have examined the Participation Agreement, the Lease, the Trust
Agreement, the Indenture, the Secured Certificates, the Tax Indemnity Agreement
and the Purchase Agreement Assignment (collectively, the "Documents"). In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as facsimile, certified or
photostatic copies and the authenticity of the originals of such copies. The
opinions contained in this opinion letter are subject to the following
assumptions, limitations and qualifications:
A. We have assumed (i) the due organization, existence and good
standing of all parties to the Documents (the "Parties"), (ii) the power and
full legal right of the Parties under all applicable laws and regulations,
without approvals, authorizations, consents or other orders of any public body
or board, to execute, deliver and perform under the Documents,
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
(iii) the due authorization, execution and delivery by the Parties of the
Documents and the due authentication of the Secured Certificates by the
Indenture Trustee, (iv) that the Parties are not subject to any judgment, order,
writ, injunction or decree of any court, arbitrator or governmental agency or
instrumentality that prohibits or enjoins the execution, delivery or performance
of any of the Documents or any of the transactions contemplated by the Documents
and (v) with respect to factual matters, the accuracy of the representations set
forth in Section 8 of the Participation Agreement.
B. The enforceability of the Documents against the Owner Participant
or against the Owner Trustee may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and, in the
case of indemnity provisions contained therein, as limited by public policy
considerations, and except that certain of the remedial provisions in the Lease
and the Indenture may be limited or rendered unenforceable by applicable laws,
which laws, however, do not in our opinion make the remedies provided in such
document inadequate for the practical realization of the benefits provided
thereby.
C. The execution, delivery and performance by the Owner Trustee and
by First Security Bank, National Association, in its individual capacity, or
both, as the case may be, of the Participation Agreement, the Trust Agreement,
the Lease, the Purchase Agreement Assignment, the Indenture and the Secured
Certificates (the "Owner Trustee Documents") and the consummation of the
transactions by the Owner Trustee and by First Security Bank, National
Association in its individual capacity contemplated thereby are not and will not
be in violation of the articles of association or By-Laws of First Security
Bank, National Association or of any indenture, mortgage, credit agreement,
license or other agreement or instrument to which First Security Bank, National
Association, in its individual capacity or as the Owner Trustee is a party or by
which it is bound, or of any Federal or state law, governmental rule or
regulation applicable to First Security Bank, National Association, in its
individual capacity or as the Owner Trustee or any judgment or order applicable
to it and known to such counsel after due inquiry.
D. Neither the execution and delivery by the Owner Trustee and,
where appropriate, by First Security Bank, National Association, in its
individual capacity, or both, as the case may be, of the Owner Trustee Documents
nor the consummation of any of the transactions by the Owner Trustee, by First
Security Bank, National Association in its individual capacity, or both, as the
case may be, contemplated thereby requires the consent or approval of, the
giving of notice to, or the registration with, or the taking of any other action
with respect to, any governmental authority or agency under any existing Federal
laws governing the banking and trust powers of First Security Bank, National
Association, or state law (except for filings pursuant to the Uniform Commercial
Code, and except for compliance with requirements of the Federal Aviation Act).
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
E. We express no opinion as to the availability of specific
performance and/or injunctive relief or other equitable or provisional remedies
in relation to enforcement of the Documents.
F. We express no opinion as to the priority of any security
interests or as to title to any part of the Trust Estate.
G. This opinion is given based on states of law, documentation and
fact as they exist on the date hereof and we do not undertake to advise you of
any changes which hereafter may be brought to our attention.
H. The enforcement of any rights of any party is subject to any
implied duty to act reasonably and in good faith.
I. We express no opinions as to matters governed by (i) any Federal
or state securities law, (ii) any Federal or state tax laws, or (iii) the
Federal Aviation Act.
Based on our examination described above, relying upon statements of
fact contained in the documents we have examined and subject to the assumptions,
limitations and qualifications expressed in this letter, we are of the opinion
that:
1. The Participation Agreement, the Trust Agreement and the Tax
Indemnity Agreement (the "Owner Participant Documents") constitute the legal,
valid and binding obligations of Owner Participant, enforceable against Owner
Participant in accordance with their respective terms.
2. Neither the execution of, delivery and performance by Owner
Participant of the Owner Participant Documents nor the consummation of any of
the transactions by Owner Participant contemplated thereby requires the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect to any governmental authority or agency of the
United States, the State of [_____________] or, assuming the law of
[_____________] is identical to the law of New York, the State of [________]
(except for filings pursuant to the Uniform Commercial Code, and except for
compliance with the requirements of the Federal Aviation Act, as to which we
express no opinion).
3. The Owner Trustee Documents (other than the Trust Agreement),
including the Secured Certificates, constitute legal, valid and binding
obligations of the Owner Trustee, enforceable against the Owner Trustee in
accordance with their respective terms.
4. The Indenture duly creates for the benefit of the Indenture
Trustee the security interests which the Indenture purports to create and the
Indenture Trustee is entitled to the benefits and security afforded by the
Indenture.
We are licensed to practice law in the State of New York, and the
opinions set forth in this opinion letter are limited to the application of the
laws of the United States of
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __,___
America and the State of New York to the matters expressly covered by such
opinions. This letter is furnished by us to you on the date hereof only in
connection with the transactions contemplated by the Participation Agreement and
may not be relied upon by any other person or entity.
Very truly yours,
<PAGE>
SCHEDULE A
Northwest Airlines, Inc.
Northwest Airlines Corporation
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Pass Through Trustee
State Street Bank and Trust Company, as Indenture Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit E-2 to Participation Agreement
[Form of Opinion of Owner Participant's in-house counsel]
__________ ___, 1999
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Boeing 747-451 with Registration Mark N[___]
Dear Sirs:
I am in-house counsel of [_________], a [_________] corporation (the
"Owner Participant"), and have acted as counsel to Owner Participant in
connection with the transactions contemplated by that certain Participation
Agreement [NW 1999 __] dated as of [_____] (the "Participation Agreement") among
Northwest Airlines, Inc., Northwest Airlines Corporation, the Owner Participant,
First Security Bank, National Association, as Owner Trustee under the Trust
Agreement referred to therein, State Street Bank and Trust Company, as Pass
Through Trustee under each of the Pass Through Trust Agreements referred to
therein, State Street Bank and Trust Company, as Subordination Agent, and State
Street Bank and Trust Company, as Indenture Trustee under the Trust Indenture
referred to therein. This opinion is delivered pursuant to Section 4(a)(xiv) of
the Participation Agreement.
Except as otherwise noted herein, all capitalized terms used but not
defined in this opinion letter shall have the meanings set forth in, or by
reference in, the Participation Agreement.
In connection with my opinion herein, I have examined executed
counterparts of the Participation Agreement, the Trust Agreement and the Tax
Indemnity Agreement (the "Owner Participant Documents") and the other documents
relating to the proposed transaction. With respect to factual matters, I have
relied upon the representations and warranties contained in each such Owner
Participant Document and upon originals or copies, certified or otherwise
identified to my satisfaction, of such other documents as I have deemed relevant
to the rendering of this opinion. In such examination I have assumed the
genuineness of all signatures (other than that of Owner Participant), the legal
capacity of all natural persons, the authenticity of all documents submitted to
me as originals, the conformity with the originals of all documents submitted to
me as copies and the authenticity of the originals of such copies. In rendering
the opinions set forth below, I have assumed the due authorization, execution
and
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
delivery of the Owner Participant Documents by each of the parties thereto other
than the Owner Participant.
1. Owner Participant is a duly incorporated and validly existing
corporation in good standing under the laws of the State of [____] and has the
corporate power and authority to execute, deliver and carry out the terms of the
Owner Participant Documents.
2. The Owner Participant Documents have been duly authorized,
executed and delivered by Owner Participant.
3. Neither the execution and delivery by the Owner Participant of
the Owner Participant Documents nor the consummation of any of the transactions
by the Owner Participant contemplated thereby, violates any law, governmental
rule or regulation of the United States, the State of [____] or the State of
[____] (or any governmental subdivision thereof).
4. The execution, delivery and performance of the Owner Participant
Documents by the Owner Participant have been duly authorized by all necessary
corporate action on the part of the Owner Participant, do not require any
approval of stockholders of the Owner Participant, or, to my knowledge, any
approval or consent of any trustee or holders of any indebtedness or obligations
of the Owner Participant (other than any such approval or consent as has been
obtained), and neither the execution and delivery of any thereof by the Owner
Participant nor the performance by the Owner Participant of its obligations
thereunder (A) contravenes any law, governmental rule or regulation or, to my
knowledge, judgment or order applicable to or binding on the Owner Participant
or (B) to my knowledge, contravenes or results in any breach of, or constitutes
any default under, or results in the creation of any lien (other than provided
for in the Operative Documents) upon any property of the Owner Participant
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, bank loan or credit agreement, or any other agreement or
instrument, corporate charter, by-law or permit issued by any [_______] or
United States governmental authority to which the Owner Participant is a party
or by which the Owner Participant or its properties may be bound or affected.
5. To my knowledge, there are no pending or threatened proceedings
against or affecting the Owner Participant before any court or administrative
agency, individually or in the aggregate, which, if determined adversely to it,
would materially adversely affect the power or ability of the Owner Participant
to perform its obligations under the Owner Participant Documents.
I am a member of the Bar of the State(s) of [_______] and I do not
express herein any opinion as to any matters governed by any law other than the
laws of the State(s) of [_______], the Delaware General Corporation Law and the
Federal law of the United States. No opinion is expressed herein as to matters
governed by (i) any Federal or state securities law, (ii) any Federal or state
tax laws, or (iii) the Federal Aviation Act.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
This opinion is furnished by me at your request for your sole
benefit, and no other person or entity shall be entitled to rely on this opinion
without my express written consent, except that [our special counsel] may rely
on this opinion for purposes of delivering its opinion.
Very truly yours,
______________________
<PAGE>
SCHEDULE A
Northwest Airlines, Inc.
Northwest Airlines Corporation
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Pass Through Trustee
State Street Bank and Trust Company, as Indenture Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit F to Participation Agreement
[Form of Opinion of Crowe & Dunlevy, P.C.]
_________ __,1999
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Boeing model 747-451 aircraft with manufacturer's serial number _____
and United States nationality and registration marks N [ ] (the
Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed the following described
instruments with the Federal Aviation Administration (the "FAA") today at the
respective times noted below:
(a) AC Form 8050-2 Aircraft Bill of Sale dated [_____________]
(the "FAA Bill of Sale") by Northwest Airlines, Inc. (the
"Lessee") to First Security Bank, National Association, as
Owner Trustee (the "Owner Trustee") under Trust Agreement [NW
1999 __] dated as of [_________] (the "Trust Agreement")
between [_____________] as Owner Participant and the Owner
Trustee, covering the Aircraft was filed at[__________]
(b) AC Form 8050-1 Aircraft Registration Application by the Owner
Trustee covering the Aircraft, to which were attached the
Affidavits required by Section 47.7(c)(2)(ii) of Part 47 of
the Federal Aviation Regulations, was filed at
[_________________]
(c) the Trust Agreement was filed at [________________]
(d) Trust Indenture and Security Agreement [NW 1999 __] dated as
of [________] (the "Indenture") between the Owner Trustee and
State Street Bank and Trust Company as Indenture Trustee (the
"Indenture Trustee"), to which were attached the Trust
Agreement and Indenture Supplement [NW 1999 __] dated
[_____________] (the "Indenture Supplement") covering the
Aircraft and the Pratt & Whitney model PW 4056 aircraft
engines with manufacturer's serial numbers [_______], [
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
________], [_________] and [________] (the "Engines"), was
filed at [_______]; and
(e) Lease Agreement [NW 1999 __] dated as of [_____________] (the
"Lease") between the Owner Trustee as lessor and the Lessee,
to which were attached Lease Supplement No. 1 dated [
_____________] (the "Lease Supplement") covering the Aircraft
and the Engines, the Indenture and the Indenture Supplement,
was filed at [__________
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion and as
were made available to us by the FAA, it is our opinion that:
(a) the FAA Bill of Sale, the Indenture with the Indenture
Supplement attached, the Lease with the Lease Supplement, the
Indenture and the Indenture Supplement attached are in due
form for recordation by and have been duly filed for
recordation with the FAA pursuant to and in accordance with
the provisions of Section 44107 of Title 49 of the United
States Code;
(b) legal title to the Aircraft is vested in the Owner Trustee and
all instruments necessary to cause the FAA in due course to
issue to the Owner Trustee an AC Form 8050-3 Certificate of
Aircraft Registration covering the Aircraft have been duly
filed with the FAA pursuant to and in accordance with the
provisions of Sections 44102 and 44103 of Title 49 of the
United States Code;
(c) the Aircraft and the Engines are free and clear of Liens (as
such term is defined in the Lease) other than such as are
created by the Indenture, as supplemented by the Indenture
Supplement, and by the Lease, as supplemented by the Lease
Supplement;
(d) the Indenture, as supplemented by the Indenture Supplement
creates a duly and validly perfected first priority security
interest in favor of the Indenture Trustee in the Aircraft and
the Engines and in all of the right, title and interest of the
Owner Trustee in and to the Lease, as supplemented by the
Lease Supplement (insofar as such security interest affects an
interest covered by the recording system established by the
FAA pursuant to Section 44107 of Title 49 of the United States
Code);
(e) the Indenture, as supplemented by the Indenture Supplement, is
not required to be refilled with the FAA or filed or recorded
in any other place within the United States in order to
perfect or maintain the perfection of the security interest
created thereby in the Aircraft and the
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
Engines under the applicable laws of any jurisdiction within
the United States; and
(f) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
which have been effected) are necessary to perfect in any
jurisdiction within the United States the Owner Trustee's
title to the Aircraft or the security interest created by the
Indenture, as supplemented by the Indenture Supplement in the
Aircraft and the Engines under the applicable laws of any
jurisdiction within the United States.
No opinion is herein expressed as to: (i) laws other than the
federal laws of the United States; (ii) the validity or enforceability under
local law of the Indenture, as supplemented by the Indenture Supplement; and
(iii) the recognition of the perfection of the security interest created by the
Indenture, as supplemented by the Indenture Supplement against third parties in
any legal proceedings outside the United States. Since our examination was
limited to records maintained by the FAA Aircraft Registry, our opinion does not
cover liens which are perfected without the filing of notice thereof with the
FAA, such as federal tax liens, liens arising under Section 1368(a) of Title 29
of the United States Code and possessory artisans' liens, and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines. This opinion is rendered in reliance upon the opinion of the
Aeronautical Center Counsel dated [_______________] (a copy of which is attached
hereto) and upon the past practice of the FAA which is consistent with said
opinion.
Very truly yours,
<PAGE>
SCHEDULE A
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
Northwest Airlines, Inc.
Citibank, N.A.
[_________________], as Owner Participant
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit G to Participation Agreement
[Form of Opinion of Bingham Dana LLP,
special counsel for the Indenture Trustee]
_________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Leveraged Lease Financing of One
Boeing 747-451 Aircraft [NW 1999__]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Indenture Trustee
(the "Indenture Trustee") under the Trust Indenture and Security Agreement [NW
1999 __] dated as of [____] (the "Indenture") between First Security Bank.
National Association, not in its individual capacity, but solely as Owner
Trustee (the "Owner Trustee"), and State Street, as Indenture Trustee, in
connection with the execution and delivery of the Participation Agreement [NW
1999 ___] dated as of [____] (the "Participation Agreement") by and among the
Indenture Trustee, Northwest Airlines, Inc., as Lessee (the "Lessee"), Northwest
Airlines Corporation (the "Guarantor"), [_______]. as Owner Participant, State
Street, as Pass Through Trustee (the "Pass Through Trustee"), State Street, as
Subordination Agent (the "Subordination Agent") and the Owner Trustee and the
transactions contemplated thereby. Capitalized terms not otherwise defined
herein shall have the meanings specified in the Lease and Section 13 of the
Participation Agreement. This opinion is being delivered pursuant to Section
4(a)(xvi) of the Participation Agreement.
Our representation of State Street and the Indenture Trustee has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
We have examined the Participation Agreement, the Note Purchase
Agreement, the Indenture and the other documents to which State Street,
individually or as Indenture Trustee, is a party (together, the "Operative
Documents"), the Certificate of the Massachusetts Commissioner of Banks relating
to State Street and originals, or copies certified or otherwise identified to
our satisfaction, of such other records, documents, certificates, or other
instruments as we have deemed necessary or advisable for the purposes of this
opinion.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
For purposes of our opinion rendered in paragraph 1 below, with respect to the
authority of State Street to operate as a state-chartered trust company and
exercise trust powers, our opinion relies upon and is limited by such
Certificate of the Massachusetts Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Indenture Trustee), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
The opinions set forth below are limited solely to the internal substantive laws
of the Commonwealth of Massachusetts as applied by courts located in
Massachusetts and the federal laws of the United States. No opinion is given
herein as to the choice of law or internal substantive rules of law that any
court or other tribunal may apply to the transactions contemplated by the
Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by any law, statute, rule or regulation of the
United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdiction other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have assumed, with your permission that the Operative
Documents are governed by the internal substantive laws of the Commonwealth of
Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than State Street, in its
individual capacity or as Indenture Trustee, as applicable, at all times
relevant thereto, is validly existing and
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
in good standing under the laws of the jurisdiction in which it is
organized, and is qualified to do business and in good standing under the
laws of each jurisdiction where such qualification is required generally
or necessary in order for such party to enforce its rights under such
Operative Documents, and (ii) each party to the Operative Documents, at
all times relevant thereto, had and has the full power, authority and
legal right under its certificate of incorporation, partnership agreement,
by-laws, and other governing organizational documents, and the applicable
corporate, partnership, or other enterprise legislation and other
applicable laws, as the case may be (other than State Street and the
Indenture Trustee with respect to the laws of the United States of America
and the internal substantive laws of the Commonwealth of Massachusetts,
but only in each case to the limited extent the same may be applicable to
State Street or the Indenture Trustee, and relevant to our opinions
expressed below) to execute, and to perform its obligations under, the
Operative Documents, and (iii) each party to the Operative Documents
(other than State Street or the Indenture Trustee, as applicable) has duly
executed and delivered each of such agreements and instruments to which it
is a party and that (other than with respect to State Street and the
Indenture Trustee, as applicable) the execution and delivery of such
agreements and instruments and the transactions contemplated thereby have
been duly authorized by proper corporate or other organizational
proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the Indenture
Trustee, as applicable, and (ii) that each of the Operative Documents is a
valid, binding and enforceable obligation of State Street or the Indenture
Trustee, as applicable, to the extent that laws other than those of the
Commonwealth of Massachusetts are relevant thereto (other than the laws of
the United States of America, but only to the limited extent the same may
be applicable to State Street or the Indenture Trustee, as applicable, and
relevant to our opinions expressed below).
(c) The enforcement of any obligations of State Street or the
Indenture Trustee, as applicable, under any of the Operative Documents may
be limited by the receivership, conservatorship and supervisory powers of
bank regulatory agencies generally, as well as by bankruptcy, insolvency,
reorganization, moratorium, marshaling or other laws and rules of law
affecting the enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of debtors' or
guarantors' rights); and we express no opinion as to the status under any
fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of State Street or the Indenture Trustee, as applicable, under
any of the Operative Documents.
(d) We express no opinion as to the availability of any specific or
equitable relief of any kind.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __,___
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and, as to any rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of powers of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to releases or waivers of unmatured claims or rights,
(vi) the imposition or collection of interest on overdue interest or
providing for a penalty rate of interest or late charges on overdue or
defaulted obligations, or the payment of any premium, liquidated damages,
or other amount which may be held by any court to be a "penalty" or a
"forfeiture," or (vii) so-called "usury savings clauses" purporting to
specify methods of (or otherwise assure) compliance with usury laws or
other similar laws of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
This opinion is rendered solely for the benefit of those
institutions listed on Schdule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as Indenture
Trustee, as the case may be, has the requisite corporate and trust power and
authority to execute, deliver and perform its obligations under the Operative
Documents and in its capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Delivery Date.
2. State Street, in its individual capacity or as Indenture Trustee,
as the case may be, has duly authorized by all necessary corporate action the
Operative Documents
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ___________ __,___
and has duly executed and delivered the Operative Documents, and the Operative
Documents constitute valid and binding obligations of State Street, in its
individual capacity or as Indenture Trustee, as the case may be, enforceable
against State Street, in its individual capacity or as Indenture Trustee, as the
case may be, in accordance with their respective terms.
3. The Secured Certificates to be issued and dated the Delivery Date
have been duly authenticated and delivered by State Street as Indenture Trustee
pursuant to the terms of the Indenture.
4. The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Indenture Trustee, as the case may be,
of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us, applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
5. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Indenture Trustee, as the case may be,
of the Operative Documents or the consummation of any of the transactions by
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, contemplated thereby (except as shall have been duly obtained, given or
taken); and such authorization, execution, delivery, performance, consummation
and issuance do not conflict with or result in a breach of the provisions of any
such law.
6. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, in
its individual capacity or as Indenture Trustee, as the case may be, of the
Operative Documents (except for taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative Documents in Massachusetts, and there
are no Taxes under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for Taxes on any fees payable to State
Street in its individual capacity) upon or with
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -6- ___________ __,___
respect to the Aircraft or any Engine or any part of any interest therein, or
the purchase, ownership, delivery, lease, sublease, possession, presence, use,
operation, condition, storage, maintenance, modification, alteration, repair,
sale, return, transfer or other disposition of the Aircraft or any Engine which
would not have been imposed if State Street did not have its principal place of
business in Massachusetts or did not perform its administrative duties under the
Operative Documents in Massachusetts.
7. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Indenture Trustee, as the case may be, to enter into or perform
its obligations under the Operative Documents.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
SCHEDULE A
State Street Bank and Trust Company
First Security Bank, National Association
[__________], as Owner Participant
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit I to Participation Agreement
[Form of CW&T 1110 Opinion]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc.
Opinion of Special Counsel to Lessee Concerning
Section 1110 of the Federal Bankruptcy Code
Gentlemen:
We have acted as special counsel for Northwest Airlines, Inc., a
Minnesota corporation ("Lessee"), in connection with the transactions
contemplated by the Participation Agreement [NW 1999 ___], dated as of
[____________] (the "Participation Agreement"), among Lessee, Northwest Airlines
Corporation, as Guarantor, First Security Bank, National Association, as Owner
Trustee under the Trust Agreement referred to therein, State Street Bank and
Trust Company, as Pass Through Trustee under each of the Pass Through Trust
Agreements referred to therein, the Owner Participant named therein, State
Street Bank and Trust Company, as Subordination Agent, and State Street Bank and
Trust Company, as Indenture Trustee under the Indenture referred to therein.
Capitalized terms used herein without definitions shall have the respective
meanings ascribed to them in or by reference to the Participation Agreement,
unless the context otherwise requires. This opinion is delivered pursuant to
Section 4(a)(xxiii) of the Participation Agreement. As used herein, the term
"Airframe" shall mean the Boeing 747-451 Airframe bearing U.S. Registration No.
N[________] and Manufacturer's Serial No. [______], the term "Engines" shall
mean the four Pratt & Whitney Model PW4056 Engines bearing manufacturer's Serial
Nos. [____], [____], [____] and [____], and the term "Aircraft" shall mean the
Airframe and the Engines, collectively, but expressly excludes any portion of
the Aircraft that does not constitute an aircraft, aircraft engine, appliance,
or spare part as such terms are defined in section 40102 of title 49 of the
United States Code.
In acting as such special counsel, we have examined, among other
things, with respect to the Aircraft, executed counterparts of the Participation
Agreement, Purchase Agreement Assignment, Trust Agreement, Trust Indenture,
Trust Supplement, Lease, Lease Supplement, Bill of Sale, FAA Bill of Sale,
Guarantee and Secured Certificates. As to any facts material to our opinions
expressed herein, we have, without independent investigation,
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
relied upon the representations and warranties contained in the Operative
Documents (including, without limitation, in Sections 7 and 8 of the
Participation Agreement and certificates of officers of the Lessee including,
without limitation, the certificate of an officer of the Lessee delivered
pursuant to Section 4(a)(ix) of the Participation Agreement and the certificate
of an officer of the Lessee in the form attached as Exhibit A hereto) and upon
originals or copies (certified or otherwise identified to our satisfaction) of
such corporate records, documents and other instruments as, in our judgment, are
necessary or appropriate to enable us to render this opinion. We have also
assumed, and have not independently verified, the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
with the originals of all documents submitted to us as copies, and the accuracy
of all factual statements of parties made on or before the date hereof (and have
relied thereon as we have deemed appropriate). We have delivered to you today
our opinion of even date herewith as to, among other things, the enforceability
of certain of the Operative Documents against the Lessee. This Opinion is
subject to the same assumptions, exceptions, limitations and qualifications set
forth therein and is given in reliance on the same matters, including opinion
letters, as are stated to be relied on therein.
You have requested our opinion as to whether 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 section 1110 ("Section 1110") of title 11 of the
United States Code (the "Bankruptcy Code") if the Lessee were to become a debtor
in a case under chapter 11 of the Bankruptcy Code.
ASSUMPTIONS
The opinions expressed herein are based upon and subject to the
assumed compliance by the relevant parties, at all relevant times, with the
assumptions set forth herein and the assumption that all matters relied on
herein continue to be true and that there are no and will not be any amendments
to the Operative Documents or additional facts of which we are not aware which
would be material to a court's decision on this issue.
We have assumed, in addition to the assumptions set forth above,
that:
(i) the Owner Trustee will continue to be the registered owner of
the Aircraft, subject to the security interest of the Indenture Trustee;
(ii) the Lessee is and will continue to be a citizen of the United
States (as defined in section 40102 of title 49 of the United States Code)
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of title 49 of the United States
Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo;
(iii) the Trust Indenture constitutes the legal, valid and binding
obligation of the Owner Trustee in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
laws affecting the rights of creditors generally and general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and the Trust Indenture is effective to
create a valid security interest in favor of the Indenture Trustee for the
benefit of the Loan Participants in the Owner Trustee's right, title and
interest under the Lease and that the Indenture Trustee has and will
continue to hold a perfected security interest in the Owner Trustee's
interest under the Lease; and
(iv) all Uniform Commercial Code financing statements and all
filings necessary under the recording system of the Federal Aviation Act
have been properly filed and duly recorded in all necessary places to
properly record the ownership interest of the Owner Trustee in the
Aircraft and to perfect the security interest of the Indenture Trustee in
the Owner Trustee's interest in the Lease.
DISCUSSION
The Aircraft was first placed in service after October 22, 1994.
Therefore the Aircraft is within the scope of the provisions of Section 1110.
CONCLUSION
Based upon the foregoing, and subject to the assumptions and
qualifications contained herein, it is our opinion that if the Lessee were to
become a debtor under chapter 11 of the Bankruptcy Code, the Owner Trustee as
Lessor under the Lease, and the Indenture Trustee for the benefit of the Loan
Participants, as assignee of the Owner Trustee's rights under the Lease pursuant
to the Trust Indenture, would be entitled to the benefits of Section 1110 with
respect to the Airframe and the Engines but may not be entitled to such benefits
with respect to any replacement of the Aircraft after an Event of Loss in the
future.
QUALIFICATIONS
Section 1110 was amended effective October 22, 1994. Our opinion
respecting Section 1110 is based solely on the assumptions set forth herein, our
review of the language of Section 1110 as currently in effect, a review of the
legislative history of the Bankruptcy Reform Act of 1994(1) and a review of the
cases decided under the former version of Section 1110. We are not aware of any
judicial decisions interpreting the amendments to Section 1110 enacted in the
Bankruptcy Reform Act of 1994 that are directly applicable to the facts and
circumstances present in this transaction. Accordingly, our opinion is not based
on directly applicable judicial precedent, but rather on what we believe to be a
sound analysis of such authorities as exist. We call to your attention, however,
the decision of the United States District Court for the District of Colorado in
Western Pacific Airlines, Inc. v. GATX Capital
- ----------
(1) Pub. L. 103-394.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __,___
(In re Western Pacific Airlines, Inc.), 219 B.R. 305, on rehearing, 221 B.R. 1
(D. Colo. 1998) where the District Court concluded that the relief provided by
Section 1110 is relevant only if the debtor does not satisfy the conditions set
forth in Section 1110(a)(l)(A) and (B) during the first 60 days of the
bankruptcy case. Thus, in the District Court's view, once the debtor satisfies
those conditions, all rights and obligations in connection with subsequent
defaults are governed by the more general provisions of the Bankruptcy Code. We
believe that this decision construes Section 1110 in a manner that is
inconsistent with both the language of Section 1110 and the legislative history
explaining the purpose and operation of Section 1110. Accordingly, we believe
that the decision is an incorrect interpretation of Section 1110.
We express no opinion concerning whether any collateral consisting
of proceeds or any substitute or replacement airframe, engine or part would have
the benefits of Section 1110.
We express no opinion as to the availability or effect of a
preliminary injunction, temporary restraining order or other such temporary
relief, nor do we express any opinion, either implicitly or otherwise, with
respect to any subject not addressed expressly in the Conclusion.
We express no opinion as to the availability of Section 1110 with
respect to any bankruptcy proceedings of any possible sublessee of an Aircraft
which may be subleased by the Lessee. We are admitted to practice in the State
of New York, and we do not purport to be experts on, or to express any opinion
concerning, the laws of any jurisdiction other than the Federal laws of the
United States of America and the State of New York.
We express no opinions except as expressly set forth herein, and no
opinion is implied or may be inferred beyond the opinions expressly stated
herein. We assume no obligation to supplement the opinions expressed herein if
any applicable laws change after the date hereof or if we become aware of any
facts that might change such opinions after the date hereof.
This opinion is being delivered for your sole benefit, and no other
person or entity shall be entitled to rely upon this opinion without our express
written consent.
Very truly yours,
<PAGE>
SCHEDULE A
[Owner Participant]
State Street Bank and Trust Company, as Pass Through Trustee
Northwest Airlines, Inc.
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
EXHIBIT A
NORTHWEST AIRLINES, INC.
OFFICER'S CERTIFICATE
In connection with the opinion dated [______________ ___, ___I (the
"Opinion"), a copy of which is attached hereto as Exhibit A and which relates to
one Boeing 74-451 airframe FAA Registration No. N[______] and MSN [______], and
Pratt & Whitney Model PW4056 engine MSN [______], and Pratt & Whitney Model
PW4056 engine MSN [______], Pratt & Whitney Model PW4056 engine MSN [______],
and Pratt & Whitney Model PW4056 engine MSN [______] (collectively, the
"Aircraft"), to be delivered by Cadwalader, Wickersham & Taft ("CW&T") to the
parties identified therein in connection with the execution and delivery of
certain of the Operative Documents (as defined in the Participation Agreement as
defined in the Opinion), I, [____________], [____________] of Northwest
Airlines, Inc., do hereby certify that:
1. I understand that CW&T is relying on this Certificate in
connection with the execution and delivery of the Opinion.
2. To the best of my knowledge, information and belief, after due
inquiry, the assumptions contained in the section of the Opinion entitled
"Assumptions" are true and correct as of the date hereof.
3. I have no reason to believe that any statement, fact, or opinion
expressed in the Opinion is untrue, inaccurate or incomplete in any respect.
4. To the best of my knowledge, information and belief, after due
inquiry, all of the statements, representations, warranties, agreements,
disclosures and other information furnished by Northwest, Airlines, Inc. and
contained in the Operative Documents and other documents delivered in connection
with this transaction are true, accurate and complete in all respects.
5. Northwest Airlines, Inc. intends that, as Lessee under the Lease,
the Owner Trustee, and as assignee of the Owner Trustee's rights under the
Lease, the Indenture Trustee, for the benefit of the Loan Participants (as such
terms are defined in the Participation Agreement), be entitled to the benefits
of 11 U.S.C. ss. 1110 with respect to the Aircraft.
6. The Aircraft was first placed in service after October 22, 1994.
7. I have been duly authorized by Northwest Airlines, Inc. to
execute and deliver this Certificate to CW&T.
Dated:[__________ __, __]
NORTHWEST AIRLINES, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
Exhibit J-l to Participation Agreement
[Form of Opinion of Bingham Dana LLP,
special counsel for the Pass Through Trustee]
_____________________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Leveraged Lease Financing of One Boeing
747-451 Aircraft [NW 1999____]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Pass Through Trustee
(the "Pass Through Trustee") under the Pass Through Trust Agreement dated as of
June 3, 1996, among Northwest Airlines Holdings Corporation (formerly known as
Northwest Airlines Corporation, "Holdings"), Northwest Airlines, Inc. and State
Street, as amended by the Supplemental Agreement, dated as of November 20, 1998,
among Northwest Airlines, Inc., Northwest Airlines Corporation, Holdings and
State Street, as supplemented by Trust Supplement No. 1999-lA, Trust Supplement
No. 1999-lB and Trust Supplement No. 1999-1C, each dated as of February 16, 1999
and each among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street (collectively, the "Pass Through Trusts" and,
individually a "Pass Through Trust") in connection with the execution and
delivery of the Participation Agreement [NW 1999__] dated as of [______] (the
"Participation Agreement") by and among State Street, as Indenture Trustee,
Northwest Airlines, Inc., as Lessee (the "Lessee"), Northwest Airlines
Corporation (the "Guarantor"), [_______], as Owner Participant, State Street, as
Pass Through Trustee, State Street, as Subordination Agent (the "Subordination
Agent") and First Security Bank, National Association, as Owner Trustee and the
transactions contemplated thereby. Capitalized terms not otherwise defined
herein shall have the meanings specified in the Lease and Section 13 of the
Participation Agreement. This opinion is being delivered pursuant to Section
4(a)(xxiv) of the Participation Agreement.
Our representation of State Street and the Pass Through Trustee has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __,___
We have examined the Participation Agreement, the Liquidity Facility
for each of the Class A, Class B, and Class C Trusts, the Intercreditor
Agreement, the Note Purchase Agreement, the Escrow and Paying Agent Agreements
each dated as of February 16, 1999 and each among First Security Bank, National
Association, as Escrow Agent, the underwriters named therein, State Street, as
Pass Through Trustee and State Street, as Paying Agent and each of the Pass
Through Trusts (together, the "Operative Documents"), the Certificate of the
Massachusetts Commissioner of Banks relating to State Street and originals, or
copies certified or otherwise identified to our satisfaction, of such other
records, documents, certificates, or other instruments as we have deemed
necessary or advisable for the purposes of this opinion. For purposes of our
opinion rendered in paragraph 1 below, with respect to the authority of State
Street to operate as a state-chartered trust company and exercise trust powers,
our opinion relies upon and is limited by such Certificate of the Massachusetts
Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Pass Through Trustee), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examinations of law as we have deemed necessary for the purposes of this
opinion. The opinions set forth below are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts as applied by courts
located in Massachusetts and the federal laws of the United States. No opinion
is given herein as to the choice of law or internal substantive rules of law
that any court or other tribunal may apply to the transactions contemplated by
the Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by any law, statute, rule or regulation of the
United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdictions other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __,___
assumed, with your permissions that the Operative Documents are governed by the
internal substantive laws of the Commonwealth of Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without independent investigation that (i) each
party to the Operative Documents, other than State Street, in its
individual capacity or as Pass Through Trustee, as applicable, at all
times relevant thereto, is validly existing and in good standing under the
laws of the jurisdiction in which it is organized, and is qualified to do
business and in good standing under the laws of each jurisdiction where
such qualification is required generally or necessary in order for such
party to enforce its rights under such Operative Documents, and (ii) each
party to the Operative Documents, at all times relevant thereto, had and
has the full power, authority and legal right under its certificate of
incorporation, partnership agreement, by-laws, and other governmental
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may be
(other than State Street and the Pass Through Trustee with respect to the
laws of the United States of America and the internal substantive laws of
the Commonwealth of Massachusetts, but only in each case to the limited
extent the same may be applicable to State Street or the Pass Through
Trustee, and relevant to our opinions expressed below) to execute, and to
perform its obligations under, the Operative Documents, and (iii) each
party to the Operative Documents (other than State Street or the Pass
Through Trustee, as applicable) has duly executed and delivered each of
such agreements and instruments to which it is a party and that (other
than with respect to State Street and the Pass Through Trustee, as
applicable) the execution and delivery of such agreements and instruments
and the transactions contemplated thereby have been duly authorized by
proper corporate or other organizational proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the Pass
Through Trustee, as applicable, and (ii) that each of the Operative
Documents is a valid, binding and enforceable obligation of State Street
or the Pass Through Trustee, as applicable, to the extent that laws other
than those of the Commonwealth of Massachusetts are relevant thereto
(other than the laws of the United States of America, but only to the
limited extent the same may be applicable to State Street or the Pass
Through Trustee, as applicable, and relevant to our opinions expressed
below).
(c) The enforcement of any obligations of State Street or the Pass
Through Trustee, as applicable, under any of the Operative Documents may
be limited by the receivership, conservatorship and supervisory powers of
bank regulatory agencies generally, as well as by bankruptcy, insolvency,
reorganization, moratorium, marshaling or other laws and rules of law
affecting the enforcement generally of
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __,___
creditors' rights and remedies (including such as may deny giving effect
to waivers of debtors' or guarantors' rights); and we express no opinion
as to the status under any fraudulent conveyances laws or fraudulent
transfer laws of any of the obligations of State Street or the Pass
Through Trustee, as applicable, under any of the Operative Documents.
(d) We express no opinion as the availability of any specific or
equitable relief of any kind.
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and, as to any rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to the (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of powers of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to release or waivers of unmatured claims or rights, (vi)
the imposition or collection of interest on overdue interest or providing
for penalty rate of interest or late charges on overdue or defaulted
obligations, or the payment of any premium, liquidated damages, or other
amount which maybe held by any court to be a "penalty" or a "forfeiture"
or (vii) so-called "usury savings clauses" purporting to specify methods
of (or otherwise assure) compliance with usury laws or other similar laws
of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or change of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
In rendering the opinion set forth below in paragraph 6 as to
certain Massachusetts tax matters, we have assumed that, for federal income tax
purposes, the trust created by the Trust Agreement will not be taxable as a
corporation, but rather, will be classified as a grantor trust under subpart E,
Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code
of 1986, as amended.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ___________ __,___
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as Pass Through
Trustee, as the case may be, has or had, as the case may be, the requisite
corporate and trust power and authority to execute, deliver and perform its
obligations under the Operative Documents and in its capacity as Pass Through
Trustee, to issue and execute the Certificates delivered on the Issuance Date.
2. State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, has duly authorized by all necessary corporate
action the Operative Documents and has duly executed and delivered the Operative
Documents, and the Operative Documents constitute valid and binding obligations
of State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, enforceable against State Street, in its individual capacity or as
Pass Through Trustee, as the case may be, in accordance with their respective
terms.
3. The Certificates issued and dated the Issuance Date have been
duly issued, authenticated and delivered by State Street as Pass Through Trustee
pursuant to the terms of the Operative Documents and are enforceable against the
Pass Through Trustee and are entitled to the benefits of the applicable Pass
Through Trust.
4. The authorization, execution, delivery and performance by State
Street, it its individual capacity or as Pass Through Trustee, as the case may
be, of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us, applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
5. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Pass Through Trustee, as the
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -6- ___________ __,___
case may be, of the Operative Documents or the consummation of any of the
transactions by State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, contemplated thereby (except as shall have been
duly obtained, given or taken); and such authorization, execution, delivery,
performance, consummation and issuance do not conflict with or result in a
breach of the provisions of any such law.
6. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, it
its individual capacity or as Pass Through Trustee, as the case may be, of the
Operative Document (except for taxes on any fees payable to State Street in its
individual capacity) or in connection with the issuance, execution and delivery
of the Certificates by State Street, as Pass Through Trustee, pursuant to the
Pass Through Trusts which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative Documents in Massachusetts. Neither
State Street, in its individual capacity or as the Indenture Trustee, as the
case may be, the Owner Participant, the Owner Trustee, nor the trust created by
the Trust Agreement will, as a result of the transactions contemplated thereby,
be subject to any Taxes under the laws of the Commonwealth of Massachusetts or
any political subdivision thereof (except for Taxes on any fees payable to State
Street in its individual capacity) which would have not been imposed if State
Street did not have its principal place of business in Massachusetts or did not
perform its administrative duties under the Operative Documents in
Massachusetts, and there are no Taxes under the laws of the Commonwealth of
Massachusetts or any political subdivision thereof (except for Taxes on any fees
payable to State Street in its individual capacity) upon or with respect to the
Aircraft or any Engine or any part of any interest therein, or the purchase,
ownership, delivery, lease, sublease, possession, presence, use, operation,
condition, storage, maintenance, modification, alteration, repair, sale, return,
transfer or other disposition of the Aircraft or any Engine which would not have
been imposed if State Street did not have its principal place of business in
Massachusetts or did not perform its administrative duties under the Operative
Documents in Massachusetts.
7. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Pass Through Trustee, as the case may be, to enter into or
perform its obligations under the Operative Documents.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
SCHEDULE A
State Street Bank and Trust Company
First Security Bank, National Association
[__________________], as Owner Participant
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit J-2 to Participation Agreement
[Form of Opinion of Bingham, Dana LLP,
special counsel for the Subordination Agent]
____________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
Re: Northwest Airlines, Inc./Leveraged Lease Financing of One Boeing
747-451 Aircraft [NW 1999____]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of
February 16, 1999 (the "Intercreditor Agreement") among State Street in its
capacity as Trustee under the Northwest Airlines Pass Through Trust 1999-lA,
Northwest Airlines Pass Through Trust 1999-lB and Northwest Airlines Pass
Through Trust 1999-1C, Citibank, N.A., as Class A Liquidity Provider, Class B
Liquidity Provider and Class C Liquidity Provider, and State Street, as
Subordination Agent in connection with the execution and delivery of the
Participation Agreement [NW 1999 ____] dated as of [__________] (the
"Participation Agreement") by and among State Street, as Subordination Agent,
Northwest Airlines, Inc., as Lessee (the "Lessee"), Northwest Airlines
Corporation (the "Guarantor"), [_________], as Owner Participant, State Street,
as Pass Through Trustee (the "Pass Through Trustee"), State Street, as
Subordination Agent and First Security Bank, National Association, as Owner
Trustee and the transactions contemplated thereby. Capitalized terms not
otherwise defined herein shall have the meanings specified in the Lease and
Section 13 of the Participation Agreement. This opinion is being delivered
pursuant to Section 4(a)(xxv) of the Participation Agreement.
Our representation of State Street and the Subordination Agent has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
We have examined the Participation Agreement, the Note Purchase
Agreement and the Intercreditor Agreement (together, the "Operative Documents"),
the Certificate of the
<PAGE>
Page 2
Massachusetts Commissioner of Banks relating to State Street and originals, or
copies certified or otherwise identified to our satisfaction, of such other
records, documents, certificates, or other instruments as we have deemed
necessary or advisable for the purposes of this opinion. For purposes of our
opinion rendered in paragraph 1 below, with respect to the authority of State
Street to operate as a state-chartered trust company and exercise trust powers,
our opinion relies upon and is limited by such Certificate of the Massachusetts
Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Subordination Agent), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Subordination Agent).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
The opinions set forth below are limited solely to the internal substantive laws
of the Commonwealth of Massachusetts as applied by courts located in
Massachusetts and the federal laws of the United States. No opinion is given
herein as to the choice of law or internal substantive rules of law that any
court or other tribunal may apply to the transactions contemplated by the
Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities so-called "Blue Sky"
laws of any state or other jurisdiction. In addition, no opinion is expressed as
to matters governed by any law, statute, rule or regulation of the United States
relating to the acquisition, ownership, registration, use, operation,
maintenance, repair, replacement or sale of or the nature of the Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdiction other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have assumed, with your permission that the Operative
Documents are governed by the internal substantive laws of the Commonwealth of
Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than State Street, in its
individual capacity or
<PAGE>
Page 3
as Subordination Agent, as applicable, at all times relevant thereto, is
validly existing and in good standing under the laws of the jurisdiction
in which it is organized, and is qualified to do business and in good
standing under the laws of each jurisdiction where such qualification is
required generally or necessary in order for such party to enforce its
rights under such Operative Documents, and (ii) each party to the
Operative Documents, at all times relevant thereto, had and has the full
power, authority and legal right under its certificate of incorporation,
partnership agreement, by-laws, and other governing organizational
documents, and the applicable corporate, partnership, or other enterprise
legislation and other applicable laws, as the case may be (other than
State Street and the Subordination Agent with respect to the laws of the
United States of America and the internal substantive laws of the
Commonwealth of Massachusetts, but only in each case to the limited extent
the same may be applicable to State Street or the Subordination Agent, and
relevant to our opinions expressed below) to execute, and to perform its
obligations under, the Operative Documents, and (iii) each party to the
Operative Documents (other than State Street or the Subordination Agent,
as applicable) has duly executed and delivered each of such agreements and
instruments to which it is a party and that (other than with respect to
State Street and the Subordination Agent, as applicable) the execution and
delivery of such agreements and instruments and the transactions
contemplated thereby have been duly authorized by proper corporate or
other organizational proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the
Subordination Agent, as applicable, and (ii) that each of the Operative
Documents is a valid, binding and enforceable obligation of State Street
or the Subordination Agent, as applicable, to the extent that laws other
than those of the Commonwealth of Massachusetts are relevant thereto
(other than the laws of the United States of America, but only to the
limited extent the same may be applicable to State Street or the
Subordination Agent, as applicable, and relevant to our opinions expressed
below).
(c) The enforcement of any obligations of State Street or the
Subordination Agent, as applicable, under any of the Operative Documents
may be limited by the receivership, conservatorship and supervisory powers
of bank regulatory agencies generally, as well as by bankruptcy,
insolvency, reorganization, moratorium, marshaling or other laws and rules
of law affecting the enforcement generally of creditors' rights and
remedies (including such as may deny giving effect to waivers of debtors'
or guarantors' rights); and we express no opinion as to the status under
any fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of State Street or the Subordination Agent, as applicable,
under any of the Operative Documents.
(d) We express no opinion as the availability of any specific or
equitable relief of any kind.
<PAGE>
Page 4
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and, as to any rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of power of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to releases or waivers of unmatured claims or rights,
(vi) the imposition or collection of interest on overdue interest or
providing for a penalty rate of interest or late charges on overdue or
defaulted obligations, or the payment of any premium, liquidated damages,
or other amount which may be held by any court to be a "penalty" or a
"forfeiture," or (vii) so-called "usury savings clauses" purporting to
specify methods of (or otherwise assure) compliance with usury laws or
other similar laws of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as
Subordination Agent, as the case may be, has the requisite corporate and trust
power and authority to execute, deliver and perform its obligations under the
Operative Documents.
2. State Street, in its individual capacity or as Subordination
Agent, as the case may be, has duly authorized by all necessary corporate action
the Operative Documents and has duly executed and delivered the Operative
Documents, and the Operative Documents constitute valid and binding obligations
of State Street, in its individual capacity or as Subordination Agent, as the
case may be, enforceable against State Street, in its individual
<PAGE>
Page 5
capacity or as Subordination Agent, as the case may be, in accordance with their
respective terms.
3. The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Subordination Agent, as the case may
be, of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us, applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
4. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Subordination Agent, as the case may
be, of the Operative Documents or the consummation of any of the transactions by
State Street, in its individual capacity or as Subordination Agent, as the case
may be, contemplated thereby (except as shall have been duty obtained, given or
taken); and such authorization, execution, delivery, performance, consummation
and issuance do not conflict with or result in a breach of the provisions of any
such law.
5. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, in
its individual capacity or as Subordination Agent, as the case may be, of the
Operative Documents (except for taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative documents in Massachusetts.
6. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board of tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Subordination Agent, as the case may be, to enter into or perform
its obligations under the Operative Documents.
<PAGE>
Page 6
7. Assuming that the Subordination Agent holds each of the Equipment
Notes delivered to and registered in its name pursuant to and as required by the
Intercreditor Agreement, it holds such Equipment Notes in trust as trustee for
the related Trustee in the exercise of the fiduciary powers conferred upon State
Street by Massachusetts law.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
Page 7
SCHEDULE A
State Street Bank and Trust Company
First Security Bank, National Association
[________________], as Owner Participant
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Citibank, N.A.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW 1999___]
Section 7(b) - General Tax Indemnity
(b) General Tax Indemnity.
(i) Indemnity. Except as provided in Section 7(b)(ii) hereof, Lessee
shall pay, protect, save and on written demand shall indemnify and hold
harmless any Tax Indemnitee from and against any and all Taxes howsoever
imposed against any Tax Indemnitee, Lessee or the Aircraft, the Airframe,
any Engine or any Part thereof or interest therein by any Federal, state
or local government or other taxing authority in the United States or by
any foreign government or any political subdivision or taxing authority
thereof or by any territory or possession of the United States or by any
international authority ("Taxing Authority") upon or in connection with or
relating to (A) the construction, financing, refinancing, purchase,
acquisition, acceptance, rejection, delivery, nondelivery, transport,
ownership, registration, reregistration, insuring, assembly, possession,
repossession, operation, location, use, control, condition, maintenance,
repair, sale, return, abandonment, installation, storage, redelivery,
replacement, manufacture, leasing, subleasing, modification, rebuilding,
importation, transfer of title, transfer of registration, exportation or
other application or disposition of the Aircraft, the Airframe, any Engine
or any Part thereof or interest therein, (B) the rentals, receipts or
earnings from the Aircraft, the Airframe, any Engine or any Part, (C) any
amount paid or payable pursuant to any Operative Document or any document
related thereto or the property or the income or other proceeds with
respect to any of the property held in the Trust Estate or the Trust
Indenture Estate, (D) the Aircraft, the Airframe, any Engine or any Part,
(E) any or all of the Operative Documents, or the issuance of the Secured
Certificates (or the refinancing thereof) and any other documents
contemplated hereby or thereby and amendments and supplements hereto and
thereto or the execution, delivery or performance of any thereof or the
issuance, acquisition, modification, holding or subsequent transfer
thereof, (F) the payment of the principal of, or interest or Make-Whole
Amount or other premium on, or other amounts payable with respect to, the
Secured Certificates or the Pass Through Certificates, or (G) otherwise
with respect to or in connection with the transactions contemplated by the
Operative Documents.
(ii) Exclusions from General Tax Indemnity. The provisions of
Section 7(b)(i) shall not apply:
<PAGE>
(1) with respect to any Tax Indemnitee to any Income Tax (as defined
in Section 7(d) hereof) imposed by (A) the United States Federal
government or (B) any U.S. state or local taxing jurisdiction;
(2) with respect to any Tax Indemnitee, to any Income Taxes imposed
by any foreign or international government, jurisdiction or taxing
authority or territory or possession of the United States except to the
extent that such Tax Indemnitee would be subject to such Income Tax if the
sole connection between such Tax Indemnitee and the Taxing Authority had
been the location and operation of the Aircraft or the activities of
Lessee or any sublessee within such Taxing Authority;
(3) to any capital gains taxes, excess profits taxes, value added
taxes, accumulated earnings taxes, personal holding company taxes,
succession taxes or estate or similar taxes;
(4) to any Tax imposed as a result of a transfer or disposition by a
Tax Indemnitee including, without limitation, the revocation of the trust
created by the Trust Agreement or a transfer or disposition of all or any
portion of its respective equitable or legal ownership interest in the
Aircraft, the Trust Estate, a Secured Certificate (including sales of
participations therein), the Trust Indenture Estate (as defined in the
Trust Indenture) or any Operative Document or any interest in such Tax
Indemnitee, unless such transfer or disposition shall occur (A) pursuant
to the exercise of remedies pursuant to Section 15 of the Lease or (B) in
connection with the termination of the Lease or the action or direction of
Lessee pursuant to Sections 9, 10 or 19 thereof;
(5) to any Tax based on or measured by any fees received by the
Owner Trustee, the Pass Through Trustee, the Indenture Trustee or any
Agent in connection with any transaction contemplated by the Operative
Documents;
(6) to any Tax imposed with respect to events occurring or matters
arising after the earlier of (x) the expiration of the Term or the earlier
termination of the Lease pursuant to Section 9 or 19 thereof, (y) the
return of possession of the Aircraft to the Owner Trustee or its designee
pursuant to the terms of the Lease or (z) the commencement of storage
pursuant to Section 5(d) of the Lease provided that this exclusion shall
not apply to Taxes to the extent such Taxes are imposed on or with respect
to any events or matters occurring or arising prior to such expiration,
termination, return of possession of the Aircraft or storage;
(7) to any Tax in the nature of an intangible or similar tax upon or
with respect to the value or principal amount of the interest of any Tax
Indemnitee in any of the Secured Certificates or in the Owner Trust;
EXHIBIT K - PAGE 2
<PAGE>
(8) with respect to any Tax Indemnitee to any Tax imposed on or with
respect to a transferee (or subsequent transferee) of an original Tax
Indemnitee to the extent such Taxes would not have been required to be
withheld or imposed on or with respect to such original Tax Indemnitee;
(9) to any Tax which would not have been imposed on (A) the Owner
Trustee, the Trust Estate or the Owner Participant but for, a Lessor Lien
(including, for this purpose, Liens which would be a Lessor Lien but for
the proviso in the definition of Lessor Liens) or (B) the Indenture
Trustee but for an Indenture Trustee's Lien, in each case with respect to
the Tax Indemnitee to whom such Lien is attributable;
(10) to any Tax to the extent such Tax would not have been imposed
but for a present or future connection between the Tax Indemnitee or any
Affiliate thereof and the jurisdiction imposing such Taxes (including,
without limitation, the Tax Indemnitee or an Affiliate thereof being or
having been a citizen or resident thereof, or being or having been
organized, present or engaged in a trade or business therein, or having or
having had, a permanent establishment or fixed place of business therein,
or engaging, or having engaged, in one or more transactions or activities
therein unrelated to the transactions contemplated by the Operative
Documents), other than a connection arising solely by reason of the
transactions contemplated by the Operative Documents;
(11) to any Tax imposed on a Tax Indemnitee to the extent imposed as
a result of such Tax Indemnitee's failure to comply with any
certification, information, documentation, reporting or similar procedure
that is required by law, treaty or regulation as a condition to the
allowance of any reduction in the rate of such Tax or any exemption or
other relief from such Tax;
(12) to any Tax on a Tax Indemnitee to the extent arising out of, or
caused by, or to the extent such Tax would not have been incurred but for,
(A) the willful misconduct or gross negligence of such Tax Indemnitee or
any of its Affiliates or (B) the inaccuracy or breach of any
representation, warranty, covenant or agreement by such Tax Indemnitee or
any of its Affiliates in any Operative Document;
(13) to any Tax on a Tax Indemnitee to the extent consisting of
interest, penalties, fines or additions to Tax resulting from the
negligence or willful misconduct of such Tax Indemnitee or any of its
Affiliates in connection with the filing of, or failure to file, any tax
return, the payment of, or failure to pay any Tax, or the conduct of any
proceeding in respect thereof unless resulting from the failure by Lessee
to perform its obligations under Section 7(b)(v) hereof; or
EXHIBIT K - PAGE 3
<PAGE>
(14) to any excise tax imposed on any Tax Indemnitee under Section
4975 of the Internal Revenue Code as a result of the use by such Tax
Indemnitee or any of its Affiliates of the assets of an "employee benefit
plan" (as defined in Section 3(3) of ERISA) to purchase a Secured
Certificate, make an equity investment or otherwise acquire any interest
in the Trust Estate or any Secured Certificate.
(iii) Calculation of General Tax Indemnity Payments. Any payment which
Lessee shall be required to make to or for the account of any Tax Indemnitee
with respect to any Tax which is subject to indemnification under this Section
7(b) shall be in an amount which, after reduction by the amount of all Taxes
required to be paid by such Tax Indemnitee in respect of the receipt or accrual
of such amount and after consideration of any current savings of such Tax
Indemnitee resulting by way of any deduction, credit or other tax benefit
attributable to such indemnified Tax that actually reduces any Taxes for which
Lessee is not required to indemnify such Tax Indemnitee pursuant to this Section
7(b) or the Tax Indemnity Agreement, shall be equal to the payment otherwise
required hereunder.
If, by reason of any Tax payment made to or for the account of a Tax
Indemnitee by Lessee pursuant to this Section 7(b), such Tax Indemnitee or any
of its Affiliates subsequently realizes a tax deduction or credit (including a
foreign tax credit) not previously taken into account in computing such payment,
such Tax Indemnitee shall promptly pay to Lessee an amount equal to the sum of
(I) the actual reduction in Taxes, if any, realized by such Tax Indemnitee which
is attributable to such deduction or credit and (II) the actual reduction in
Taxes realized by such Tax Indemnitee as a result of any payment made by such
Tax Indemnitee pursuant to this sentence. For purposes of this Section
7(b)(iii), items of foreign Tax of any Tax Indemnitee shall be deemed to be
utilized by such Tax Indemnitee as credits or deductions for any taxable year in
accordance with the following priorities:
First, all available foreign Taxes for which such Tax
Indemnitee was not indemnified or held harmless by anyone;
Second, all available foreign Taxes for which such Tax
Indemnitee was indemnified or held harmless by Lessee, and all
available foreign taxes indemnified under any other
transaction (except any described in Clause Third), on a pari
passu basis; and
Third, any remaining foreign Taxes arising from any
transaction in which there is an express agreement that such
Taxes shall be utilized after foreign taxes from other
transactions.
Once the foreign Tax for which such Tax Indemnitee was indemnified by Lessee is
deemed to be utilized pursuant to the ordering rules contained in this
paragraph, it shall
EXHIBIT K - PAGE 4
<PAGE>
not subsequently be recharacterized as not having been utilized as a result of a
foreign tax liability arising in a subsequent year.
Any Taxes that are imposed on any Tax Indemnitee as a result of the
disallowance or reduction of any tax benefit referred to in this subsection as
to which such Tax Indemnitee has made in full the payment to Lessee required
hereby (or as to which such Tax Indemnitee would have made its payment but for
Section 7(b)(viii) or which tax benefit was otherwise taken into account in
computing Lessee's indemnity obligation pursuant to this Section 7) in a taxable
year subsequent to the utilization by such Tax Indemnitee shall be treated as a
Tax for which Lessee is obligated to indemnify such Tax Indemnitee pursuant to
the provisions of this Section 7(b), without regard to the exclusions set forth
in Section 7(b)(ii) hereof (other than clauses (12) or (13) thereto).
Each Tax Indemnitee shall in good faith use reasonable efforts in filing
its tax returns and in dealing with Taxing Authorities to seek and claim any tax
savings which would result in payments to Lessee under this Section 7(b).
(iv) General Tax Indemnity -- Contests. At Lessee's request Lessee shall
be entitled at its sole cost and expense (A) in the case of a contest involving
only Taxes indemnified hereunder ("Indemnified Taxes") or (B) in any proceeding
involving a claim for one or more Indemnified Taxes as well as a claim for other
Taxes, where the contest of the claim for Indemnified Taxes can be severed from
the contest of other Taxes, to assume responsibility for and control of the
contest ("Lessee Controlled Contest"). Unless otherwise required by law, any
such contest shall be conducted by and in the name of Lessee. If a written claim
shall be made against and received by any Tax Indemnitee for any Tax for which
Lessee is obligated pursuant to this Section 7(b), such Tax Indemnitee shall
notify Lessee promptly of such claim (it being understood and agreed that
failure to provide such notice shall not adversely affect or otherwise prejudice
any Tax Indemnitee's right to indemnity under this Section 7(b) except to the
extent such failure has a materially adverse effect on the ability to contest
such claim). If the Tax cannot be contested in a Lessee Controlled Contest, upon
request from Lessee within thirty (30) days after receipt of such notice, such
Tax Indemnitee shall in good faith at Lessee's sole cost and expense contest the
imposition of such Tax (a "Tax Indemnitee Controlled Contest"). After consulting
with Lessee and Lessee's counsel concerning the forum in which the adjustment is
most likely to be favorably resolved, such Tax Indemnitee may select in its sole
discretion after considering in good faith Lessee's and Lessee's counsel
recommendation the forum for such contest and determine whether any such contest
shall be by (A) resisting payment of such Tax, (B) paying such Tax under protest
or (C) paying such Tax and seeking a refund or other repayment thereof. Except
as otherwise provided in clause (Z) below, during the pendency of a contest
pursuant to this Section 7(b)(iv) Lessee may withhold payment of any Tax to the
extent provided by applicable law. In no event shall such Tax Indemnitee be
required, or Lessee be permitted, to contest the imposition of any Tax for which
Lessee is obligated pursuant to this Section 7(b) unless (W) no Event of
EXHIBIT K - PAGE 5
<PAGE>
Default shall have occurred and be continuing (unless Lessee shall have provided
security reasonably satisfactory to such Tax Indemnitee securing Lessee's
performance of its obligations under this Section 7(b)), (X) Lessee shall have
agreed to pay to such Tax Indemnitee on demand all reasonable costs and expenses
on an after-tax basis that such Tax Indemnitee may incur in connection with
contesting such claim (including, without limitation, all reasonable legal and
accounting fees), (Y) such action to be taken will not result in a material risk
of sale, forfeiture or loss of, or the creation of any Lien on, the Aircraft,
the Engines or any Part, other than Permitted Liens, unless Lessee shall have
provided such Tax Indemnitee security against such risk in form and amount
reasonably acceptable to such Tax Indemnitee, and (Z) if such contest shall be
conducted in a manner requiring the payment of the claim, Lessee shall have paid
the amount required directly to the appropriate authority or made an advance of
the amount thereof to such Tax Indemnitee on an interest-free basis and agreed
to indemnify such Tax Indemnitee on an after-tax basis against any Taxes payable
by such Tax Indemnitee with respect to such advance.
Notwithstanding anything to the contrary in this Section 7(b), in any Tax
Indemnitee Controlled Contest the Tax Indemnitee may not settle or agree to any
claim without the prior written consent of Lessee, and the Tax Indemnitee shall
conduct any such administrative proceedings and judicial contest in good faith
in an attempt to minimize the amount payable by Lessee under this Section 7(b).
The term "after-tax basis" for purposes of this Section 7(b) shall mean an
amount which, after deduction of all Taxes required to be paid by or on behalf
of the Tax Indemnitee in respect of the receipt or accrual of such amount, is
equal to the payment required under the provisions of this Section 7(b) which
require payments to be made on an after-tax basis.
If any Tax Indemnitee shall obtain a refund of all or any part of any Tax
paid by Lessee, such Tax Indemnitee shall pay Lessee an amount equal to the
amount of such refund, including interest received attributable thereto, plus
any net tax benefit (or minus any net tax detriment) realized by such Tax
Indemnitee as a result of any refund received and payment by such Tax Indemnitee
made pursuant to this sentence.
Nothing contained in this Section 7(b)(iv) shall require any Tax
Indemnitee to contest, or permit Lessee to contest, a claim which such Tax
Indemnitee would otherwise be required to contest pursuant to this Section
7(b)(iv), if such Tax Indemnitee shall waive payment by Lessee of any amount
that might otherwise be payable by Lessee under this Section 7(b) in respect of
such claim and any other claim, the contest of which would be adversely
affected.
(v) General Tax Indemnity -- Reports. If any report, return or statement
is required to be filed with respect to any Tax which is subject to
indemnification under this Section 7(b), Lessee shall timely file the same at
its sole expense (except for any such report, return or statement which the Tax
Indemnitee has notified Lessee that the Tax Indemnitee intends to file or which
the Tax Indemnitee is required by law to file in
EXHIBIT K - PAGE 6
<PAGE>
its own name). Lessee shall have no obligation under the preceding sentence if
such Tax Indemnitee, after receipt of Lessee's written request, shall have
failed to furnish Lessee with such information in a timely fashion as is in such
Tax Indemnitee's control and is not otherwise reasonably available to Lessee and
is necessary to file such returns. Lessee shall either file such report, return
or statement so as to show the ownership of the Aircraft in the Owner Trustee
and send a copy of such report, return or statement to the Tax Indemnitee and
Owner Trustee or, where Lessee is not so permitted to file such report, return
or statement, it shall notify the Tax Indemnitee of such requirement and prepare
and deliver such report, return or statement to the Tax Indemnitee in a manner
satisfactory to such Tax Indemnitee within a reasonable time prior to the time
such report, return or statement is to be filed. Lessee shall provide to the
Owner Participant upon request (or shall cause to be provided to the Owner
Participant upon request) such information maintained in the regular course of
Lessee's business and shall make available for inspection and copying by the
Owner Participant, at Lessee's expense, such records as Lessee retains in the
regular course of its business, or is required under applicable law to retain,
as shall be reasonably necessary for the Owner Participant to prepare or support
any required Federal, state, local or foreign tax returns or other filings, or
to comply with audit or litigation requirements. The Owner Participant shall
provide to Lessee upon request (or shall cause to be provided to Lessee on
request) such information related to the Overall Transaction maintained in the
regular course of the Owner Participant's business, and shall make available (or
shall cause to be made available) for inspection and copying by Lessee, at the
Owner Participant's expense, such records related to the Overall Transaction as
the Owner Participant or the Owner Trustee retain in the regular course of their
business or are required by law to retain, as shall be necessary for Lessee to
prepare or support any required Federal, state, local or foreign returns or
other filings or to comply with audit or litigation requirements.
(vi) Verification. At Lessee's written request after Lessee receives a Tax
Indemnitee's computations showing the amount of any indemnity payable by Lessee
to such Tax Indemnitee pursuant to this Section 7(b) or any amount payable by
any Tax Indemnitee to Lessee pursuant to this Section 7(b), such computations
shall be subject to confidential verification in writing by any nationally
recognized firm of certified public accountants selected by Lessee and
reasonably acceptable to such Tax Indemnitee. The accounting firm shall complete
its review within thirty (30) days of Lessee's receipt of such Tax Indemnitee`s
computations. The computations of such accounting firm shall (i) be delivered
simultaneously to Lessee and such Tax Indemnitee and (ii) absent manifest error,
be final, binding and conclusive upon Lessee and such Tax Indemnitee. If Lessee
pays such indemnity in whole or in part before completion of the verification
procedure, appropriate adjustments will be made promptly after completion of the
verification procedure (and nothing in this Section 7(b)(vi) shall be construed
as changing the time when any such indemnity is payable under this Section 7(b))
to take into account any redetermination of the indemnity by the accounting
firm. The fee and disbursements of such firm shall be paid by Lessee unless such
verification shall disclose an error made by such Tax Indemnitee in favor
EXHIBIT K - PAGE 7
<PAGE>
of such Tax Indemnitee exceeding the lesser of five percent (5%) of the original
claim or $10,000, in which case such fee and disbursements shall be paid by such
Tax Indemnitee. Such Tax Indemnitee shall cooperate with such accounting firm
and (subject to such accounting firm's execution of a confidentiality agreement
satisfactory to such Tax Indemnitee) shall supply such accounting firm with all
information reasonably necessary to permit accomplishment of such review and
determination. The sole responsibility of such accounting firm shall be to
verify the computations of the amount payable hereunder and the interpretation
of this Agreement shall not be within the scope of such accounting firm's
responsibilities.
(vii) General Tax Indemnity -- Payment. Except as provided in Section
7(b)(iv) hereof, Lessee shall pay any Tax for which it is liable pursuant to
this Section 7(b) directly to the appropriate taxing authority if legally
permissible or upon demand of a Tax Indemnitee shall pay such Tax and any other
amounts due hereunder to such Tax Indemnitee within fifteen (15) Business Days
of such demand, but in no event shall any such payments be required to be made
by Lessee more than five (5) Business Days prior to the date the Tax to which
any such payment hereunder relates is due in immediately available funds. Any
such demand for payment from a Tax Indemnitee shall specify in reasonable detail
the payment and the facts upon which the right to payment is based. Each Tax
Indemnitee shall promptly forward to Lessee any notice, bill or advice received
by it concerning any Tax, provided, however, that the failure of any Tax
Indemnitee to forward any such notice, bill or advice shall not adversely affect
or otherwise prejudice such Tax Indemnitee's rights to indemnification under
this Section 7(b) unless such failure materially adversely affects the ability
to contest any claim reflected therein. Within thirty (30) days after the date
of each payment by Lessee of any Tax indemnified against hereunder, Lessee shall
furnish the appropriate Tax Indemnitee the original or a certified copy of a
receipt for Lessee's payment of such Tax or such other evidence of payment of
such Tax as is reasonably acceptable to such Tax Indemnitee.
(viii) Application of Payments During Existence of Event of Default. Any
amount payable to Lessee pursuant to the terms of this Section 7(b) shall not be
paid to or retained by Lessee if at the time of such payment or retention an
Event of Default shall have occurred and be continuing under the Lease. At such
time as there shall not be continuing any such Event of Default, such amount
shall be paid to the Lessee to the extent not previously applied against
Lessee's obligations hereunder as and when due after the Owner Trustee shall
have declared the Lease in default pursuant to Section 15 thereof.
(ix) Reimbursements by Tax Indemnitees Generally. If, for any reason,
Lessee is required to make any payment with respect to any Taxes imposed on any
Tax Indemnitee, any Pass Through Trustee, any Loan Participant or the
Subordination Agent in respect of the transactions contemplated by the Operative
Documents or on the Aircraft, the Airframe, the Engines or any Part, which Taxes
are not the responsibility of Lessee under this Section 7(b), then such Tax
Indemnitee, Pass
EXHIBIT K - PAGE 8
<PAGE>
Through Trustee, Loan Participant or the Subordination Agent, as the case may
be, shall pay to Lessee an amount which equals the amount paid by Lessee with
respect to such Taxes plus interest thereon computed at an annual interest rate
equal to the Base Rate plus one percent from the date of payment by Lessee.
(x) Forms, etc. Each Tax Indemnitee agrees to furnish to Lessee from time
to time such duly executed and properly completed forms that are requested by
Lessee or that the Tax Indemnitee knows, or has reason to know in the ordinary
course of its business, may be necessary or appropriate in order to claim any
reduction of or exemption from any withholding tax imposed by any taxing
authority in respect of any payments otherwise required to be made by Lessee
pursuant to the Operative Documents, which reduction or exemption may be
available to such Tax Indemnitee.
(xi) Non-Parties. If a Tax Indemnitee is not a party to this Agreement,
Lessee may require the Tax Indemnitee to agree to the terms of this Section 7(b)
prior to making any payment to such Tax Indemnitee under this Section 7(b).
EXHIBIT K - PAGE 9
<PAGE>
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW 1999__]
Section 7(c) - General Indemnity
(c) General Indemnity. Lessee hereby agrees to indemnify each
Indemnitee against, and agrees to protect, defend, save and keep harmless each
thereof from (whether or not the transactions contemplated herein or in any of
the other Operative Documents are consummated), any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket
costs, expenses and disbursements (including reasonable legal fees and expenses
and Transaction Expenses to the extent not required to be paid by the Owner
Trustee or the Owner Participant pursuant to Section 16 hereof but excluding
internal costs and expenses such as salaries and overhead), of whatsoever kind
and nature (collectively called "Expenses") imposed on, incurred by or asserted
against any Indemnitee, in any way relating to or arising out of (A) any of the
Operative Documents or any sublease or sub-sublease of the Aircraft or the
enforcement of any of the terms thereof or any amendment, modification or waiver
in respect thereof and, only in the case of the Indemnitee who is the
Subordination Agent or the Liquidity Provider, the Intercreditor Agreement and
the Liquidity Facilities, (B) the manufacture, purchase, acceptance or rejection
of the Airframe or any Engine, (C) the Aircraft (or any portion thereof or any
Engine or engine affixed to the Airframe) whether or not arising out of the
finance, refinance, ownership, delivery, nondelivery, storage, lease, sublease,
sub-sublease, possession, use, non-use, operation, maintenance, registration,
reregistration, condition, modification, alteration, replacement, repair,
substitution, sale, return or other disposition of the Aircraft (or any portion
thereof or any Engine or engine affixed to the Airframe) including, without
limitation, latent or other defects, whether or not discoverable, strict tort
liability and any claim for patent, trademark or copyright infringement, (D) the
offer, sale or delivery of the Secured Certificates (the indemnity in this
clause (D) to extend also to any person who controls an Indemnitee within the
meaning of Section 15 of the Securities Act of 1933, as amended) or (E) the
offer or sale of any interest in the Trust Estate or the Trust Agreement or any
similar interest with respect to the Aircraft on or prior to the Delivery Date;
provided that the foregoing indemnity as to any Indemnitee shall not extend to
any Expense resulting from or arising out of or which would not have occurred
but for one or more of the following: (A) any representation or warranty by such
Indemnitee (or any member of the Related Indemnitee Group) in the Operative
Documents, the Intercreditor Agreement, the Liquidity Facilities or the Pass
Through Trust Agreements or in connection therewith being incorrect in any
material respect, or (B) the failure by such Indemnitee (or any member of the
Related Indemnitee Group) to perform or observe any agreement, covenant or
condition in any of the Operative Documents, the Intercreditor Agreement, the
Liquidity Facilities or the Pass Through Trust Agreements applicable to it
<PAGE>
including, without limitation, the creation or existence of a Lessor Lien
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens), a Loan Participant Lien or an
Indenture Trustee's Lien (except to the extent such failure was caused directly
by the failure of Lessee to perform any obligation under a Lessee Document), or
(C) the willful misconduct or the gross negligence of such Indemnitee (or any
member of the Related Indemnitee Group) (other than gross negligence imputed to
such Indemnitee (or any member of the Related Indemnitee Group) solely by reason
of its interest in the Aircraft), or (D) with respect to the Owner Trustee, a
disposition (voluntary or involuntary) by the Owner Trustee of all or any part
of its interest in the Airframe or any Engine (other than as contemplated by the
Lease or the Trust Indenture) or with respect to any Indemnitee, by such
Indemnitee of all or any part of such Indemnitee's interest in the Airframe, any
Engine or in the Operative Documents other than during the continuance of an
Event of Default under the Lease, or (E) any Tax whether or not Lessee is
required to indemnify for such Tax pursuant to Section 7(b) hereof (it being
understood that Section 7(b) hereof and the Tax Indemnity Agreement provide for
Lessee's liability with respect to Taxes), or (F) in the case of an Indemnitee
which is the Owner Participant or the Owner Trustee (in its individual or trust
capacity) (other than in connection with an Event of Default) or, in connection
with an exercise of remedies under the Trust Indenture upon a default thereunder
(other than a default under Section 4.02(a) of the Trust Indenture), the
Indenture Trustee or a Loan Participant, the offer or sale of any interest in
the Trust Estate or the Trust Agreement or any similar interest, or (G) in the
case of an Indemnitee which is the Owner Participant or the Owner Trustee (in
its individual or trust capacity) and the affiliates, successors and assigns
thereof, a failure on the part of the Owner Trustee to use ordinary care to
distribute in accordance with the Trust Agreement any amounts received and
distributable by it thereunder, and in the case of an Indemnitee which is a Loan
Participant, a Certificate Holder or the Indenture Trustee (in its individual or
trust capacity) and the affiliates, successors and assigns thereof, a failure on
the part of the Indenture Trustee to use ordinary care to distribute in
accordance with the Trust Indenture any amounts received and distributable by it
thereunder, or (H) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Operative Documents other than such as have been consented to, approved,
authorized or requested by Lessee, or (I) subject to the next succeeding
paragraph, any loss of tax benefits or increase in tax liability under any tax
law whether or not Lessee is required to indemnify therefor pursuant to this
Agreement or the Tax Indemnity Agreement, or (J) except to the extent fairly
attributable to acts, omissions or events occurring prior thereto, acts or
events which occur with respect to the Airframe, any Engine or any Part after
the earliest of: (I) the return of possession of the Airframe or such Engine or
Part to the Owner Trustee or its designee pursuant to the terms of the Lease,
(II) the termination of the Lease in accordance with Section 9 or Section 19
thereof or (Ill) the commencement of storage pursuant to Section 5(d) of the
Lease, or (K) any Expense which is specified to be for the account of an
Indemnitee pursuant to any Operative Document without express right of
reimbursement under any Operative Document, or (L) as to any Indemnitee the
funding of such Indemnitee's participation in the transaction contemplated by
the Operative Documents giving rise to a "prohibited transaction" within the
meaning of the provisions of the Code or the Regulations of the United States
Department of Labor implementing ERISA or any other violation of the fiduciary
responsibility provisions of ERISA. The foregoing
EXHIBIT L - PAGE 2
<PAGE>
indemnity shall not extend to any Expense to the extent that such Expense is not
caused by, or does not arise out of, an act, omission or event which occurs
prior to the termination of the Lease and the payment of all other payments
required to be paid by Lessee under the Operative Documents.
Lessee further agrees that any payment or indemnity pursuant to this
Section 7(c) in respect of any Expenses shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any Federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or possession of the United States or any international authority,
shall be equal to the excess, if any, of (A) the amount of such Expense over (B)
the net reduction in Taxes required to be paid by such recipient resulting from
the accrual or payment of such Expense.
If, by reason of any Expense payment made to or for the account of
an Indemnitee by Lessee pursuant to this Section 7(c), such Indemnitee
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing such
payment, such Indemnitee shall promptly pay to Lessee, but only if Lessee shall
have made all payments then due and owing to such Indemnitee under the Operative
Documents, an amount equal to the sum of (I) the actual reduction in Taxes
realized by such Indemnitee which is attributable to such deduction or credit,
and (II) the actual reduction in Taxes realized by such Indemnitee as a result
of any payment made by such Indemnitee pursuant to this sentence.
Nothing in this Section 7(c) shall be construed as a guaranty by
Lessee of payments due pursuant to the Secured Certificates or of the residual
value of the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations to indemnify hereunder, and no payment by Lessee to an Indemnitee
pursuant to this Section 7(c) shall be deemed to constitute a waiver or release
of any right or remedy which the Lessee may have against such Indemnitee for any
actual damages as a result of the failure by such Indemnitee to give Lessee such
notice. Lessee shall be entitled, at its sole cost and expense, acting through
counsel acceptable to the respective Indemnitee, (A) so long as Lessee has
agreed in a writing acceptable to such Indemnitee that Lessee is liable to such
Indemnitee for such Expense hereunder (unless such Expense is covered by the
proviso to the first paragraph of this Section 7(c)), in any judicial or
administrative proceeding that involves solely a claim for one or more Expenses,
to assume responsibility for and control thereof, (B) so long as Lessee has
agreed in a writing acceptable to such Indemnitee that Lessee is liable to such
Indemnitee for such Expense hereunder (unless such Expense is covered by the
proviso to the first paragraph of this Section 7(c)), in any judicial or
administrative proceeding involving a claim for one or more Expenses and other
claims related or unrelated to the transactions contemplated by the Operative
Documents, to assume responsibility for and control of such claim for Expenses
to the extent that the same
EXHIBIT L - PAGE 3
<PAGE>
may be and is severed from such other claims (and such Indemnitee shall use its
best efforts to obtain such severance), and (C) in any other case, to be
consulted by such Indemnitee with respect to judicial proceedings subject to the
control of such Indemnitee. Notwithstanding any of the foregoing to the
contrary, Lessee shall not be entitled to assume responsibility for and control
of any such judicial or administrative proceedings (M) while an Event of Default
shall have occurred and be continuing, (N) if such proceedings will involve a
material risk of the sale, forfeiture or loss of, or the creation of any Lien
(other than a Permitted Lien) on the Aircraft, the Trust Indenture Estate or the
Trust Estate or any part thereof, or (0) if such proceeding could in the good
faith opinion of such Indemnitee entail any material risk of criminal liability
or present a conflict of interest making separate representation necessary. The
affected Indemnitee may participate at its own expense and with its own counsel
in any judicial proceeding controlled by Lessee pursuant to the preceding
provisions.
The affected Indemnitee shall supply Lessee with such information
reasonably requested by Lessee as is necessary or advisable for Lessee to
control or participate in any proceeding to the extent permitted by this Section
7(c). Such Indemnitee shall not enter into a settlement or other compromise with
respect to any Expense without the prior written consent of Lessee, which
consent shall not be unreasonably withheld or delayed, unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this
Section 7(c).
Lessee shall supply the affected Indemnitee with such information
reasonably requested by such Indemnitee as is necessary or advisable for such
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).
When Lessee or the insurers under a policy of insurance maintained
by Lessee (or any Sublessee) undertakes the defense of an Indemnitee with
respect to an Expense, no additional legal fees or expenses of such Indemnitee
in connection with the defense of such Indemnitee shall be indemnified hereunder
unless such fees or expenses were incurred at the written request of Lessee or
such insurers, provided that no such defense shall be compromised or settled on
a basis that admits any gross negligence or willful misconduct on the part of
such Indemnitee without such Indemnitee's prior consent.
In the case of any Expense indemnified by Lessee hereunder which is
covered by a policy of insurance maintained by Lessee (or any Sublessee)
pursuant to Section 11 of the Lease or otherwise, it shall be a condition of
such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such Expense as may be required to retain the
benefits of such insurance with respect to such Expense. Notwithstanding any of
the foregoing to the contrary, with respect to any Expense which is covered
under policies of insurance maintained by Lessee (or any Sublessee) pursuant to
Section 11 of the Lease or otherwise, the rights of an Indemnitee to control or
participate in any proceeding shall be modified to the extent necessary to
comply with the requirements of such policies and the rights of the insurers
thereunder.
EXHIBIT L - PAGE 4
<PAGE>
Upon payment of any Expense or Tax pursuant to this Section 7,
Lessee or, if any Expense or Tax has been paid by insurers, the insurers,
without any further action, shall be subrogated to any claims the affected
Indemnitee may have relating thereto other than claims under Section 5.03 or
7.01 of the Trust Indenture or Section 5.03 or 7.01 of the Trust Agreement. Such
Indemnitee agrees to give such further assurances or agreements and to cooperate
with Lessee or the insurers to permit Lessee or the insurers to pursue such
claims, if any, to the extent reasonably requested by Lessee or the insurers.
In the event that Lessee shall have paid an amount to an Indemnitee
pursuant to this Section 7(c), and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay to Lessee an amount equal to the amount of such
reimbursement (but in no event more than such payment from Lessee) plus any net
tax benefit (or minus any net tax detriment) realized by such Indemnitee as a
result of any reimbursement received and payment made by such Indemnitee
pursuant to this sentence, provided that (i) no Event of Default has occurred
and is continuing and (ii) such Indemnitee shall have no obligation to reimburse
Lessee if Lessee has not paid such Indemnitee all amounts required pursuant to
this Section 7(c) and any other amounts then due to such Indemnitee from Lessee
under any of the Operative Documents.
Lessee's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from Lessee pursuant to any provision of this Agreement may
proceed directly against Lessee without first seeking to enforce any other right
of indemnification.
Lessee agrees to pay the reasonable fees and expenses of the
Indenture Trustee and the Owner Trustee for acting as such, other than such fees
and expenses which constitute Transaction Expenses.
EXHIBIT L - PAGE 5
================================================================================
LEASE AGREEMENT
[NW 1999 _]
Dated as of
[-----------------]
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 Boeing 747-451 Aircraft
================================================================================
As set forth in Section 20 hereof, Lessor has assigned to the Indenture Trustee
(as defined herein) certain of its right, title and interest in and to this
Lease. To the extent, if any, that this Lease constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease may be created through the
transfer or possession of any counterpart other than the original executed
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee on the signature page thereof.
<PAGE>
TABLE OF CONTENTS TO LEASE AGREEMENT
Page
----
SECTION 1. Definitions......................................................1
SECTION 2. Acceptance and Lease............................................16
SECTION 3. Term and Rent...................................................16
(a) Basic Term...............................................16
(b) [Intentionally Omitted]..................................16
(c) Basic Rent...............................................16
(d) Adjustments to Basic Rent................................16
(e) Supplemental Rent........................................18
(f) Payments in General......................................19
SECTION 4. Lessor's Representations and Warranties.........................19
SECTION 5. Return of the Aircraft..........................................20
(a) Condition Upon Return....................................20
(b) Return of the Engines....................................21
(c) Fuel; Manuals............................................22
(d) Storage Upon Return......................................22
SECTION 6. Liens...........................................................22
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia...........................................23
(a) Registration and Maintenance.............................23
(b) Possession and Subleases.................................24
(c) Insignia.................................................28
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions...................................29
(a) Replacement of Parts.....................................29
(b) Pooling of Parts.........................................29
(c) Alterations, Modifications and Additions.................30
SECTION 9. Voluntary Termination...........................................31
(a) Termination Event........................................31
(b) [Intentionally Omitted]..................................31
(c) Optional Sale of the Aircraft............................31
(d) Termination as to Engines................................33
(i)
<PAGE>
Page
----
SECTION 10. Loss, Destruction, Requisition, etc............................33
(a) Event of Loss with Respect to the Aircraft...............33
(b) Event of Loss with Respect to an Engine..................36
(c) Application of Payments from Governmental
Authorities for Requisition of Title, etc................36
(d) Requisition for Use of the Aircraft by the United
States Government or the Government of Registry of
the Aircraft.............................................37
(e) Requisition for Use of an Engine by the United
States Government or the Government of Registry of
the Aircraft.............................................38
(f) Application of Payments During Existence of Event of
Default..................................................38
SECTION 11. Insurance......................................................39
(a) Public Liability and Property Damage Insurance...........39
(b) Insurance Against Loss or Damage to the Aircraft.........40
(c) Reports, etc.............................................43
(d) Self-Insurance...........................................44
(e) Additional Insurance by Lessor and Lessee................44
(f) Indemnification by Government in Lieu of Insurance.......44
(g) Application of Payments During Existence of an Event
of Default................................................44
SECTION 12. Inspection.....................................................45
SECTION 13. Assignment.....................................................45
SECTION 14. Events of Default..............................................46
SECTION 15. Remedies.......................................................48
SECTION 16. Lessee's Cooperation Concerning Certain Matters................51
SECTION 17. Notices........................................................52
SECTION 18. No Set-Off, Counterclaim, etc..................................53
SECTION 19. Renewal Options; Purchase Options; Valuation...................53
(a) Renewal Options..........................................53
(b) Purchase Options.........................................54
(c) Valuation................................................55
(d) Special Purchase Option..................................56
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates..................................................57
SECTION 21. Lessor's Right to Perform for Lessee...........................57
SECTION 22. Investment of Security Funds; Liability of Lessor Limited......57
(a) Investment of Security Funds.............................57
(b) Liability of Lessor Limited..............................58
(ii)
<PAGE>
Page
----
SECTION 23. Service of Process.............................................58
SECTION 24. Miscellaneous..................................................59
SECTION 25. Successor Trustee..............................................59
SECTION 26. Covenant of Quiet Enjoyment....................................59
(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
(iv)
<PAGE>
LEASE AGREEMENT
[NW 1999 _]
This LEASE AGREEMENT [NW 1999 _], dated as of [___________], 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 1999 _] 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 Boeing 747-451 aircraft (except
Engines or engines from time to time installed thereon) specified in
the initial Lease Supplement, which aircraft shall be leased by
Lessor to Lessee hereunder and under such Lease Supplement, and any
aircraft (except Engines or engines from time to time installed
thereon) which may from time to time be substituted for such
aircraft (except Engines or engines from time to time installed
thereon) pursuant to clause (ii) of the first paragraph of Section
10(a); and (ii) any and all Parts (A) so long as the same shall be
incorporated or installed in or attached to such aircraft (except
Engines or engines from time to time installed thereon), or (B) so
long as title thereto shall remain vested in Lessor in accordance
with the
<PAGE>
terms of Section 8 after removal from such aircraft (except Engines
or engines from time to time installed thereon); provided, however,
that at such time as an aircraft (except Engines or engines from
time to time installed thereon) shall be deemed part of the property
leased hereunder in substitution for the Airframe pursuant to the
applicable provisions hereof, the replaced Airframe shall cease to
be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then
outstanding and, if no Secured Certificates shall be outstanding,
the Base Rate.
"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 [______________________], 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 under the Trust Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of the Owner Trustee, dated
the Delivery Date, specifically referring to the Airframe and each
Engine, which Bill of Sale shall contain, among other things, a
statement that such Bill of Sale thereby conveys to the Owner
Trustee good title to the Airframe and each Engine described in such
Bill of Sale, free and clear of all liens, encumbrances and rights
of others except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to
close in the City of New York, New York; Boston, Massachusetts; or
Minneapolis, Minnesota.
"Certificate Holder" means Certificate Holder as defined in
the Trust Indenture.
-2-
<PAGE>
"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.
"Commitment" means the amount of a Pass Through Trustee's or
the Owner Participant's, as the case may be, participation in
Lessor's Cost for the Aircraft required to be made available or paid
as provided in Section 1 of the Participation Agreement.
"Consent and Agreement" means that certain Consent and
Agreement [NW 1999 _], 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.
"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 [________________], 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 [____________] (or, if [____________] is
not a Business Day, the Business Day immediately succeeding
[_________].
-3-
<PAGE>
"Engine" means (i) each of the four Pratt & Whitney Model
PW4056 engines listed by manufacturer's serial number in the initial
Lease Supplement, whether or not from time to time thereafter
installed on the Airframe or installed on any other airframe or on
any other aircraft; and (ii) any engine which may from time to time
be substituted, pursuant to the terms hereof, for any of such four
engines, together in each case with any and all Parts incorporated
or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 after removal from such
Engine; provided, however, that at such time as an engine shall be
deemed part of the property leased hereunder in substitution for an
Engine pursuant to the applicable provisions hereof, the replaced
Engine shall cease to be an Engine hereunder. The term "Engines"
means, as of any date of determination, all Engines then leased
hereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder. Section references to ERISA are to
ERISA, as in effect at the date of the Participation Agreement and
any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
"Event of Default" has the meaning specified in Section 14
hereof.
"Event of Loss" with respect to the Aircraft, Airframe or any
Engine means any of the following events with respect to such
property: (i) the loss of such property or of the use thereof due to
the destruction of or damage to such property which renders repair
uneconomic or which renders such property permanently unfit for
normal use by Lessee (or any Sublessee) for any reason whatsoever;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total
loss, or a constructive or compromised total loss; (iii) the theft
or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of,
such property (other than a requisition for use by the United States
Government or any other government of registry of the Aircraft, or
any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) (other than a requisition
of title) shall have resulted in the loss of possession of such
property by Lessee (or any Sublessee) for a period in excess of 180
consecutive days or, 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
-4-
<PAGE>
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 Boeing Model 747-400 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) 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.
-5-
<PAGE>
"Foreign Air Carrier" means any air carrier which is not a
U.S. Air Carrier and which performs maintenance, preventative
maintenance and inspections for the Aircraft, Airframe and/or any
Engine or engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal Aviation
Administration, the Civil Aviation Authority of the United Kingdom,
the Direction Generale de l'Aviation Civile of the French Republic,
the Luftfahrt Bundesamt of the Federal Republic of Germany, the
Rijksluchtvaartdienst 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 Guarantee [NW 1999 _], dated as
of the date hereof, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"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
-6-
<PAGE>
willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation Agreement
pursuant to said Section 7, or (D) claims against the Indenture
Trustee arising out of the transfer by the Indenture Trustee of all
or any portion of its interest in the Aircraft, the Trust Estate,
the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the
Lease or Article IV or V of the Trust Indenture, or a transfer of
the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
["Initial Installment" has the meaning set forth in Section
19(d) hereof.]
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
and the Subordination Agent, as such Intercreditor Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Issuance Date" means February 16, 1999.
"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Lease Agreement [NW 1999 _] 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 [_______________] and each
succeeding [_________________] and [____________], to and including
the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in
the form of Exhibit A hereto, to be entered into between Lessor and
Lessee on the Delivery Date for the purpose of leasing the Aircraft
under and pursuant to the terms of this Lease Agreement, and any
subsequent Lease Supplement entered into in accordance with the
terms hereof.
"Lessee Documents" means the Participation Agreement, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement (insofar as it relates to the Aircraft), the FAA Bill of
Sale, the Bill of Sale, the Purchase Agreement Assignment and the
Tax Indemnity Agreement.
-7-
<PAGE>
"Lessor Liens" means any Lien or disposition of title or
interest arising as a result of (i) claims against Lessor, First
Security Bank, National Association, in its individual capacity, or
the Owner Participant not related to the transactions contemplated
by the Operative Documents, (ii) any act or omission of the Owner
Participant, Lessor, or First Security Bank, National Association,
in its individual capacity, which is not related to the transactions
contemplated by the Operative Documents or is in violation of any of
the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association,
in its individual capacity, with respect to Taxes or Expenses
against which Lessee is not required to indemnify the Owner
Participant, Lessor or First Security Bank, National Association, in
its individual capacity, pursuant to Section 7 of the Participation
Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of
all or any portion of the respective interests of Lessor or the
Owner Participant in the Aircraft, the Trust Estate or the Operative
Documents other than the transfer of possession of the Aircraft by
Lessor pursuant to this Agreement, the transfer pursuant to the
Trust Indenture or a transfer of the Aircraft pursuant to Section 9,
10 or 19 hereof or pursuant to the exercise of the remedies set
forth in Section 15 hereof, provided, however, that any Lien which
is attributable solely to First Security Bank, National Association
or the Owner Participant and would otherwise constitute a Lessor
Lien hereunder shall not constitute a Lessor Lien hereunder so long
as (1) the existence of such Lien poses no material risk of the
sale, forfeiture or loss of the Aircraft, (2) the existence of such
Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any
Sublessee), (3) the existence of such Lien does not affect the
priority or perfection of, or otherwise jeopardize, the Lien of the
Trust Indenture, (4) First Security Bank, National Association or
the Owner Participant, as appropriate, is diligently contesting such
Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded
Payments in favor of First Security Bank, National Association or
the Owner Participant, as appropriate).
"Lessor's Cost" for the Aircraft means the amount denominated
as such in Exhibit B to the Lease.
"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.
-8-
<PAGE>
"Liquidity Provider" means Citibank, N.A., as Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity
Provider under the Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a)
hereof.
"Majority in Interest of Certificate Holders" has the meaning
set forth in the Trust Indenture.
"Make-Whole Amount" has the meaning assigned to that term in
the Trust Indenture.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement and the
Consent and Agreement.
"Net Economic Return" shall have the meaning ascribed to such
term in paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" means the net present value, as
of the Delivery Date, of Basic Rent set forth in Exhibit B hereto,
discounted at an annual interest rate of [___] percent on a
semi-annual basis.
"Note Purchase Agreement" shall mean the Note Purchase
Agreement, dated as of the Issuance Date, among Northwest Airlines,
Inc., the Subordination Agent, First Security Bank, National
Association, as Escrow Agent, State Street Bank and Trust Company,
as Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and
sale of certain secured certificates.
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Lease, the Trust Indenture, the
Trust Agreement, an acceptance certificate covering the Aircraft in
the form agreed to by the Participants and Lessee, the Tax Indemnity
Agreement, the Lease Supplement covering the Aircraft, the Trust
Supplement covering the Aircraft, the Secured Certificates, the Bill
of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it
relates to the Aircraft), the Guarantee, the Purchase Agreement
Assignment and the Consent and Agreement.
-9-
<PAGE>
"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 and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor
Owner Trustee pursuant to Section 9.01 of the Trust Agreement, and
references to a predecessor Owner Trustee in its individual capacity
by name in the Operative Documents shall include such successor
Owner Trustee in its individual capacity from and after such
succession.
"Owner Trustee Documents" means the Participation Agreement,
the Trust Agreement, the Trust Supplement covering the Aircraft, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Trust Indenture and the Secured
Certificates.
"Participants" means and includes the Loan Participants and
the Owner Participant.
"Participation Agreement" means that certain Participation
Agreement [NW 1999 _], dated as of the date hereof, among Lessee,
the Guarantor, the Purchasers, the Indenture Trustee, the
Subordination Agent, the Owner Participant and Owner Trustee, as
such Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and
the Participants.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines, (b) any
items leased by Lessee from a third party (other than Lessor) and
(c) cargo containers) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or so long as
title thereto shall remain vested in Lessor in accordance with
Section 8 after removal therefrom.
-10-
<PAGE>
"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 III to the Participation
Agreement.
"Pass Through Trust" means each of the [three] separate pass
through trusts created under the Pass Through Trust Agreements.
"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 [_]% 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.
"Purchase Agreement" means that certain Purchase Agreement No.
1630, dated December 1, 1989, between the Manufacturer and Lessee
relating to the purchase by Lessee of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"Purchase Agreement Assignment" means that certain Purchase
Agreement Assignment [NW 1999 _], 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.
-11-
<PAGE>
"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.
"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 [_________________], 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
[_____________] shall be the amount determined as provided in
Section 19(a) hereof.
"Stipulated Loss Value Date" means the [___] 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, a Massachusetts trust company, as subordination agent under
the Intercreditor Agreement, or any successor thereto.
"Supplemental Rent" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than Basic
Rent) which Lessee
-12-
<PAGE>
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 1999 _], 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 [_______________], 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
-13-
<PAGE>
Exhibit D may be adjusted from time to time as provided in Section
3(d) hereof and in Section 7 of the Tax Indemnity Agreement).
"Transaction Expenses" means: all of the reasonable
out-of-pocket costs, fees and expenses incurred by the Owner
Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent and the Indenture Trustee in connection with the
transactions contemplated by the Participation Agreement, the other
Operative Documents, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the
Underwriting Agreement (except, in each case, as otherwise provided
therein) including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements of (A) Bingham Dana 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 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;
-14-
<PAGE>
(10) the reasonable fees, expenses and disbursements of
Milbank, Tweed, Hadley & McCloy, special counsel to the
Liquidity Provider; and
(11) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation.
"Trust Agreement" means that certain Trust Agreement [NW 1999
_], dated as of the date hereof, between the Owner Participant and
First Security Bank, National Association, in its individual
capacity, as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof,
including, without limitation, supplementation thereof by one or
more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"Trust Agreement and Indenture Supplement" or "Trust
Supplement" means a supplement to the Trust Agreement and the Trust
Indenture, substantially in the form of Exhibit A to the Trust
Indenture.
"Trust Estate" means the Trust Estate as that term is defined
in the Trust Agreement.
"Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1999__], dated as of the date hereof, between
Lessor and the Indenture Trustee, as originally executed or as
modified, amended or supplemented in accordance with the provisions
thereof.
"Trust Indenture Estate" has the meaning assigned to that term
in the Trust Indenture.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of February 4, 1999, 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
-15-
<PAGE>
registry, for the performance by such employees of similar functions
within the United States of America or such other jurisdiction of
registry (it is understood that cabin attendants need not be regular
employees of Lessee (or any Sublessee)) and (ii) shall be maintained
by Lessee (or any Sublessee) in accordance with its normal
maintenance practices.
SECTION 2. Acceptance and Lease. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. Term and Rent. (a) Basic Term. The Basic Term shall
commence on the Delivery Date and end on [__________________], 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 [____________________], (B) Transaction Expenses paid by Lessor
pursuant to Section 16(a) of the Participation Agreement are
determined to be other than [_____]% of Lessor's Cost, or (C) there
is a change in tax law (including the issuance of proposed
regulations) after [________________] 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 Initial Installments, the Remaining Installments] and the
Special Purchase Price shall be recalculated by the Owner
Participant, on or prior to [__________________], using the
-16-
<PAGE>
same methods and assumptions used to calculate original Basic Rent,
Stipulated Loss Value and Termination Value percentages [, the
Initial Installments, the Remaining Installments] 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 [, the Initial Installments, the
Remaining Installments] 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 [, the Initial Installments, the
Remaining Installments] 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 [, the Initial
Installments, the Remaining Installments] 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 [, the Initial Installments, the
Remaining Installments] 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
-17-
<PAGE>
hereunder, whether or not adjusted in accordance with this Section
3(d), shall, and each payment of Termination Value and Stipulated
Loss Value, whether or not adjusted in accordance with this Section
3(d), shall, together with all other amounts (including an amount
equal to the premium, if any, payable by Lessor on the Secured
Certificates) payable simultaneously by Lessee pursuant to this
Lease, in each case be, under any circumstances and in any event, in
an amount at least sufficient to pay in full, on the date on which
such amount of Rent is due, any payments then required to be made on
account of the principal of, premium, if any, and interest on the
Secured Certificates. It is agreed that no installment of Basic Rent
or payment of Termination Value or Stipulated Loss Value shall be
increased or adjusted by reason of (i) any attachment or diversion
of Rent on account of (A) Lessor Liens or (B) any Loan Participant
Lien on or 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.
-18-
<PAGE>
(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 1999 _ (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.
011-000-028, Account No. 9903-990-1, Attention: Corporate Trust Department,
Reference: Northwest/NW 1999 _ (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
-19-
<PAGE>
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY
PART THEREOF, except that First Security Bank, National Association, in its
individual capacity, (i) represents and warrants that on the Delivery Date,
Lessor shall have received whatever title to the Aircraft was conveyed to it by
Lessee, (ii) represents and warrants that on the Delivery Date the Aircraft
shall be free of Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens) attributable
to it, (iii) covenants that it will not, through its own actions or inactions,
interfere in Lessee's quiet enjoyment of the Aircraft during the Term, (iv)
agrees that it will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to the Airframe
or any Engine or any portion of the Trust Estate and (v) represents and warrants
that it is a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement, and agrees that if at any time
it shall cease to be a Citizen of the United States without making use of a
voting trust, voting powers agreement or similar arrangement it will promptly
resign as Owner Trustee (if and so long as such citizenship is necessary under
the Federal Aviation Act as in effect at such time or, if it is not necessary,
if and so long as the Owner Trustee's citizenship would have any material
adverse effect on the Loan Participants, the Owner Participant or Lessee),
effective upon the appointment of a successor Owner Trustee in accordance with
Section 9.01 of the Trust Agreement. None of the provisions of this Lease shall
be deemed to amend, modify or otherwise affect the representations, warranties
or other obligations (express or implied) of the Manufacturer, any subcontractor
or supplier of the Manufacturer with respect to the Airframe, the Engines or any
Parts, or to release the Manufacturer, or any such subcontractor or supplier,
from any such representation, warranty or obligation. Lessor covenants that
during the Term (so long as this Lease shall not have been declared 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 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
-20-
<PAGE>
the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by reason
of the failure of Lessor or its designee to be eligible on such date to own an
aircraft registered with the Federal Aviation Administration or (ii) such
registration is otherwise prohibited by applicable law; the Airframe will be
fully equipped with the Engines (or other Pratt & Whitney Model PW4056 engines
or four engines of the same or another manufacturer of not less than equivalent
utility, value and remaining useful life, and suitable for installation and use
on the Airframe without impairing the value, utility or remaining useful life of
the Aircraft; provided that all engines shall be of the same make and model)
duly installed thereon. Also, at the time of such return, such Airframe and
Engines or engines (i) shall be certified (or, if not then registered under the
Federal Aviation Act, shall be eligible for certification) as an airworthy
aircraft by the Federal Aviation Administration, (ii) shall be free and clear of
all Liens (other than Lessor Liens (including for this purpose Liens which would
be Lessor Liens but for the proviso in the definition of Lessor Liens),
Indenture Trustee's Liens and Loan Participant Liens) and rights of third
parties under pooling, interchange, overhaul, repair or other similar agreements
or arrangements, (iii) shall be in as good an operating condition as when
delivered to Lessee hereunder, ordinary wear and tear excepted, or, in the case
of any such engines owned by Lessee, shall have a value, utility and remaining
useful life at least equal to, and shall be in as good an operating condition as
required by the terms hereof with respect to, Engines constituting part of the
Aircraft but not then installed on the Airframe, and (iv) shall be in compliance
with the return conditions, if any, set forth in Exhibit G.
During the last six (6) months of the Term (unless Lessee shall have
elected to purchase the Aircraft or renew this Lease in accordance with the
terms of this Lease), with reasonable notice, Lessee will cooperate, and cause
any Sublessee to cooperate, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating thereto, provided that such cooperation shall not interfere with the
operation or maintenance of the Aircraft by Lessee or any Sublessee.
(b) Return of the Engines. In the event that any engine not owned
by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) bill of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty bill of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Indenture Trustee's Liens and Loan Participant Liens), 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.
-21-
<PAGE>
(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 free parking facilities for the Aircraft
(maintenance costs and other out-of-pocket costs other than parking fees to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination at a location in the continental
United States selected by Lessee and used as a location for the parking or
storage of aircraft; provided that Lessee shall have no obligation to move the
Aircraft from such location during or after the storage period. Lessee, unless
instructed by Lessor to the contrary, will maintain insurance for the Aircraft
during such period not exceeding thirty (30) days and be reimbursed by Lessor
for the premiums thereon.
SECTION 6. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of Lessee
(or any 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,
-22-
<PAGE>
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 to Lessee
hereunder, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Boeing
Model 747-400 aircraft powered by engines of the same type as those with which
the Airframe shall be equipped at the time of such grounding and registered in
the United States have been grounded by the 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
-23-
<PAGE>
Participant such information as may be required to enable Lessor to file any
reports required to be filed by Lessor or the Owner Participant with any
governmental authority because of Lessor's ownership of the Aircraft. (II)
Operation. Lessee will not maintain, use, service, repair, overhaul or operate
the Aircraft (or permit any Sublessee to maintain, use, service, repair,
overhaul or operate the Aircraft) in violation of any law or any rule,
regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Lessor or, so long as any Secured Certificates shall
be outstanding, the first priority Lien of the Trust Indenture and does not
involve any material risk of sale, forfeiture or loss of the Aircraft. Lessee
will not operate the Aircraft, or permit any Sublessee to operate the Aircraft,
in any area excluded from coverage by any insurance required by the terms of
Section 11; provided, however, that the failure of Lessee to comply with the
provisions of this sentence shall not give rise to an Event of Default hereunder
where such failure is attributable to causes beyond the reasonable control of
Lessee (or any Sublessee) or to extraordinary circumstances involving an
isolated occurrence or series of incidents not in the ordinary course of the
regular operations of Lessee (or any Sublessee) and in each such case Lessee (or
such Sublessee, as the case may be) is taking all reasonable steps to remedy
such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon compliance
with all of the terms of Section 8(f) of the Participation Agreement, shall, at
the request and sole expense of Lessee, cooperate with Lessee to take all
actions required to change the registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(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
-24-
<PAGE>
contemplates or requires the transfer of title to the Airframe, (B)
if Lessor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and Lessee shall (or shall
cause Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the Airframe may
be subject shall be with a U.S. Air Carrier or a Foreign Air
Carrier;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service, repair,
maintenance or overhaul work on the Airframe or Engine or any part
of any thereof or for alterations or modifications in or additions
to such Airframe or Engine to the extent required or permitted by
the terms of Section 8(c) hereof;
(iii) install an Engine on an airframe which is owned by
Lessee (or any Sublessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines (other
than Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety),
(B) the rights of third parties under interchange agreements which
would be permitted under clause (i) above, provided that Lessor's
title to such Engine and, if any Secured Certificates shall be
outstanding, the first priority Lien of the Trust Indenture shall
not be divested or impaired as a result thereof and (C) mortgage
liens or other security interests, provided that (as regards this
clause (C)) such mortgage liens or other security interests
effectively provide that such Engine shall not become subject to the
lien of such mortgage or security interest, notwithstanding the
installation thereof on such airframe;
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and 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
-25-
<PAGE>
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine to
the Civil Reserve Air Fleet Program in any contract year and provide
Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States Air
Force to whom notice must be given pursuant to Section 15 hereof,
and (B) promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States of America or any agency
or instrumentality thereof pursuant to such program;
(viii) for a period not to extend beyond the end of the Term,
enter into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; provided that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide
Lessor written notice of such Wet Lease (such notice to be given
prior to entering into such Wet Lease, if practicable, but in any
event promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by Lessor,
which approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any such
case, the Sublessee under such sublease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B)
in the event that 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
-26-
<PAGE>
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 Trust 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
-27-
<PAGE>
of Lessor, its successors or assigns will acquire or claim, as against Lessee
(or any Sublessee) or any such mortgagee, lessor or conditional vendor or other
holder of a security interest or any successor or assignee of any thereof, any
right, title or interest in such engine as the result of such engine being
installed on the Airframe; provided, however, that such agreement of Lessor
shall not be for the benefit of any lessor or secured party of any airframe
(other than the Airframe) leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other security
agreement or for the benefit of any mortgagee of or any other holder of a
security interest in an airframe owned by Lessee (or any Sublessee), unless such
lessor, conditional vendor, other secured party or mortgagee has expressly
agreed (which agreement may be contained in such lease, conditional sale or
other security agreement or mortgage) that neither it nor its successors or
assigns will acquire, as against Lessor, any right, title or interest in an
Engine as a result of such Engine being installed on such airframe. Lessee shall
provide to the Owner Participant and the Indenture Trustee (i) written notice of
any Sublease hereunder (such notice to be given not later than five days prior
to entering into such Sublease, if practicable, but in any event promptly after
entering into any such Sublease) and (ii) a copy of each Sublease which has a
term of more than three months.
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or
-28-
<PAGE>
installed in or attached to the Airframe or any Engine and which may from time
to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever,
except as otherwise provided in paragraph (c) of this Section 8 or if the
Airframe or an Engine to which a Part relates has suffered an Event of Loss. In
addition, Lessee (or any Sublessee) may, at its own cost and expense, remove in
the ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or any Sublessee), except as otherwise provided in paragraph (c) of this
Section 8, will, at its own cost and expense, replace such Parts as promptly as
practicable. All replacement Parts shall be free and clear of all Liens (except
for Permitted Liens and pooling arrangements to the extent permitted by
paragraph (b) of this Section 8 and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in as good operating
condition as, and shall have a value and utility at least equal to, the Parts
replaced assuming such replaced Parts were in the condition and repair required
to be maintained by the terms hereof. Except as otherwise provided in paragraph
(c) of this Section 8, all Parts at any time removed from the Airframe or any
Engine shall remain the property of Lessor, no matter where located, until such
time as such Parts shall be replaced by Parts which have been incorporated or
installed in or attached to the Airframe or such Engine and which meet the
requirements for replacement Parts specified above. Immediately upon any
replacement part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided, without further act (subject only to
Permitted Liens and any pooling arrangement to the extent permitted by paragraph
(b) of this Section 8 and except in the case of replacement property temporarily
installed on an emergency basis), (i) title to such replacement Part shall
thereupon vest in Lessor, (ii) such replacement Part shall become subject to
this Lease and be deemed part of the Airframe or such Engine for all purposes
hereof to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine, and (iii) title to the replaced Part
shall thereupon vest in Lessee (or, if a Sublease is then in effect, any
Sublessee), free and clear of all rights of Lessor, and shall no longer be
deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; provided that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, provided that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with 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
-29-
<PAGE>
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 materially diminish the value, utility or remaining useful life
of the Airframe or such Engine below the value, utility or remaining useful life
thereof immediately prior to such alteration, modification or addition, assuming
the Airframe or such Engine was then in the condition required to be maintained
by the terms of this Lease, except that the value (but not the utility or
remaining useful life) of the Airframe or any Engine may be reduced by the value
of Obsolete Parts which shall have been removed so long as the aggregate value
of all Obsolete Parts which shall have been removed and not replaced shall not
exceed $800,000. 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.
-30-
<PAGE>
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 ninety (90) 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) in the case of a
termination pursuant to Section 9(a)(2), that Lessee has determined that the
Aircraft is obsolete or surplus to its needs. Any Termination Notice shall
become irrevocable fifteen (15) days prior to the Termination Date.
(b) [Intentionally Omitted].
(c) Optional Sale of the Aircraft. In the event that Lessee shall
have exercised its right to terminate this Lease under Section 9(a)(2), then
during the period from the giving of the notice referred to in Section 9(a)(3)
until the proposed Termination Date (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date), Lessee, as agent
for Lessor and at no expense to Lessor, shall use commercially reasonable
efforts to obtain all-cash bids in the worldwide market for the purchase of the
Aircraft and, in the event it receives any bid, Lessee shall, within five
Business Days after receipt thereof and at least ten Business Days prior to the
proposed Termination Date, certify to Lessor in writing the amount and terms of
such bid, and the name and address of the party or parties (who shall not be
Lessee or any Affiliate of Lessee or any Person with whom Lessee or any such
Affiliate has an arrangement or understanding regarding the future use of the
Aircraft by Lessee or any such Affiliate but who may be the Owner Participant,
any 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
-31-
<PAGE>
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 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, 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 Make-Whole Amount or Termination Value) due on or prior to the
Termination Date. If no sale shall have occurred on the Termination Date and
Lessor has not made the payment contemplated by the preceding sentence and
thereby caused this Lease to terminate, or if Lessee revokes its Termination
Notice, this Lease shall continue in full force and effect as to the Aircraft,
Lessee shall pay the reasonable costs and expenses incurred by the Owner
Participant and Lessor (unless such failure to terminate the Lease is a
consequence of the failure of Lessor or the Owner Participant without due cause
to make, or cause to be made, the payment referred to in the immediately
preceding sentence), if any, in
-32-
<PAGE>
connection with preparation for such sale and Lessee may give one or more
additional Termination Notices in connection 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 in connection with Section 9(a)(2) no more than two times during the Term.
(d) Termination as to Engines. So long as no Event of Default
shall have occurred and be continuing, Lessee shall have the right at its option
at any time during the Term, on at least thirty (30) days' prior written notice,
to terminate this Lease with respect to any Engine. In such event, and prior to
the date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and Lessor shall transfer such
right, title and interest as it may have to the replaced Engine as provided in
Section 5(b). No termination of this Lease with respect to any Engine as
contemplated by this Section 9(d) shall result in any reduction of Basic Rent.
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which
event not later than the earlier of (x) the Business Day next
succeeding the 120th day following the occurrence of such Event of
Loss or (y) an earlier Business Day irrevocably specified fifteen
(15) days in advance by notice from Lessee to Lessor and the
Indenture Trustee (the "Loss Payment Date"), Lessee shall pay or
cause to be paid to Lessor in funds of the type specified in Section
3(f) hereof, an amount equal to the Stipulated Loss Value of the
Aircraft corresponding to the Stipulated Loss Value Date occurring
on or immediately following the Loss Payment Date; provided,
however, that if a Lease Period Date shall occur on or prior to the
Loss Payment Date with respect to which Stipulated Loss Value is
determined, Lessee shall pay on such Lease Period Date (A) if the
Lease Period Date occurs on the Loss Payment Date with respect to
which Stipulated Loss Value is determined, an amount equal to the
-33-
<PAGE>
Basic Rent that would have been due on such Lease Period Date (but
only to the extent payable in arrears as indicated on Exhibit B) if
such Event of Loss had not occurred and (B) if the Lease Period Date
occurs prior to the Loss Payment Date with respect to which
Stipulated Loss Value is determined, an amount equal to the Basic
Rent that would have been due on such Lease Period Date if such
Event of Loss had not occurred, or
(ii) 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 (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 (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
-34-
<PAGE>
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 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 Pratt & Whitney Model PW4056 engine (or engine of the same or
another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the
-35-
<PAGE>
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 conveyance, be
deemed part of the property leased hereunder, and shall be deemed an "Engine".
No Event of Loss with respect to an Engine under the circumstances contemplated
by the terms of this paragraph (b) shall result in any reduction in Basic Rent.
(c) Application of Payments from Governmental Authorities for
Requisition of Title, etc. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or
the Airframe and any Engine or engines then installed thereon), (A)
unless the same are replaced pursuant to the last paragraph of
Section 10(a), after reimbursement of Lessor (as provided in Section
7.01 of the Trust Agreement) for reasonable costs and expenses, so
much of such payments remaining as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a),
shall be applied in reduction of Lessee's obligation to pay
Stipulated Loss Value, if not already paid by Lessee, or, if already
paid by Lessee, shall be applied to reimburse Lessee for its payment
of Stipulated Loss Value, and following the foregoing application,
the balance, if any, of such payments will be paid over to, or
retained by Lessee, provided that Lessor shall be entitled to so
much of the excess, if any, of such payment over the greater of
-36-
<PAGE>
(x) the Stipulated Loss Value and (y) the fair market value of the
Aircraft as Lessor shall demonstrate to Lessee's reasonable
satisfaction is attributable to compensation for loss of Lessor's
interest in the Aircraft as distinguished from the loss of use of
the Aircraft; or (B) if such property is replaced pursuant to the
last paragraph of Section 10(a), such payments shall be paid over
to, or retained by, Lessee; provided that Lessee shall have fully
performed or, concurrently therewith, will fully perform the terms
of the last paragraph of Section 10(a) with respect to the Event of
Loss for which such payments are made; and
(ii) if such payments are received with respect to an Engine
under circumstances contemplated by Section 10(b) hereof, so much of
such payments remaining after reimbursement of Lessor (as provided
for in Section 7.01 of the Trust Agreement) for reasonable costs and
expenses shall be paid over to, or retained by, Lessee, provided
that Lessee shall have fully performed, or concurrently therewith
will perform, the terms of Section 10(b) with respect to the Event
of Loss for which such payments are made.
(d) Requisition for Use of the Aircraft by the United States
Government or the Government of Registry of the Aircraft. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other government
of registry of the Aircraft or any instrumentality or agency of any thereof,
Lessee shall promptly notify Lessor of such requisition, and all of Lessee's
obligations under this Lease Agreement with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred, provided
that if such Airframe and Engines or engines installed thereon are not returned
by such government prior to the end of the Term, Lessee shall be obligated to
return the Airframe and such Engines or engines to Lessor pursuant to, and in
all other respects in compliance with the provisions of, Section 5 promptly on
the date of such return by such government. If, in the event of any such
requisition, Lessee shall fail to return the Aircraft on or before the thirtieth
day beyond the end of the Term, such failure shall constitute an Event of Loss
which shall be deemed to have occurred on the last day of the Term and in such
event Lessee shall make the payment contemplated by Section 10(a)(i) in respect
of such Event of Loss; provided, however, that Lessor may notify Lessee in
writing on or before the twentieth day prior to the last day of the Term that,
in the event Lessee shall fail by reason of such requisition to return the
Airframe and such Engines or engines on or before the thirtieth day beyond the
end of the Term, such failure shall not be deemed an Event of Loss. Upon the
giving of such notice and such failure to return by the thirtieth day beyond the
end of the Term, Lessee shall be relieved of all of its obligations pursuant to
the provisions of Section 5 (including Exhibit G) but not under any other
Section, except that if any engine not owned by Lessor shall then be installed
on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
furnished, to Lessor a full warranty (as to title) bill of sale with respect to
each such engine, in form and substance 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
-37-
<PAGE>
definition of Lessor Liens), Loan Participant Liens and Indenture Trustee's
Liens), against receipt from Lessor of a bill of sale evidencing the transfer,
without recourse or warranty (except as to the absence of Lessor Liens,
including for this purpose Liens 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.
(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
-38-
<PAGE>
Owner Participant [amount shall be at least $400,000,000] and (ii) cargo
liability insurance, in the case of both clause (i) and clause (ii), (A) of the
type and covering the same risks as from time to time applicable to aircraft
operated by Lessee (or, if a Sublease is then in effect, by Sublessee) of the
same type as the Aircraft and (B) which is maintained in effect with insurers of
recognized responsibility. Any policies of insurance carried in accordance with
this paragraph (a) and any policies taken out in substitution or replacement for
any of such policies (A) shall be amended to name Lessor, in its individual
capacity and as owner trustee, the Indenture Trustee and the Owner Participant
(but without imposing on any such parties liability to pay the premiums for such
insurance) (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) as additional insureds as their respective
interests may appear, (B) shall provide that in respect of the respective
interests of Lessor, the Indenture Trustee and the Owner Participant (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) in such policies the insurance shall not be invalidated by any action
or inaction of Lessee (or, if any Sublease is then in effect, any Sublessee) or
any other Person and shall insure Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Lessee (or, if
any Sublease is then in effect, any Sublessee), (C) may provide for
self-insurance to the extent permitted by Section 11(d) and (D) shall provide
that if the insurers cancel such insurance for any reason whatever or if any
material change is made in such insurance which adversely affects the interest
of Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), or
such insurance shall lapse for non-payment of premium, such cancellation, lapse
or change shall not be effective as to Lessor, the Indenture 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
-39-
<PAGE>
(I) above, insurance otherwise conforming with the provisions of said clause (I)
except that (A) the amounts of coverage shall not be required to exceed the
amounts of public liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee (or, if a Sublease is then in
effect, by Sublessee) of the same type as the Aircraft which are on the ground
and not in operation; and (B) the scope of the risks covered and the type of
insurance shall be the same as from time to time shall be applicable to aircraft
owned or operated by Lessee (or, if a Sublease is then in effect, by Sublessee)
of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except
as provided in clause (II) of this Section 11(b), Lessee shall maintain or cause
to be maintained in effect, at its or any Sublessee's expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, by Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) of the same type as the Aircraft; provided that
such insurance shall at all times while the Aircraft is subject to this Lease be
for an amount (subject to self-insurance to the extent permitted by Section
11(d)) not less than the Stipulated Loss Value for the Aircraft. Any policies
carried in accordance with 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 $7,000,000 (or, if the Aircraft is
then under a Sublease, in excess of $4,000,000), 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
-40-
<PAGE>
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 $7,000,000
(or, if the Aircraft is then under a Sublease, of $4,000,000) or less or the
amount of any proceeds of any loss in excess of the Stipulated Loss Value for
the Aircraft shall be paid to Lessee or its order unless an Event of Default
shall have occurred and be continuing and the insurers have been notified
thereof by Lessor or the Indenture Trustee, (iv) shall provide that if the
insurers cancel such insurance for any reason whatever, or such insurance lapses
for non-payment of premium or if any material change is made in the insurance
which adversely affects the interest of Lessor, the Indenture Trustee or the
Owner Participant, such cancellation, lapse or change shall not be effective as
to Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease) for
thirty (30) days (seven (7) days in the case of hull war risk and allied perils
coverage) after issuance to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), respectively, of written notice by such insurers
of such cancellation, lapse or change, provided, however, that if any notice
period specified above is not reasonably obtainable, such policies shall provide
for as long a period of prior notice as shall then be reasonably obtainable, (v)
shall provide that in respect of the respective interests of Lessor, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) in such policies
the insurance shall not be invalidated by any action or inaction of Lessee (or,
if a Sublease is then in effect, any Sublessee) or any other Person and shall
insure the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by Lessee (or, if a Sublease is then in effect, any Sublessee), (vi) shall be
primary without any right of contribution from any other insurance which is
carried by Lessor, the Owner Participant or the Indenture Trustee (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), and
(viii) shall waive any right of the insurers to set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee or
the Owner Participant. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Lessor shall hold any payment to it
of any insurance proceeds in respect of such loss for the account of Lessee or
any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), (i) unless such
property is replaced pursuant to the last paragraph of Section
10(a), so much of such payments remaining, after reimbursement of
Lessor (as provided in Section 7.01 of the
-41-
<PAGE>
Trust Agreement) for reasonable costs and expenses, as shall not
exceed the Stipulated Loss Value required to be paid by Lessee
pursuant to Section 10(a) hereof shall be applied in reduction of
Lessee's obligation to pay such Stipulated Loss Value, if not
already paid by Lessee, or, if already paid by Lessee, shall be
applied to reimburse Lessee for its payment of such Stipulated Loss
Value, and the balance, if any, of such payments remaining
thereafter will be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee); or (ii) if such property is
replaced pursuant to the last paragraph of Section 10(a), such
payments shall be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee), provided that Lessee shall have
fully performed, or concurrently therewith will fully perform, the
terms of the last paragraph of Section 10(a) with respect to the
Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so
much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, shall be paid over to, or retained by, Lessee
(or if directed by Lessee, any Sublessee), provided that Lessee
shall have fully performed, or concurrently therewith will fully
perform, the terms of Section 10(b) with respect to the Event of
Loss for which such payments are made.
As between Lessor and Lessee, the insurance payments for any
property damage loss to the Airframe or any engine not constituting an Event of
Loss with respect thereto will be applied in payment for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, if not
already paid for by Lessee (or any Sublessee), and any balance (or if already
paid for by Lessee (or any Sublessee), all such insurance proceeds) remaining
after compliance with such Sections with respect to such loss shall be paid to
Lessee (or any Sublessee if directed by Lessee).
(II) During any period that the Aircraft is on the ground and not
in operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned 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, _____, 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
-42-
<PAGE>
Brokers"), describing in reasonable detail the insurance and reinsurance then
carried and maintained with respect to the Aircraft and stating the opinion of
such firm that the insurance then carried and maintained with respect to the
Aircraft complies with the terms hereof; provided, however, that all information
contained in the foregoing report shall not be made available by Lessor, the
Indenture Trustee, the Loan Participants or the Owner Participant to anyone
except (A) to permitted transferees of Lessor's, the Loan Participants', the
Owner Participant's or the Indenture Trustee's interest who agree to hold such
information confidential, (B) to Lessor's, the Loan Participants', the Owner
Participant's or the Indenture Trustee's counsel or independent certified public
accountants or independent insurance advisors who agree to hold such information
confidential or (C) as may be required by any statute, court or administrative
order or decree or governmental ruling or regulation. Lessee will cause such
Insurance Brokers to agree to advise Lessor, the Indenture Trustee and the Owner
Participant in writing of any default in the payment of any premium and of any
other act or omission on the part of Lessee of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. To the extent such agreement is reasonably obtainable, Lessee will
also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new certificate
of insurance, substantially in the same form as delivered by Lessee to such
parties on the Delivery Date. In the event that Lessee or any Sublessee shall
fail to maintain or cause to be maintained insurance as herein provided, Lessor
or the Indenture Trustee may at its sole option provide such insurance and, in
such event, Lessee shall, upon demand, reimburse Lessor or the Indenture
Trustee, as Supplemental Rent, for the cost thereof to Lessor or the Indenture
Trustee, as the case may be, without waiver of any other rights Lessor or the
Indenture Trustee may have; provided, however, that no exercise by Lessor or the
Indenture Trustee, as the case may be, of said option shall affect the
provisions of this Lease, including the provisions of Section 14(g) hereof.
(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,
-43-
<PAGE>
if applicable, per annum or other period) hull or liability insurance deductible
imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written consent
of Lessor, other government of registry of the Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee (or any Sublessee)
with respect to the Aircraft (including permitted self-insurance) shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 11 which is payable to
or retainable by Lessee (or any Sublessee) shall not be paid to or retained by
Lessee (or any Sublessee) if at the time of such payment or retention an Event
of Default 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
-44-
<PAGE>
cooperate with the Owner Participant to enable the Owner Participant's
authorized representative to observe the next scheduled major overhaul to be
performed on the Aircraft; provided that Lessee shall be required to so
cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe (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. 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), in any material respect, any covenant
or agreement (except the covenants set forth in the Tax Indemnity
Agreement and in clauses
-45-
<PAGE>
(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 three hundred sixty-five (365) 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, the
Underwriting Agreement or the Note Purchase Agreement or any
document or instrument furnished pursuant to any 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
-46-
<PAGE>
(f) the commencement by Lessee of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
any other applicable federal or state bankruptcy, insolvency or
other similar law in the United States, or the consent by Lessee to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of Lessee or for all or substantially all of its property,
or the making by Lessee of any assignment for the benefit of
creditors, or Lessee shall take any corporate action to authorize
any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect
to the Aircraft (or cause to be carried and maintained) insurance
required to be maintained in accordance with the provisions of
Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an Event of Loss so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. Remedies. Upon the occurrence of any Event of Default
and at any time thereafter so long as the same shall be continuing, Lessor may,
at its option, declare by written notice to Lessee this Lease Agreement to be in
default, 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
-47-
<PAGE>
the Term, or Lessor, at its option, may enter upon the premises
where all or any part of the Airframe or any Engine is located and
take immediate possession of and remove the same by summary
proceedings or otherwise (and/or, at Lessor's option, store the same
at Lessee's premises until disposal thereof by Lessor), all without
liability accruing to Lessor for or by reason of such entry or
taking of possession or removing whether for the restoration of
damage to property caused by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or private
sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle the Aircraft as Lessor, in its
sole discretion, may determine, all free and clear of any rights of
Lessee, except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph
(a) or paragraph (b) above with respect to the Airframe and/or any
Engine, Lessor, by written notice to Lessee specifying a payment
date which shall be the Lease Period Date not earlier than ten days
from the date of such notice, may demand that Lessee pay to Lessor,
and Lessee shall pay Lessor, on the payment date so specified, as
liquidated damages for loss of a bargain and not as a penalty (in
lieu of the installments of Basic Rent for the Aircraft due for
Lease Periods commencing on or after the Delivery Date or the Lease
Period Date specified as the payment date in such notice), any
unpaid Basic Rent due on Lease Period Dates prior to the payment
date so specified 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
-48-
<PAGE>
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 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
-49-
<PAGE>
either Lessor or Lessee, on behalf of both, may request such appointment by the
then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. The cost of such appraisal or appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or
-50-
<PAGE>
amendment to be duly filed and recorded, and maintained of record, in accordance
with the applicable laws of the government of registry of the Aircraft. In
addition, Lessee will promptly and duly execute and deliver to Lessor such
further documents and take such further action as Lessor or the Indenture
Trustee may from time to time reasonably request in order more effectively to
carry out the intent and purpose of this Lease and to establish and protect the
rights and remedies created or intended to be created in favor of Lessor and the
Indenture Trustee hereunder, including, without limitation, if requested by
Lessor or the Indenture Trustee, at the expense of Lessee, the execution and
delivery of supplements or amendments hereto or to the Trust Indenture, each in
recordable form, subjecting to this Lease and the Trust Indenture, any airframe
or engine substituted for the Airframe or any Engine pursuant to the terms
thereof and the recording or filing of counterparts thereof, in accordance with
the laws of such jurisdictions as Lessor or the Indenture Trustee may from time
to time deem advisable. Lessee agrees to furnish to Lessor and the Indenture
Trustee promptly after execution and delivery of any supplement and amendment
hereto and promptly after the execution and delivery of any supplement and
amendment to the Trust Indenture (except for any such supplement or amendment
which does not require or receive the approval of Lessee pursuant to the
Operative Documents and is not required pursuant to the terms of the Operative
Documents), an opinion of counsel reasonably satisfactory to Lessor and the
Indenture Trustee as to the due recording or filing of such supplement or
amendment. Commencing in ____, 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:
-51-
<PAGE>
(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:
Treasurer (Telecopy No. (612) 726-0665), or to such other address or
telecopy number as Lessee shall from time to time designate in
writing to Lessor,
(ii) if to Lessor, at 79 South Main Street, Salt Lake City,
Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), or to such other address or telecopy number as
Lessor shall from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the
Owner Participant, addressed to such Loan Participant, the Indenture
Trustee or the Owner Participant at such address or telecopy number
as such Loan Participant, the Indenture Trustee or the Owner
Participant shall have furnished by notice to Lessor and to Lessee,
and, until an address is so furnished, addressed to such Loan
Participant, the Indenture Trustee or the Owner Participant at its
address or telecopy number set forth in Schedule I to the
Participation Agreement.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(f). Lessee's
obligation to pay all Rent payable hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any set-off, counterclaim, recoupment, defense or other right which Lessee
may have against Lessor, in its individual capacity or as Owner Trustee under
the Trust Agreement, the Indenture Trustee (in its individual capacity or as
Indenture Trustee), any Loan Participant, the Owner Participant, or anyone else
for any reason whatsoever (whether in connection with the transactions
contemplated hereby or any other transactions), including, without limitation,
any breach by Lessor or the Owner Participant of their respective warranties,
agreements or covenants contained in any of the Operative Documents, (ii) any
defect in the title, registration, airworthiness, condition, design, operation,
or fitness for use of, or any damage to or loss or destruction of, the Aircraft,
or any interruption or cessation in or prohibition of the use or possession
thereof by Lessee (or any Sublessee) for any reason whatsoever, including,
without limitation, any such interruption, cessation or prohibition resulting
from the act of any government authority, (iii) any insolvency, bankruptcy,
reorganization or similar case or proceedings by or against Lessee (or any
Sublessee) or any other person, or (iv) any other circumstance, happening, or
event whatsoever, whether or not unforeseen or similar to any of the foregoing.
If for any reason whatsoever this Lease shall be terminated in whole or in part
by operation of law or otherwise except as specifically provided herein, Lessee
nonetheless agrees without limitation of the other rights or remedies of Lessor
hereunder to pay to Lessor an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the 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.
-52-
<PAGE>
SECTION 19. Renewal Options; Purchase Options; Valuation. (a)
Renewal Options. (1) Fixed Renewal Term. 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).
(2) Fair Market Renewal Term. At the expiration of the third Fixed
Renewal Term or any Fair Market Renewal Term, Lessee shall have the right to
renew this Lease by delivery to Lessor of a written notice irrevocably electing
to renew this Lease for a renewal term of not less than one year and not more
than three years for a Basic Rent equal to the "fair market rental value" of the
Aircraft for such period (any such renewal term, a "Fair Market Renewal Term").
Each such right to renew may be exercised by Lessee delivering to Lessor, at
least ninety (90) days prior to the commencement of such Fair Market Renewal
Term, a written notice irrevocably electing to renew this Lease for a Fair
Market Renewal Term (which notice shall also specify the length of the Fair
Market Renewal Term).
(3) If no written notice is delivered by Lessee to Lessor pursuant
to Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee
has elected to renew this Lease as aforesaid, and provided that there shall not
then have occurred and be continuing a Default of the type referred to in
Section 14(a), 14(b) or 14(e) or an Event of Default and that all necessary
governmental authorizations and approvals shall have been received and that
Basic Rent for the Renewal Term has already been determined as above provided
and a Lease Supplement evidencing such renewal has been executed and filed for
recordation with the Federal Aviation Administration, this Lease shall continue
in full force and effect during the Renewal Term, except that (x) Lessee shall
pay Lessor Basic Rent for the Aircraft during the Renewal Term in an amount
equal to the "fair market rental value" thereof determined in accordance with
Section 19(c), each semi-annual installment of Basic Rent not to exceed in the
case of a Fixed Renewal Term 50% of the average Basic Rent during the Basic Term
(such average being determined as the total of all payments of Basic Rent during
the Basic Term 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
-53-
<PAGE>
Renewal Term shall be determined separately for each Renewal Term by the Owner
Participant in good faith to reflect Stipulated Loss Values determined in
accordance with the following sentence. Stipulated Loss Values during a Renewal
Term shall on the date on which such Renewal Term begins be equal to the fair
market sales value of the Aircraft as of such date, determined in accordance
with the provisions of this Section 19(a)(4) and Section 19(c) hereof, and shall
decline ratably on a monthly basis to the fair market sales value of the
Aircraft as of the last day of such Renewal Term, determined in accordance with
the provisions of this Section 19(a)(4) and Section 19(c) hereof.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
(b) Purchase Options. Lessee shall have the option, upon at least
ninety (90) days' irrevocable prior written notice to Lessor, to purchase the
Aircraft on the last Business Day of the Basic Term or any Renewal Term for a
purchase price equal to the lesser of (x) the fair market sales value of the
Aircraft or (y) 50% of Lessor's Cost. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) Valuation. At any time not earlier than three hundred
sixty-five (365) days prior to the date on which Lessee may purchase the
Aircraft pursuant to Section 19(b) hereof or renew this Lease pursuant to
Section 19(a)(1) or Section 19(a)(2) hereof, Lessee may deliver to Lessor a
revocable notice of its intent to exercise its renewal option or purchase
option. For all purposes of this Section 19, including the appraisal referred to
in this Section 19(c), in determining "fair market rental value" or "fair market
sales value", the Aircraft shall be valued (i) as if in the condition and
otherwise in compliance with the terms of Section 5 upon a return of the
Aircraft to the United States and as if it had been maintained at all times as
required in accordance with Section 7(a)(I) during periods when no Sublease was
in effect, (ii) on the basis of the value which would obtain in an arm's-length
transaction between an informed and willing buyer-user or lessee (other than a
lessee or an Affiliate of a lessee currently in possession or a used equipment
scrap dealer) under no compulsion to buy or lease and an informed and willing
seller or lessor unaffiliated with such buyer-user or lessee and under no
compulsion to sell or lease and disregarding the purchase and renewal options of
the lessee provided in this Lease, and (iii) in the case of such valuation for
determining "fair market rental value", assuming such lessee would have
substantially the same obligations during the Fair Market Renewal Term as
provided hereunder including without limitation the obligations of Lessee to
carry and maintain the insurance required by Section 11 hereof and to make
certain payments with reference to Stipulated Loss Value during the applicable
Fair Market Renewal Term. Upon receipt of such notice Lessor and Lessee shall
confer in good faith with a view to reaching agreement on the "fair market
rental value" or "fair market sales value" of the Aircraft. If the parties have
-54-
<PAGE>
not so agreed by two hundred seventy (270) days prior to the end of the Basic
Term or the Renewal Term in question, then the question shall be determined by
an appraisal mutually agreed to by two recognized independent aircraft
appraisers, one of which appraisers shall be chosen by Lessor and one by Lessee
within five Business Days after Lessor or Lessee shall have received written
notice from the other party of a demand that such an appraisal be made, which
notice shall specify the appraiser chosen by the party giving the notice or, if
such appraisers cannot agree on the amount of such appraisal within twenty
Business Days after the end of such five-day period, each shall render its own
appraisal and shall by mutual consent choose another appraiser within five
Business Days after the end of such twenty-day period. If, within such five-day
period, such two appraisers fail to appoint a third appraiser, then either
Lessor or Lessee, on behalf of both, may request such appointment by the then
President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) Special Purchase Option. On 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 [, 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]. 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) [(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
-55-
<PAGE>
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 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 shall be evidenced by this Lease, which after the date 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
- -- provision may be utilized only if EBO Date occurs on or after maturity of
Secured Certificates].
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
-56-
<PAGE>
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 Ratings Services, a
division of McGraw-Hill, Inc. ("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.
-57-
<PAGE>
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
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)
-58-
<PAGE>
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
or Lessee's rights, benefits and obligations pursuant to the Overall Transaction
during the Term of this Lease, and this Lease shall not be terminated except as
expressly provided herein.
-59-
<PAGE>
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:
-----------------------------------------
Name:
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------------
Name:
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of [____________]
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
-----------------------------------------
Name:
Title:
- Signature Page -
<PAGE>
EXHIBIT A
to
Lease Agreement
[NW 1999 _]
LEASE SUPPLEMENT No.
[NW 1999 _]
LEASE SUPPLEMENT NO. __, dated [_________] between FIRST SECURITY
BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement [NW 1999 _], dated as of
[_____________] between _____________________, as Owner Participant, and such
Owner Trustee (such Owner Trustee, in its capacity as such Owner Trustee,
being herein called "Lessor"), and NORTHWEST AIRLINES, INC. ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement [NW 1999 _], dated as of [___________], relating to one Boeing 747-451
aircraft (herein called the "Lease," and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery from time to time of Lease Supplements for the purpose of leasing
the Airframe and Engines under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
(1)The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
(2)The Lease Agreement relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated [______________] to the Lease Agreement, has been
recorded by the Federal Aviation Administration on [_____________], as one
document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease
and Lessee hereby accepts and leases from Lessor under the Lease the following
described Boeing 747-451 aircraft (the "Aircraft"), which Aircraft as of the
date hereof consists of the following components:
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
- ----------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
<PAGE>
(ii) Engines: four (4) Pratt & Whitney Model PW4056 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 [_______________].
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent for
the Aircraft throughout the Term therefor in accordance with Section 3 of the
Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE>
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:
-----------------------------------------
Name:
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By:
-----------------------------------------
Name:
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of [____________]
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW 1999 _]
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 Total Basic
in Advance in Arrears Rent
Lease Period (Percentage of (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost) Lessor's Cost)
------------ ------------------ ------------------ --------------
EXHIBIT B - PAGE 2
<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 Total Basic
in Advance in Arrears Rent
Lease Period (Percentage of (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost) Lessor's Cost)
- ------------------------------------------------------------------------------
<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 [______________].
[Initial Installment: [__]% of Lessor's Cost on [ ].
Remaining Installments: Date Amount
April 15, [ ] [__]% of Lessor's Cost June 15, [ ] [__]%
of Lessor's Cost September 15, [ ] [__]% of Lessor's Cost
December 15, [ ][__]% of Lessor's Cost]
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW 1999 _]
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
--------------- ----------------
EXHIBIT C - PAGE 2
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 3
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 4
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 5
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 6
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 7
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 8
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW 1999 _]
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 - PAGE
EXHIBIT E
to
Lease Agreement
[NW 1999 _]
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 Initial Installment, the
Remaining Installments] 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 [_] 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 [, Initial Installment,
Remaining Installments] 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 [___________________], 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 1999 _]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malaysia
Australia Malta
Austria Mexico
Bahamas Morocco
Belgium Netherlands
Brazil New Zealand
Canada Norway
Chile Paraguay
Denmark People's Republic of China
Egypt Philippines
Finland Portugal
France Republic of China (Taiwan)*
Germany Singapore
Greece South Africa
Hungary South Korea
Iceland Spain
India Sweden
Indonesia Switzerland
Ireland Thailand
Italy Trinidad and Tobago
Japan United Kingdom
Luxembourg Uruguay
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 1999 _]
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 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) the
Aircraft shall have all Lessee's and any Sublessee's exterior markings removed
or painted over and the areas where such markings were removed or painted over
refurbished as necessary to blend with adjacent areas, (iv) the Aircraft shall
have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return, and (v) the Aircraft shall be in
Lessee's or such Sublessee's passenger configuration and the interior of the
Airframe shall be clean in accordance with Lessee's customary standards for a
"between flights" cleaning. In the event the FAA shall issue any directive which
would require improvements to the Aircraft in order for the airworthiness
certificate of the Aircraft to be maintained in good standing, Lessee shall not
apply for an extension of the date of compliance with the directive as to the
Aircraft to a date after the date of return of the Aircraft pursuant to Section
5 of the Lease, unless it shall previously or concurrently have applied for such
an extension with respect to all Boeing 747-400 aircraft in its fleet affected
by such directive.
<PAGE>
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
- --------------------------------------------------------------------------------
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
Dated as of [_______________]
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 BOEING 747-451 AIRCRAFT
BEARING U.S. REGISTRATION MARK N[______]
LEASED BY NORTHWEST AIRLINES, INC.
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE..............................................................2
ARTICLE I DEFINITIONS.......................................................6
SECTION 1.01. Definitions...................................................6
SECTION 1.02. Reference to Other Documents.................................12
ARTICLE II THE SECURED CERTIFICATES........................................12
SECTION 2.01. Form of Secured Certificates.................................12
SECTION 2.02. Issuance and Terms of Secured Certificates...................18
SECTION 2.03. Payments from Trust Indenture Estate Only....................20
SECTION 2.04. Method of Payment............................................22
SECTION 2.05. Application of Payments......................................24
SECTION 2.06. Termination of Interest in Trust Indenture Estate............25
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates...............................................25
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates....27
SECTION 2.09. Payment of Expenses on Transfer; Cancellation................27
SECTION 2.10. Mandatory Redemptions of Secured Certificates................27
SECTION 2.11. Voluntary Redemptions of Secured Certificates................28
SECTION 2.12. Redemptions; Notice of Redemption............................28
SECTION 2.13. Assumption of Secured Certificates by Lessee.................29
SECTION 2.14. Option to Purchase Secured Certificates......................29
SECTION 2.15. Subordination................................................30
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST
INDENTURE ESTATE...........................................31
SECTION 3.01. Basic Rent Distribution......................................31
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing................................................32
SECTION 3.03. Payments After Event of Default..............................33
SECTION 3.04. Certain Payments.............................................36
SECTION 3.05. Other Payments...............................................36
SECTION 3.06. Payments to the Owner Trustee................................37
SECTION 3.07. Application of Payments Under Guarantee......................37
ARTICLE IV COVENANTS OF THE OWNER TRUSTEE, EVENTS OF DEFAULT, REMEDIES OF
INDENTURE TRUSTEE..........................................37
SECTION 4.01. Covenants of the Owner Trustee...............................37
SECTION 4.02. Event of Default.............................................38
-i-
<PAGE>
Page
----
SECTION 4.03. Certain Rights...............................................41
SECTION 4.04. Remedies.....................................................42
SECTION 4.05. Return of Aircraft, Etc......................................44
SECTION 4.06. Remedies Cumulative..........................................45
SECTION 4.07. Discontinuance of Proceedings................................46
SECTION 4.08. Waiver of Past Defaults......................................46
SECTION 4.09. Appointment of Receiver......................................46
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc........................................................46
SECTION 4.11. Rights of Certificate Holders to Receive Payment.............47
ARTICLE V DUTIES OF THE INDENTURE TRUSTEE..................................47
SECTION 5.01. Notice of Event of Default...................................47
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.....48
SECTION 5.03. Indemnification..............................................50
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions...............................................51
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions...............................................51
SECTION 5.06. Replacement Airframes and Replacement Engines................51
SECTION 5.07. Indenture Supplements for Replacements.......................54
SECTION 5.08. Effect of Replacement........................................54
SECTION 5.09. Investment of Amounts Held by Indenture Trustee..............54
ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE.....................55
SECTION 6.01. Acceptance of Trusts and Duties..............................55
SECTION 6.02. Absence of Duties............................................55
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents..................................................56
SECTION 6.04. No Segregation of Monies; No Interest........................56
SECTION 6.05. Reliance; Agreements; Advice of Counsel......................57
SECTION 6.06. Capacity in Which Acting.....................................57
SECTION 6.07. Compensation.................................................57
SECTION 6.08. Instructions from Certificate Holders........................58
ARTICLE VII INDEMNIFICATION OF THE INDENTURE TRUSTEE BY THE OWNER TRUSTEE..58
SECTION 7.01. Scope of Indemnification.....................................58
ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES...............................59
SECTION 8.01. Notice of Successor Owner Trustee............................59
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor..................................................59
SECTION 8.03. Appointment of Additional and Separate Trustees..............60
-ii-
<PAGE>
Page
----
ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
DOCUMENTS..................................................62
SECTION 9.01. Instructions of Majority; Limitations........................62
SECTION 9.02. Trustees Protected...........................................64
SECTION 9.03. Documents Mailed to Certificate Holders......................64
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement.........................64
ARTICLE X MISCELLANEOUS....................................................65
SECTION 10.01. Termination of Trust Indenture..............................65
SECTION 10.02. No Legal Title to Trust Indenture Estate in Certificate
Holders....................................................65
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding............65
SECTION 10.04. Trust Indenture for Benefit of the Owner Trustee, the
Indenture Trustee, Owner Participant, Lessee and
Certificate Holders........................................66
SECTION 10.05. Notices.....................................................66
SECTION 10.06. Severability................................................66
SECTION 10.07. No Oral Modification or Continuing Waivers..................66
SECTION 10.08. Successors and Assigns......................................67
SECTION 10.09. Headings....................................................67
SECTION 10.10. Normal Commercial Relations.................................67
SECTION 10.11. Governing Law; Counterpart Form.............................67
SECTION 10.12. Voting By Certificate Holders...............................68
SECTION 10.13. Bankruptcy..................................................68
SECTION 10.14 No Action Contrary to Lessee's Rights Under the Lease........68
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
-iii-
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1999 _], dated as of
[_______________] ("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 Owner Participant and the Owner Trustee have entered
into the Trust Agreement whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner Participant
subject, however, to the Trust Indenture Estate created pursuant hereto for the
use and benefit of, and with the priority of payment to, the holders of Secured
Certificates issued hereunder, and (ii) the Owner Trustee has been authorized
and directed to execute and deliver this Trust Indenture;
WHEREAS, the parties desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee to the Pass Through
Trustees (or their designee) of the Secured Certificates evidencing the
participation of the Pass Through Trustees in the payment of Lessor's Cost for
the Aircraft, as provided in the Participation Agreement and (ii) to provide for
the assignment, mortgage and pledge by the Owner Trustee to the Indenture
Trustee, as part of the Trust Indenture Estate hereunder, among other things, of
all of the Owner Trustee's right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Certificate
Holders, subject to Section 2.15 and Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
<PAGE>
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 hereunder and under the
Participation Agreement to the Certificate Holders by the Owner Trustee and for
the uses and purposes and subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants herein contained, and of the
acceptance of the Secured Certificates by the holders thereof, and for other
good and valuable consideration the receipt and adequacy whereof are hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors in trust and assigns, for the security and
benefit of the Certificate Holders, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, other than
Excluded Payments (which collectively, excluding Excluded Payments but including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Agreement and Indenture Supplement or any mortgage
supplemental hereto, are included within the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor to which the Owner Trustee shall
from time to time acquire title as provided herein and in the Lease), all as
more particularly described in the Trust Agreement and Indenture Supplement
executed and delivered with respect to the Aircraft or any such replacements or
substitutions therefor, as provided in this Indenture;
(2) the Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Basic Rent, Supplemental Rent and
payments of any kind thereunder (excluding any Excluded Payments)), and the
Guarantee;
(3) the Purchase Agreement (to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Indenture;
-2-
<PAGE>
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery hereof, the Owner Trustee is
delivering to the Indenture Trustee the original executed counterpart of the
Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt
is attached), and executed copies of the Participation Agreement, and the
Purchase Agreement Assignment with the Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (8) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to
-3-
<PAGE>
any of the Indenture Agreements to which it is a party, or, except as herein
expressly provided, to make any payment, or to make any inquiry as to the nature
or sufficiency of any payment received by it, or present or file any claim, or
take any action to collect or enforce the payment of any amounts which may have
been assigned to it or to which it may be entitled at any time or times.
The Owner Trustee does hereby constitute the Indenture Trustee the
true and lawful attorney of the Owner Trustee, irrevocably, granted for good and
valuable consideration and coupled with an interest and with full power of
substitution, and with full power (in the name of the Owner Trustee or
otherwise) to ask for, require, demand, receive, compound and give acquittance
for any and all monies and claims for monies (in each case including insurance
and requisition proceeds but in all cases excluding Excluded Payments) due and
to become due under or arising out of the Indenture Agreements, and all other
property which now or hereafter constitutes part of the Trust Indenture Estate,
to endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceedings which
the Indenture Trustee may deem to be necessary or advisable in the premises.
Without limiting the generality of the foregoing, but subject to the rights of
the Owner Trustee and the Owner Participant hereunder, during the continuance of
any Event of Default under this Trust Indenture, the Indenture Trustee shall
have the right under such power of attorney to accept any offer in connection
with the exercise of remedies as set forth herein of any purchaser to purchase
the Airframe and Engines and upon such purchase to execute and deliver in the
name of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Indenture Trustee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Indenture
Trustee pursuant to this paragraph shall increase the obligations or liabilities
of the Owner Trustee to any Person beyond those obligations and liabilities
specifically set forth in this Trust Indenture and in the other Operative
Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Indenture Trustee at such address
or addresses as the Indenture Trustee shall specify, for application as provided
in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Indenture Trustee any and all monies from time
to time received by it constituting part of the Trust Indenture Estate, for
distribution by the Indenture Trustee pursuant to this Trust Indenture, except
that the Owner Trustee shall accept for distribution pursuant to the Trust
Agreement any amounts distributed to it by the Indenture Trustee under this
Trust Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute
-4-
<PAGE>
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 any part thereof or in any amount to be received by
it from the use or disposition of the Airframe
-5-
<PAGE>
and Engines, other than amounts distributed to it pursuant to
Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average
-6-
<PAGE>
Life at the redemption date of such Secured Certificate. "Remaining Weighted
Average Life" of such Secured Certificate, at the redemption date of such
Secured Certificate, shall be the number of days equal to the quotient obtained
by dividing (a) the sum of the products obtained by multiplying (i) the amount
of each then remaining installment of principal, including the payment due on
the maturity date of such Secured Certificate, by (ii) the number of days from
and including the redemption date to but excluding the scheduled payment date of
such principal installment; by (b) the then unpaid principal amount of such
Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) hereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in writing
to Lessee, the Indenture Trustee, the Owner Participant and each Certificate
Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at Two International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments).
-7-
<PAGE>
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by Lessee in respect of any amounts payable under the Tax
Indemnity Agreement, (v) fees payable to the Owner Trustee or the Indenture
Trustee pursuant to the last sentence of Section 7(c) of the Participation
Agreement, (vi) provided that the Secured Certificates shall have been duly
assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the
Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease plus
all reasonable expenses incurred by the Owner Trustee and the Owner Participant
in connection with such assumption, as applicable, (vii) any payment of the
foregoing under the Guarantee, (viii) interest accrued on any of the above, and
(ix) any right to enforce the payment of any amount described in clauses (i)
through (viii) above and the right to declare an Event of Default in respect of
any of the foregoing amounts.
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"Guarantor" shall have the meaning specified in the Lease.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
-8-
<PAGE>
"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 the Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under the
Trust Indenture or the Lease.
"Law" shall mean (a) any constitution, treaty, statute, law,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"Lease" shall mean that certain Lease Agreement [NW 1999 _], dated
as of [_______________], entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery hereof, as said Lease Agreement has
been, or may from time to time be, supplemented or amended, or the terms thereof
waived or modified, to the extent permitted by, and in accordance with, the
terms of this Indenture. The term "Lease" shall also include each Lease
Supplement from time to time entered into pursuant to the terms of the Lease.
"Lease Default" shall mean a "Default" as defined in the Lease.
"Lease Event of Default" shall mean an "Event of Default" as defined
in the Lease.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota
corporation.
"Lessee Operative Documents" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Bill of Sale and the Bill of Sale.
"Majority in Interest of Certificate Holders" as of a particular
date of determination shall mean the holders of more than a majority in
aggregate unpaid Principal Amount of all Secured Certificates outstanding as of
such date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason of
subrogation pursuant to Section 4.03 hereof (unless all Secured Certificates
then outstanding shall be held by the Owner Trustee or the Owner Participant) or
Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate,
the amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant) by
which (a) the present value of the remaining scheduled payments of principal and
interest from the redemption date to maturity of such Secured Certificate
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30-day months) using
a discount rate equal to the Treasury Yield exceeds (b) the outstanding
principal amount of such Secured Certificate plus accrued interest. For purposes
of determining the Make-Whole Amount, "Treasury Yield" at the time of
determination with respect to any Secured Certificate means the interest rate
(expressed as a semiannual equivalent and as a
-9-
<PAGE>
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate and trading in the public securities
market either as determined by interpolation between the most recent weekly
average yield to maturity for two series of United States Treasury securities,
trading in the public securities markets, (A) one maturing as close as possible
to, but earlier than, the Average Life Date of such Secured Certificate and (B)
the other maturing as close as possible to, but later than, the Average Life
Date of such Secured Certificate, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Secured Certificate is
reported on the most recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519)" means the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination of a
Make-Whole Amount shall be the third Business Day prior to the applicable
redemption date and the "most recent H.15(519)" means the H.15(519) published
prior to the close of business on the third Business Day prior to the applicable
redemption date.
"Mortgaged Property" shall have the meaning specified in Section
3.03 hereof.
"Owner Indemnitee" shall have the meaning specified in the
definition of Excluded Payments herein.
"Owner Participant" shall mean [______________________________], a
[____________________], so long as such party shall have any interest in the
Trust Estate, and transferees thereof as permitted by Section 8 of the
Participation Agreement.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" shall mean that certain Participation
Agreement [NW 1999 _], dated as of [_______________], among the Owner Trustee,
the Subordination Agent, the Indenture Trustee, Lessee, the Guarantor, the Owner
Participant and the Purchasers as the same may from time to time be supplemented
or further amended, or the terms thereof waived or modified, to the extent
permitted by, and in accordance with, the terms thereof.
"Past Due Rate" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as in effect
from time to time.
"Payment Date" shall mean each February 1 and August 1, commencing
on [February/August _, ____] (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Secured Certificates have been
paid in full.
-10-
<PAGE>
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) hereof.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or replacement
thereof.
"Secured Obligations" shall have the meaning specified in Section
2.06 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c)
hereof.
"Series A" or "Series A Secured Certificates" means Secured
Certificates issued and designated as "Series A" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
-11-
<PAGE>
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under the
Trust Indenture, but in its individual capacity.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Agreement and Indenture Supplement" shall mean a supplement
to the Trust Agreement and to this Indenture, in substantially the form of
Exhibit A hereto, which shall particularly describe the Aircraft, and any
Replacement Airframe and Replacement Engine included in the property of the
Owner Trustee covered by the Trust Agreement.
"Trust Indenture", "this Trust Indenture", "the Trust Indenture",
"Indenture", "this Indenture", and "the Indenture" shall mean this Trust
Indenture and Security Agreement [NW 1999 _] as it may from time to time be
supplemented or amended as herein provided, including supplementing by the Trust
Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
SECTION 1.02. Reference to Other Documents. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW 1999 _] DATED AS OF [_______________].
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [_____] ISSUED IN CONNECTION
WITH THE BOEING 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER
N[_____].
-12-
<PAGE>
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 1999 _], dated as of
[_______________], 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 [February/August 1, _____], and thereafter on [August 1] and
[February 1] 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 1999 _], dated as of [_______________],
between the Owner Trustee and State Street Bank and Trust Company (the
"Indenture Trustee"), as the same may be amended or supplemented from time to
time. All other capitalized terms used in this Secured Certificate and not
defined herein shall have the respective meanings assigned in the Trust
Indenture.
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
-13-
<PAGE>
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 to the Indenture
Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter,
-14-
<PAGE>
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
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
- ----------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
-15-
<PAGE>
necessary or appropriate to effectuate the subordination as provided in the
Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for
such purpose.]**
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ----------
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
-16-
<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:
-17-
<PAGE>
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 [February/August 1, ____], and on each [August 1] and
[February 1] 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
-18-
<PAGE>
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Certificate Holders,
(iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass
Through Trustees, in each case pursuant to Section 7 of the Participation
Agreement, (b) 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, (ii) interest on Interest Drawings, Final Drawings, and Applied
Downgrade Advances and Applied Non-Extension Advances (as defined in the
Liquidity Facilities) under any Liquidity Facility except to the extent included
in Net Interest and Related Charges, and (iii) fees payable to the Liquidity
Provider payable (whether or not in fact paid) under Section 7(a) of the Note
Purchase Agreement (as originally in effect or amended, with the consent of the
Owner Participant), 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, Applied Downgrade Advance and/or Applied
Non-Extension 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, Applied Downgrade Advance or Applied Non-Extension 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 or Applied Non-Extension Advance which becomes a Final
Drawing) which remains in a Cash Collateral Account, Designated
-19-
<PAGE>
Interest Rate means the weighted average Investment Earnings of funds in the
Cash Collateral Accounts. As used in this Section, a Payment Default when used
in connection with a Secured Certificate or Equipment Note means a default in
the payment of principal thereof or interest thereon which has not been cured
other than solely because of acceleration. The following terms are used in this
Section as defined in the Intercreditor Agreement without regard to any
amendment, modification or supplement thereto after the Closing Date: Cash
Collateral Accounts, 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,
-20-
<PAGE>
covenants and agreements made by the Owner Trustee (when made in such capacity)
contained in this Trust Indenture and any agreement referred to herein other
than the Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies which can be exercised and enforced against the
Trust Estate; therefore, anything contained in this Trust Indenture or such
other agreements to the contrary notwithstanding (except for any express
provisions or representations that the Owner Trustee is responsible for, or is
making, in its individual capacity, for which there would be personal liability
of the Owner Trustee), no recourse shall be had with respect to this Trust
Indenture or such other agreements against the Owner Trustee in its individual
capacity or against any institution or person which becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them, and (ii) none of the
Owner Trustee, in its individual capacity, the Owner Participant, the Indenture
Trustee and any officer, director, trustee, servant, employee, agent or direct
or indirect parent or controlling Person or Persons of any of them shall have
any personal liability for any amounts payable, or other obligation owed,
hereunder, under the Participation Agreement or any of the other Operative
Documents or under the Secured Certificates except as expressly provided herein
or in the Participation Agreement; provided, however, that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Trust Indenture or such other agreements of
rights and remedies against the Trust Estate. These provisions are not intended
as any release or discharge of the indebtedness represented by the Secured
Certificates and the Trust Indenture, but are intended only as a covenant not to
sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their
individual capacities, except as expressly provided herein or in the
Participation Agreement, for a deficiency with respect to such indebtedness, the
indebtedness represented by this Trust Indenture and the Secured Certificates to
remain in full force and effect as fully as though these provisions were not
contained in this Trust Indenture. The Owner Trustee hereby acknowledges that
the Certificate Holders have expressly reserved all their rights and remedies
against the Trust Indenture Estate, including the right, in the event of a
default in the payment of all or part of the Principal Amount of, interest on,
Make-Whole Amount, if any, or any other amount due with respect to any Secured
Certificate within the periods provided for in Section 4.02(b) hereof, or upon
the occurrence and continuation of any other Event of Default under this Trust
Indenture, to foreclose upon this Trust Indenture, and/or to receive the
proceeds from the Trust Indenture Estate and otherwise to enforce any other
right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x)
release the Owner Participant from personal liability, or constitute a covenant
not to sue the Owner Participant, for any breach by it of any of its covenants,
representations or warranties contained in the Participation Agreement or for
any of the payments it has agreed to make pursuant to the Participation
Agreement or (y) release the Owner Trustee or constitute a covenant not to sue
the Owner Trustee for any breach by it of any representations, warranties or
covenants of the Owner Trustee contained in the Operative Documents or (z)
release the Owner Trustee in its individual capacity from personal liability, or
constitute a covenant not to sue the Owner Trustee in its individual capacity
for any breach by it of any representations, warranties or covenants of the
Owner Trustee made in its individual capacity in the Operative Documents.
-21-
<PAGE>
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee, directly or indirectly (other than the recourse liability
of the Owner Trustee (in its individual capacity), to make payment on account of
any amount payable as principal, Make-Whole Amount, if any, interest or other
amounts on the Secured Certificates or under this Indenture and (iii) any
Certificate Holder or the Indenture Trustee actually receives any Excess Amount
(as hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder or the Indenture Trustee, as the case may be, shall
promptly refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. Method of Payment.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account
-22-
<PAGE>
of such holder maintained at such bank. If the Indenture Trustee shall fail to
make any such payment as provided in the immediately preceding sentence after
its receipt of funds at the place and prior to the time specified above, the
Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate such holders for loss of use of funds at the Debt Rate until such
payment is made and the Indenture Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any Secured Certificate,
except that, in the case of the final payment in respect of any Secured
Certificate, such Secured Certificate shall be surrendered to the Indenture
Trustee for cancellation promptly after such payment. Notwithstanding any other
provision of this Trust Indenture to the contrary, the Indenture Trustee shall
not be required to make, or cause to be made, wire transfers as aforesaid prior
to the first Business Day on which it is practicable for the Indenture Trustee
to do so in view of the time of day when the funds to be so transferred were
received by it if such funds were received after 12:00 noon, New York City time,
at the place of payment. Prior to the due presentment for registration of
transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee
shall deem and treat the Person in whose name any Secured Certificate is
registered on the Secured Certificate Register as the absolute owner and holder
of such Secured Certificate for the purpose of receiving payment of all amounts
payable with respect to such Secured Certificate and for all other purposes, and
none of the Owner Trustee or the Indenture Trustee shall be affected by any
notice to the contrary. So long as any signatory to the Participation Agreement
or nominee thereof shall be a registered Certificate Holder, all payments to it
shall be made to the account of such Certificate Holder specified in Schedule I
thereto and otherwise in the manner provided in or pursuant to the Participation
Agreement 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
-23-
<PAGE>
Form 1001 or W-8 (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in which the payment
hereunder or under the Secured Certificate(s) held by such holder is made (but
prior to the making of such payment), or in either of the two preceding calendar
years, and has not notified the Indenture Trustee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Indenture
Trustee has no reason to know that any information set forth in such form is
inaccurate), the Indenture Trustee shall withhold only the amount, if any,
required by Law (after taking into account any applicable exemptions claimed by
the Certificate Holder) to be withheld from payments hereunder or under the
Secured Certificates held by such holder in respect of United States federal
income tax (and such withholding shall constitute payment in respect of such
Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such successor
certificate, form or forms as may be required by the United States Treasury
Department as necessary in order to avoid withholding of United States federal
income tax), during the calendar year in which the payment is made (but prior to
the making of such payment), and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such certificate or form prior to the date of such
payment (and the Indenture Trustee has no reason to know that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Indenture Trustee a properly completed and currently effective
U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment
hereunder or under the Secured Certificates held by such holder, no amount shall
be withheld from payments in respect of United States federal income tax. If any
Certificate Holder has notified the Indenture Trustee that any of the foregoing
forms or certificates is withdrawn or inaccurate, or if such holder has not
filed a form claiming an exemption from United States withholding tax or if the
Code or the regulations thereunder or the administrative interpretation thereof
are at any time after the date hereof amended to require such withholding of
United States federal income taxes from payments under the Secured Certificates
held by such holder, the Indenture Trustee agrees to withhold from each payment
due to the relevant Certificate Holder withholding taxes at the appropriate rate
under Law and will, on a timely basis as more fully provided above, deposit such
amounts with an authorized depository and make such returns, statements,
receipts and other documentary evidence in connection therewith as required by
applicable law.
Neither the Owner Participant nor the Owner Trustee shall be liable
for the failure of the Indenture Trustee to withhold taxes in the manner
provided for herein or if any Certificate Holder provides false or inaccurate
information on any form required to be delivered under this Section 2.04.
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:
-24-
<PAGE>
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by Law, any
overdue interest and any other overdue amounts thereunder) to the date of
such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates.
The Indenture Trustee shall keep a register (the "Secured
Certificate Register") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
-25-
<PAGE>
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured Certificate to the date on which interest shall have been paid on
such old Secured Certificate, and all payments of the Principal Amount marked on
such new Secured Certificate, as provided above, shall be deemed to have been
made thereon. The Owner Trustee shall not be required to exchange any
surrendered Secured Certificates as provided above during the ten-day period
preceding the due date of any payment on such Secured Certificate. The Owner
Trustee shall in all cases deem the Person in whose name any Secured Certificate
shall have been issued and registered as the absolute owner and holder of such
Secured Certificate for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Secured Certificate and for all
purposes until a notice stating otherwise is received from the Indenture Trustee
and such change is reflected on the Secured Certificate Register. The Indenture
Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee
of each registration of a transfer of a Secured Certificate. Any such transferee
of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to
the provisions of the Participation Agreement applicable to Certificate Holders,
including Sections 6, 8(c), 8(e), 8(k), 8(l), 8(q), 8(r), 8(t), 8(cc), 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.
-26-
<PAGE>
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured
Certificates.
If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the holder of
such Secured Certificate, execute and the Indenture Trustee shall authenticate
and deliver in replacement thereof a new Secured Certificate, payable in the
same Principal Amount dated the same date and captioned as issued in connection
with the Aircraft. If the Secured Certificate being replaced has become
mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
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
-27-
<PAGE>
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 ofredemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. Voluntary Redemptions of Secured Certificates.
Any or all of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured
-28-
<PAGE>
Certificates shall cease to accrue on and after such redemption date, and (4)
the place or places where such Secured Certificates are to be surrendered for
payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at any office or agency maintained for such purposes pursuant to Section 2.07,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. Assumption of Secured Certificates by Lessee.
If, in accordance with Section 8(x) of the Participation Agreement,
and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of
the Secured Certificates and other amounts owing to the Certificate Holders
substantially in the form of the Guarantee, and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Secured Certificates and all other Operative Documents
and the Owner Participant shall be released and discharged from any further
obligations under the Participation Agreement and any other Operative Document
to which it is a party, except with respect to any such obligations that accrued
prior thereto.
SECTION 2.14. Option to Purchase Secured Certificates.
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
-29-
<PAGE>
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 connection with
the issuance of such new Secured Certificate shall be borne by the Owner
Participant.
-30-
<PAGE>
SECTION 2.15. Subordination.
(a) The Owner Trustee and, by acceptance of its Secured Certificates
of any Series, each Certificate Holder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series A), each Certificate Holder of such Series agrees that in the
event that such Certificate Holder, in its capacity as a Certificate Holder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series which it is not entitled to receive under this Section 2.15 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided
in Article III hereof.
(c) As used in this Section 2.15, the term "Senior Holder" shall
mean, (i) the Certificate Holders of Series A until the Secured Obligations in
respect of Series A Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series A Secured Certificates have been
paid in full, the Certificate Holders of Series B until the Secured Obligations
in respect of Series B Secured Certificates have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.
Except as otherwise provided in Section 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Indenture Trustee pursuant to Section
4.03 hereof shall be promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as shall be required to
pay in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series A
Secured Certificates shall be distributed to the Certificate
Holders of Series A ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments
-31-
<PAGE>
then due under each Series A Secured Certificate bears to the
aggregate amount of the payments then due under all Series A
Secured Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the Certificate
Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series B Secured Certificate
bears to the aggregate amount of the payments then due under
all Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the Certificate
Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series C Secured Certificate
bears to the aggregate amount of the payments then due under
all Series C Secured Certificates; and
Second, the balance, if any, of such installment remaining thereafter
shall be distributed to the Owner Trustee; provided, however,
that if an Event of Default shall have occurred and be
continuing, then such balance shall not be distributed as
provided in this clause "Second" but shall be held by the
Indenture Trustee as part of the Trust Indenture Estate and
invested in accordance with Section 5.09 hereof until
whichever of the following shall first occur: (i) all Events
of Default shall have been cured or waived, in which event
such balance shall be distributed as provided in this clause
"Second" without reference to this proviso, (ii) Section 3.03
hereof shall be applicable, in which event such balance shall
be distributed in accordance with the provisions of such
Section 3.03, or (iii) the 120th day after the receipt of such
payment in which case such payment shall be distributed as
provided in this clause "Second" without reference to this
proviso.
-32-
<PAGE>
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a
refinancing of the Secured Certificates pursuant to Section 17 of the
Participation Agreement shall be applied to redemption of the Secured
Certificates and to all other amounts payable hereunder or to the Indenture
Trustee or any Certificate Holder under the Participation Agreement by applying
such funds in the following order of priority:
First, (a) to reimburse the Indenture Trustee and the Certificate Holders
for any reasonable costs or expenses incurred in connection with
such redemption for which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative Documents and then (b) to
pay any other amounts then due to the Indenture Trustee and the
Certificate Holders under this Trust Indenture, the Participation
Agreement or the Secured Certificates;
Second, (i) to pay the amounts specified in paragraph (i) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount, if any,
then due and payable in respect of the Series A Secured
Certificates;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series C Secured Certificates;
and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and 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.
-33-
<PAGE>
SECTION 3.03. Payments After Event of Default.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of
Default shall have occurred and be continuing and the Secured Certificates shall
have become due and payable pursuant to Section 4.04(b) hereof, as well as all
payments or amounts then held by the Indenture Trustee as part of the Trust
Indenture Estate, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
First, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any tax, expense or other loss
(including, without limitation, all amounts to be expended at the
expense of, or charged upon the tolls, rents, revenues, issues,
products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the
"Mortgaged Property") pursuant to Section 4.05(b) hereof) incurred
by the Indenture Trustee (to the extent not previously reimbursed),
the expenses of any sale, taking or other proceeding, reasonable
attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the
Indenture Trustee or the Certificate Holders in the protection,
exercise or enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee or any Certificate Holder,
liquidated or otherwise, upon such Event of Default shall be applied
by the Indenture Trustee as between itself and the Certificate
Holders in reimbursement of such expenses and any other expenses for
which the Indenture Trustee or the Certificate Holders are entitled
to reimbursement under any Operative Document and in the case the
aggregate amount to be so distributed is insufficient to pay as
aforesaid, then ratably, without priority of one over the other, in
proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing or
prior Certificate Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or payments made
by each such then existing or prior Certificate Holder pursuant to
said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount
of all Series A Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be
-34-
<PAGE>
distributed to the Certificate Holders of Series A, and in
case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series A Secured
Certificates held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the
date of distribution, bears to the aggregate unpaid Principal
Amount of all Series A Secured Certificates held by all such
holders plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series B
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series B Secured Certificates to the date of
distribution, shall be distributed to the Certificate Holders
of Series B, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series B Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series B Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series C Secured Certificates to the date of
distribution, shall be distributed to the Certificate Holders
of Series C, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series C Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
-35-
<PAGE>
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. Certain Payments.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease, the
Participation Agreement or such other Operative Document, as the case may be.
(b) The Indenture Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) any Certificate
Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the
Pass Through Trustees, in each case whether pursuant to Section 7 of the
Participation Agreement or as Supplemental Rent, directly to the Person entitled
thereto. Any payment received by the Indenture Trustee under clause (b) of the
third paragraph of Section 2.02 shall be distributed to the Subordination Agent
to be distributed in accordance with the terms of the Intercreditor Agreement,
and any payment received by the Indenture Trustee under clause (c) of the third
paragraph of Section 2.02 shall be distributed directly to the Persons entitled
thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. Other Payments.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
-36-
<PAGE>
First, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of
Section 3.03 hereof, and
Second, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the
Indenture Trustee under the Lease or otherwise with respect to the
Aircraft (including, without limitation, all amounts realized upon
the sale or release of the Aircraft after the termination of the
Lease with respect thereto), to the extent received or realized at
any time after payment in full of all Secured Obligations due the
Certificate Holders, shall be distributed by the Indenture Trustee
in the order of priority specified in clause (ii) of the immediately
preceding sentence of this Section 3.05.
SECTION 3.06. Payments to the 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.
-37-
<PAGE>
ARTICLE IV
COVENANTS OF THE OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of the Owner Trustee.
The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Principal
Amount of, Make-Whole Amount, if any, and interest on and other amounts
due under the Secured Certificates and hereunder in accordance with the
terms of the Secured Certificates and this Trust Indenture and all
amounts, if any, payable by it to the Certificate Holders under the
Participation Agreement;
(b) the Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to exist
a Lessor Lien attributable to it in its individual capacity with respect
to the Aircraft or any other portion of the Trust Estate; that it will
promptly, at its own expense, take such action as may be necessary to duly
discharge such Lessor Lien attributable to it in its individual capacity;
and that it will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from such Lessor
Liens attributable to it in its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an
Event of Default, a Default or an Event of Loss, the Owner Trustee will
give prompt written notice of such Event of Default, Default or Event of
Loss to the Indenture Trustee, each Certificate Holder, Lessee and the
Owner Participant;
(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments furnished
to the Owner Trustee under the Lease, including, without limitation, a
copy of any Termination Notice and a copy of each report or notice
received pursuant to Section 9(a) and 11(c) of the Lease to the extent
that the same shall not have been furnished to the Indenture Trustee
pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the consent
of the Indenture Trustee (acting pursuant to instructions given in
accordance with Section 9.01 hereof), the Owner Trustee will not contract
for, create, incur, assume or suffer to exist any Debt, and will not
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or
-38-
<PAGE>
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
(10) 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 (10) Business Days after the Owner Trustee or the
Owner Participant receives written demand from the Indenture Trustee or
any Certificate Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its
individual or trust capacity pursuant to Section 8(h) of the Participation
Agreement, or by the Owner Participant pursuant to Section 8(h) of the
Participation Agreement shall remain undischarged for a period of thirty
(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
document or 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
-39-
<PAGE>
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 sixty (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 sixty (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 sixty (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 sixty (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 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 the Owner Participant, the
Owner Trustee or the Trust Estate or for all or substantially all of its
property, or seeking the winding-up or liquidation of its affairs and the
continuation of any such case or other proceeding undismissed and unstayed
for a period of ninety (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
-40-
<PAGE>
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 thirty (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 (10)
Business Days' prior written notice of the date (the "Enforcement Date") on or
after which the Indenture Trustee may commence and consummate the exercise of
any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of Section 15 of
the Lease. If an Event of Default shall have occurred and be continuing, the
Owner Trustee shall have the following rights hereunder, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of Default in respect
of the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture
Trustee shall have insufficient funds to make any payment of Principal Amount
and interest on any Secured Certificate on the day it becomes due and payable,
the Owner Trustee or the Owner Participant may, but shall not be obligated to,
pay the Indenture Trustee prior to the Enforcement Date, in the manner provided
in Section 2.04 hereof, for application in accordance with Section 3.01 hereof,
an amount equal to the portion of the Principal Amount and interest (including
interest, if any, on any overdue payments of such portion of Principal Amount
and interest) then due and payable on the Secured Certificates, and, unless the
Owner Trustee has cured Events of Default in respect of payments of Basic Rent
on each of the three immediately preceding Basic Rent payment dates, or the
Owner Trustee has cured six previous Events of Default in respect of payments of
Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this
Trust Indenture be deemed to cure any Event of Default which would otherwise
have arisen on account of the nonpayment by Lessee of such installment of Basic
Rent (but not any other Default or Event of Default which shall have occurred
and be continuing).
If any Event of Default (other than in respect of the nonpayment of
Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the
Owner Participant
-41-
<PAGE>
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 the 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 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 (20) days' prior written notice of its
intention to sell the Aircraft.
-42-
<PAGE>
Without limiting any of the foregoing, it is understood and agreed that the
Indenture Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall not
have possession thereof at the time of such sale.
Anything in this Trust Indenture to the contrary notwithstanding,
the Indenture Trustee shall not be entitled to exercise any remedy hereunder as
a result of an Event of Default which arises solely by reason of one or more
events or circumstances which constitute a Lease Event of Default unless the
Indenture Trustee as security assignee of the Owner Trustee shall have exercised
or concurrently be exercising one or more of the remedies provided for in
Section 15 of the Lease to terminate the Lease or take possession and/or sell
the Aircraft; provided, however, that such requirement to exercise one or more
of such remedies under the Lease shall not apply in circumstances where the
Indenture Trustee is, and has been, for a continuous period in excess of 60 days
or such other period as may be specified in Section 1110(a)(1)(A) of the
Bankruptcy Code (such 60-day or other period being the "Section 1110 Period"),
involuntarily stayed or prohibited by applicable law or court order from
exercising such remedies under the Lease (a "Continuous Stay Period"); provided
further, however, that the requirement to exercise one or more of such remedies
under the Lease shall nonetheless be applicable during a Continuous Stay Period
subsequent to the expiration of the Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the Section 1110 Period with the
approval of the relevant court to perform the Lease in accordance with Section
1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by
Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the
Section 1110 Period with the consent of the Indenture Trustee pursuant to
Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption
during the Section 1110 Period with the approval of the relevant court of the
Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence
of the Indenture Trustee's own failure to give any requisite notice to any
Person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, so
long as the Indenture Trustee fails to participate in such proceedings, the
Owner Trustee shall have the right (without affecting in any way any rights or
remedy of the Indenture Trustee hereunder) to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid
-43-
<PAGE>
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 Pass Through Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
SECTION 4.05. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing,
subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture
Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture
Trustee such instruments of title and other documents as the Indenture Trustee
may deem necessary or advisable to enable the Indenture
-44-
<PAGE>
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the Indenture Trustee may specify, to
obtain possession of all or any part of the Mortgaged Property included in the
Trust Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If the Owner Trustee shall for any reason fail to execute
and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
-45-
<PAGE>
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
-46-
<PAGE>
Owner Trustee hereby consents to the appointment of such a receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of the
Mortgaged Property shall be entitled to exercise all the rights and powers of
the Indenture Trustee with respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc.
The Owner Trustee irrevocably appoints the Indenture Trustee the
true and lawful attorney-in-fact of the Owner Trustee in its name and stead and
on its behalf, for the purpose, if an Event of Default shall have occurred and
be continuing, 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 twenty (20) days after mailing notice
-47-
<PAGE>
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; provided, however, that the Indenture
Trustee may not sell the Aircraft or any Engine without the consent of a
majority in interest of Certificate Holders. If the Indenture Trustee shall at
any time declare the Lease to be in default pursuant to Section 15 thereof or
shall elect to foreclose or otherwise enforce this Trust Indenture, the
Indenture Trustee shall forthwith notify the Owner Participant, the Certificate
Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture,
in the absence of Actual Knowledge on the part of the Indenture Trustee, the
Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee
or the Owner Participant, as the case may be, shall not be deemed to have
knowledge of a Default or an Event of Default (except, in the case of the
Indenture Trustee, the failure of Lessee to pay any installment of Basic Rent
within one (1) 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
-48-
<PAGE>
15 of the Lease other than the right to proceed by appropriate court
action, either at law or in equity, to enforce payment by Lessee or the
Guarantor of such amounts included in Excluded Payments or performance by
Lessee or the Guarantor of such insurance covenant, or to recover damages
for the breach thereof or for specific performance of any covenant of
Lessee or the Guarantor;
(2) unless an Event of Default and an Indenture Trustee Event shall
have occurred and be continuing and except as provided in clause (4)
below, the Indenture Trustee shall not, without the consent of the Owner
Trustee, which consent shall not be withheld if no right or interest of
the Owner Trustee or the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute and deliver amendments, modifications,
waivers or consents in respect of any of the provisions of the Lease, or
(ii) approve any accountants, engineers, appraisers or counsel as
satisfactory to render services for or issue opinions to the Owner Trustee
pursuant to the Operative Documents; provided that, whether or not an
Event of Default shall have occurred and be continuing, no amendment,
modification, waiver or consent in respect of the Lease shall affect the
amount or timing of, or the right to enforce payment of, any Excluded
Payment;
(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee, (i)
to receive from Lessee all notices, certificates, reports, filings,
opinions of counsel and other documents and all information which any
thereof is permitted or required to give or furnish to the Owner Trustee
or Lessor pursuant to any Operative Document (including pursuant to
Section 7(b) of the Participation Agreement), (ii) to exercise inspection
rights pursuant to Section 12 of the Lease, (iii) to retain all rights
with respect to insurance maintained for its own account which Section
11(e) of the Lease specifically confers on Lessor or the Owner
Participant, (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor under
Section 21 of the Lease and (v) to give notices of default under Section
14 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the
right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated
Loss Values and Termination Values as 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
-49-
<PAGE>
to Section 15 of the Lease, and (iii) make an election pursuant to and in
accordance with the provisions of Section 9(c) of the Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights of
the "Lessor" under the Lease shall be exercised by the Owner Trustee to
the exclusion of the Indenture Trustee including, without limitation, the
right to (i) exercise all rights with respect to Lessee's use and
operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, and (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease; provided that
the foregoing shall not limit (A) any rights separately granted to the
Indenture Trustee under the Operative Documents or (B) the right of the
Indenture Trustee to receive any funds to be delivered to the "Lessor"
under the Lease (except with respect to Excluded Payments) and under the
Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, to (A) declare the Lease to be in default under
Section 15 thereof and (B) subject only to the provisions of Sections 4.03,
4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15
(other than in connection with Excluded Payments) at any time that a Lease Event
of Default shall have occurred and be continuing.
The Indenture Trustee will execute and the Owner Trustee will file
or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
-50-
<PAGE>
SECTION 5.03. Indemnification.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
-51-
<PAGE>
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, the Owner Trustee shall direct the Indenture Trustee to execute and
deliver to the Owner Trustee an appropriate instrument releasing such Airframe
and/or Engine as appropriate from the Lien of this Trust Indenture and the
Indenture Trustee shall execute and deliver such instrument as aforesaid, but
only upon compliance by Lessee with the applicable provisions of Section 10 of
the Lease and upon receipt by or deposit with the Indenture Trustee of the
following:
(1) A written request from the Owner Trustee, requesting such
release specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
A. With respect to the Replacement of any Airframe:
(i) a description of the Airframe which shall be identified
by manufacturer, model, FAA registration number (or
other applicable registration information) and
manufacturer's serial number;
(ii) a description of the Replacement Airframe to be received
(including the manufacturer, model, FAA registration
number (or other applicable registration information)
and manufacturer's serial number) as consideration for
the Airframe to be released;
(iii) that the Replacement Airframe is of the same or an
improved model as the Airframe requested to be released
from this Indenture;
(iv) the value, utility and remaining useful life (without
regard to hours or cycles) of the Replacement Airframe
as of the date of such certificate (which in the
judgment of Lessee shall be not less than the then
value, utility and remaining useful life (without regard
to hours or cycles) of the Airframe requested to be
released (assuming such Airframe was in the condition
and repair required to be maintained under the Lease));
and
(v) 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,
-52-
<PAGE>
in the performance of any of the terms and covenants of
the Lease.
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 such Replacement Engine is substantially the same
as the Engine to be released (or an improved model);
(iv) the value, utility and remaining useful life (without
regard to hours or cycles) of the Replacement Engine as
of the date of such certificate (which value shall not
be less than the then value, utility and remaining
useful life (without regard to hours or cycles) of the
Engine to be released (assuming such Engine was in the
condition and repair required to be maintained under the
Lease));
(v) that each of the conditions specified in Section 10(b)
of the Lease with respect to such Replacement Engine
have been satisfied; and
(vi) 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.
(3) (a) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the lien of this Indenture.
(b) With respect to the replacement of any Engine, such Uniform
Commercial Code financing statements covering the lien created by this Indenture
as deemed necessary or desirable by counsel for the Indenture Trustee to protect
the lien under the Indenture in the Replacement Engine.
-53-
<PAGE>
(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(iv)
of this Section 5.06.
(5) The opinion of in-house counsel to Lessee, or other counsel
satisfactory to the Indenture Trustee, stating that the Replacement Airframe or
Replacement Engine has been validly subjected to the lien of this Indenture and
covered by the Lease, the instruments subjecting such Replacement Airframe or
Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the
case may be, have been duly filed for recordation pursuant to the Federal
Aviation Act or any other law then applicable to the registration of the
Aircraft, and no further action, filing or recording of any document is
necessary or advisable in order to establish and perfect the right, title,
estate and interest of the Owner Trustee to and the lien of this Trust Indenture
on such Replacement Aircraft or Replacement Engine.
SECTION 5.07. Indenture Supplements for Replacements.
If a Replacement Airframe or Replacement Engine is being substituted
as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture
Trustee agree for the benefit of the Certificate Holders and Lessee, subject to
fulfillment of the conditions precedent and compliance by Lessee with its
obligations set forth in Section 10 of the Lease and the requirements of Section
5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to
execute and deliver a Lease Supplement and a Trust Agreement and Indenture
Supplement, as applicable, as contemplated by Section 10 of the Lease.
SECTION 5.08. Effect of Replacement.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced, and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
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
-54-
<PAGE>
Cash Equivalents as directed by Lessee so long as the Indenture Trustee may
acquire the same using its best efforts. Unless otherwise expressly provided in
this Trust Indenture, any income realized as a result of any such investment,
net of the Indenture Trustee's reasonable fees and expenses in making such
investment, shall be held and applied by the Indenture Trustee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be charged
against the principal amount invested. The Indenture Trustee shall not be liable
for any loss resulting from any investment required to be made by it under this
Trust Indenture other than by reason of its willful misconduct or gross
negligence, and any such investment may be sold (without regard to its maturity)
by the Indenture Trustee without instructions whenever such sale is necessary to
make a distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties.
The Indenture Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the terms of this
Trust Indenture and agrees to receive and disburse all monies constituting part
of the Trust Indenture Estate in accordance with the terms hereof. The Owner
Trustee, in its individual capacity, and the Indenture Trustee, in its
individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or gross negligence
(other than for the handling of funds, for which the standard of accountability
shall be willful misconduct or negligence), (ii) in the case of the Indenture
Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the
last sentence of Section 5.04 hereof, and (iii) for liabilities that may result,
in the case of the Owner Trustee, from the inaccuracy of any representation or
warranty of the Owner Trustee expressly made in its individual capacity in the
Participation Agreement or in Section 4.01(b) or 6.03 hereof (or in any
certificate furnished to the Indenture Trustee or any Certificate Holder in
connection with the transactions contemplated by the Operative Documents) or, in
the case of the Indenture Trustee (in its individual capacity), from the
inaccuracy of any representation or warranty of the Indenture Trustee (in its
individual capacity) in the Participation Agreement or expressly made hereunder.
Neither the Owner Trustee nor the Indenture Trustee shall be liable for any
action or inaction of the other or of the Owner Participant.
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
-55-
<PAGE>
maintenance of any such registration, recording or filing, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any lien or encumbrance of any kind against any part of
the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or
inquire into the failure to receive any financial statements from Lessee, or (v)
to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the Lease with
respect to the Aircraft. The Owner Participant shall not have any duty or
responsibility hereunder, including, without limitation, any of the duties
mentioned in clauses (i) through (v) above; provided, that nothing contained in
this sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents.
NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY
NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE
TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE
AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in its
individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft
is free and clear of Lessor Liens (including for this purpose Liens which would
be Lessor Liens but for the proviso in the definition of Lessor Liens)
attributable to the Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Indenture Trustee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement, the Secured Certificates, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Guarantee, or as to the correctness of any statement contained in any
thereof, except for the 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.
-56-
<PAGE>
SECTION 6.04. No Segregation of Monies; No Interest.
Any monies paid to or retained by the Indenture Trustee pursuant to
any provision hereof and not then required to be distributed to the Certificate
Holders, Lessee or the Owner Trustee as provided in Article III hereof need not
be segregated in any manner except to the extent required by Law or Section
10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Indenture Trustee
shall not be liable for any interest thereon (except that the Indenture Trustee
shall invest all monies held as directed by Lessee so long as no Lease Event of
Default or Lease Default has occurred and is continuing (or in the absence of
such direction, by the Majority In Interest of Certificate Holders) in Cash
Equivalents; provided, however, that any payments received, or applied
hereunder, by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel.
Neither the Owner Trustee nor the Indenture Trustee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Indenture Trustee may
accept a copy of a resolution of the Board of Directors (or, in the case of the
Owner Participant which originally executed the Participation Agreement,
evidence of the approval by the Executive Committee thereof) of any party to the
Participation Agreement, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to the aggregate unpaid Principal Amount of Secured Certificates
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Indenture Trustee. As to any fact or matter relating to
Lessee the manner of ascertainment of which is not specifically described
herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof
rely on a certificate, signed by a duly authorized officer of Lessee, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee and the Indenture Trustee for any action taken or omitted to be
taken by them in good faith in reliance thereon. The Indenture Trustee shall
assume, and shall be fully protected in assuming, that the Owner Trustee is
authorized by the Trust Agreement to enter into this Trust Indenture and to take
all action to be taken by it pursuant to the provisions hereof, and shall not
inquire into the authorization of the Owner Trustee with respect thereto. In the
administration of the trusts hereunder, the Owner Trustee and the Indenture
Trustee each may execute any of the trusts or powers hereof and perform its
powers and duties hereunder directly or through agents or attorneys and may at
the expense of the Trust Indenture Estate, consult with counsel, accountants and
other skilled persons to be selected and retained by it, and the Owner Trustee
and the Indenture Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled persons.
-57-
<PAGE>
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 THE INDENTURE TRUSTEE BY THE OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.
The Owner Trustee, not in its individual capacity, but solely as
Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee (in its individual and trust capacities),
and its successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes
payable by the Indenture Trustee on or measured by any compensation received by
the Indenture Trustee for its services under this Trust Indenture), claims,
actions, suits, costs, expenses or disbursements (including reasonable legal
fees and expenses) of any kind and nature whatsoever, which may be imposed on,
incurred by or asserted against the Indenture Trustee (whether or not also
indemnified against by any other Person under any other document) in any way
relating to or arising out of this Trust Indenture or any other Operative
-58-
<PAGE>
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 Taxes or 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
-59-
<PAGE>
Interest of Certificate Holders may at any time (but only with the consent of
Lessee, which consent shall not be unreasonably withheld, except that such
consent shall not be necessary if a Lease Event of Default is continuing) remove
the Indenture Trustee without cause by an instrument in writing delivered to the
Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee shall duly assign, transfer, deliver and pay over to such
successor Indenture Trustee all monies or other property then held by such
predecessor Indenture Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
bank or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any
-60-
<PAGE>
corporation to which substantially all the corporate trust business of the
Indenture Trustee may be transferred, shall, subject to the terms of paragraph
(c) of this Section 8.02, be a successor Indenture Trustee and the Indenture
Trustee under this Trust Indenture without further act.
SECTION 8.03. Appointment of Additional and Separate Trustees.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee.
In case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the
-61-
<PAGE>
custody, investment and payment of monies and all monies received by any such
additional or separate trustee from or constituting part of the Trust Indenture
Estate or otherwise payable under any Operative Document to the Indenture
Trustee shall be promptly paid over by it to the Indenture Trustee. All other
rights, powers, duties and obligations conferred or imposed upon any additional
or separate trustee shall be exercised or performed by the Indenture Trustee and
such additional or separate trustee jointly except to the extent that applicable
Law of any jurisdiction in which any particular act is to be performed renders
the Indenture Trustee incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations (including the holding of
title to all or part of the Trust Indenture Estate in any such jurisdiction)
shall be exercised and performed by such additional or separate trustee. No
additional or separate trustee shall take any discretionary action except on the
instructions of the Indenture Trustee or a Majority in Interest of Certificate
Holders. No trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder, except that the Indenture Trustee shall
be liable for the consequences of its lack of reasonable care in selecting, and
Indenture Trustee's own actions in acting with, any additional or separate
trustee. Each additional or separate trustee appointed pursuant to this Section
8.03 shall be subject to, and shall have the benefit of Articles IV through VIII
and Article X hereof insofar as they apply to the Indenture Trustee. The powers
of any additional or separate trustee appointed pursuant to this Section 8.03
shall not in any case exceed those of the Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or modification of, or consent under, the
terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement or the Guarantee, unless such
-62-
<PAGE>
supplement, amendment, waiver, modification or consent is consented to in
writing by the Indenture Trustee and a Majority in Interest of Certificate
Holders. Anything to the contrary contained herein notwithstanding, without the
necessity of the consent of any of the Certificate Holders or the Indenture
Trustee, (i) any Excluded Payments payable to the Owner Participant may be
modified, amended, changed or waived in such manner as shall be agreed to by the
Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under
Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such
amendments, modifications and changes do not and would not affect the time of,
or reduce the amount of, Rent payments until after the payment in full of all
Secured Obligations or otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely affect 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
-63-
<PAGE>
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations in respect of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and unconditional
character of the obligations of Lessee to pay Rent as set forth in Sections 3
and 18 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Certificate Holder of the benefit of the Lien of this Trust Indenture on the
Trust Indenture Estate, except as provided in connection with the exercise of
remedies under Article IV hereof. So long as no Lease Event of Default has
occurred and is continuing, without the consent of Lessee no amendment or
supplement to this Trust Indenture or waiver or modification of the terms hereof
shall adversely affect Lessee.
(c) At any time after the date hereof, the Owner Trustee and the
Indenture Trustee may enter into one or more agreements supplemental hereto
without the consent of any Certificate Holder for any of the following purposes:
(i) (a) to cure any defect or inconsistency herein or in the Secured
Certificates, or to make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the interests of any
Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure
any ambiguity or correct any mistake; (ii) to evidence the succession of another
party as the Owner Trustee in accordance with the terms of the Trust Agreement
or to evidence the succession of a new trustee hereunder pursuant hereto, the
removal of the trustee hereunder or the appointment of any co-trustee or
co-trustees or any separate or additional trustee or trustees; (iii) to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee or to make any other provisions with respect to matters or questions
arising hereunder so long as such action shall not adversely affect the
interests of the Certificate Holders in its capacity solely as Certificate
Holder; (iv) to correct or amplify the description of any property at any time
subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Trust Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Certificate Holders, or to surrender any
rights or power herein conferred upon the Owner Trustee, the Owner Participant
or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to
include on the Secured Certificates any legend as may be required by law.
SECTION 9.02. Trustees Protected.
If, in the opinion of the institution acting as Owner Trustee under
the Trust Agreement or the institution acting as Indenture Trustee hereunder,
any document required to be executed by it pursuant to the terms of Section 9.01
hereof adversely affects any right, duty, immunity or indemnity with respect to
such institution under this Trust Indenture or the Lease, such institution may
in its discretion decline to execute such document.
SECTION 9.03. Documents Mailed to Certificate Holders.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail,
-64-
<PAGE>
by first class mail, postage prepaid, a copy thereof to Lessee and to each
Certificate Holder at its address last set forth in the Secured Certificate
Register, but the failure of the Indenture Trustee to mail such copies shall not
impair or affect the validity of such document.
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders.
No holder of a Secured Certificate shall have legal title to any
part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
-65-
<PAGE>
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding.
Any sale or other conveyance of the Trust Indenture Estate, or any
part thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. Trust Indenture for Benefit of the Owner Trustee, the
Indenture Trustee, Owner Par. cipant, 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
Participation 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
-66-
<PAGE>
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. Successors and Assigns.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. Headings.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. Normal Commercial Relations.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
-67-
<PAGE>
SECTION 10.11. Governing Law; Counterpart Form.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 10.12. Voting By Certificate Holders.
All votes of the Certificate Holders shall be governed by a vote of
a Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. Bankruptcy.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14 No Action Contrary to Lessee's Rights Under the Lease.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
-68-
<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: _______________________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity, except
as expressly provided herein, but solely as
Indenture Trustee,
Indenture Trustee
By: _______________________________________________
Name:
Title:
-69-
<PAGE>
-----------------------------
EXHIBIT A
TO
TRUST INDENTURE
AND SECURITY AGREEMENT
-----------------------------
TRUST INDENTURE SUPPLEMENT
[NW 1999 _]
This TRUST INDENTURE SUPPLEMENT [NW 1999 _], 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 1999 _] dated as of [_______________] (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 1999 _],
dated as of [_______________] (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 the Owner Trustee's right, title and interest in
and to the following described property:
EXHIBIT A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ -------------
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
together with all of the 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 the 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,
EXHIBIT A-2
<PAGE>
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.
EXHIBIT A-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust
Indenture Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee, Owner Trustee
By: _____________________________________________
Name:
Title:
EXHIBIT A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
------------------- ----------------
Series A . . . . . . $[_________] [_________]%
Series B . . . . . . $[_________] [_________]%
Series C . . . . . . $[_________] [_________]%
SCHEDULE I-1
<PAGE>
Secured Certificates Amortization
SERIES A
--------
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
--------------------- ------------------------------
SCHEDULE I-2
<PAGE>
SERIES B
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
--------------------- ------------------------------
SCHEDULE I-3
<PAGE>
SERIES C
Aircraft: N[_____]
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 Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1A, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1B, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1C, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
SCHEDULE II-1
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
[NW 1999 _]
Dated as of [___________]
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
---------------
One Boeing 747-451
Aircraft
================================================================================
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW 1999 _]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1999 _], dated as of
[___________] 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 Boeing 747-451
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 1999 _], 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 rights and
interests in and to the Purchase Agreement, as and to the extent that the same
relate to the Aircraft and the operation thereof, including, without limitation,
(a) all claims for damages in respect of the Aircraft arising as a result of any
default by the Manufacturer under the Purchase Agreement, including, without
limitation, all warranty, service life policy, aircraft performance guarantee
and indemnity provisions in the Purchase 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 the Purchase Agreement in respect of the Aircraft;
reserving to Assignor, however, (i) all of Assignor's rights and interests in
and to the Purchase Agreement as and to the extent that it relates to any
matters not in respect of the Aircraft, (ii) all of Assignor's rights and
interests under the Purchase Agreement (other than under Articles 8.3 and 8.4
and Exhibit B (Product Assurance
<PAGE>
Document) thereof), (iii) all of Assignor's rights and interests in or arising
out of any payments or deposits made or to be made by Assignor or amounts
credited or to be credited or paid or to be paid by the Manufacturer to Assignor
in respect of the Aircraft under the Purchase Agreement, (iv) all of Assignor's
rights and interests in and to any Spare Parts General Terms Agreement and (v)
with respect to the Aircraft so long, and only so long, as the Manufacturer
shall not have received written notice from the Indenture Trustee or the Owner
Trustee (including by mail, courier, telex, or telecopy thereof from the
Indenture Trustee or the Owner Trustee addressed to the Manufacturer's Vice
President - Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, WA 98124 if by
mail; 1901 Oakesdale Ave. S.W., M/C 21-34, Renton, WA 98055, if by courier;
425-237-1706 if by telecopy and 32-9430 (answerback BOEINGREN), if by telex)
that an Event of Default under the Lease has occurred and is continuing, all
rights to demand, accept and retain all rights in and to property (other than
the Aircraft), data, documents, training and services of any kind which the
Manufacturer is obligated to provide or does provide pursuant to the Purchase
Agreement with respect 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 written notice from the Indenture Trustee or the Owner Trustee
(including by mail, courier, telex, or telecopy thereof from the Indenture
Trustee or the Owner Trustee addressed to the Manufacturer's Vice President
Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, WA 98124 if by mail; 1901
Oakesdale Ave. S.W., M/C 21-34, Renton, WA 98055, if by courier; 425-237-1706 if
by telecopy and 32-9430 (answerback BOEINGREN), if by telex) 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 (i) such rights and powers of the "Buyer" under the Purchase
Agreement and (ii) such rights as Assignee may have with respect to the Aircraft
under any warranty, covenant, representation, service life policy, aircraft
performance guarantee, indemnity or product support agreement of the
Manufacturer or any subcontractor or vendor with respect thereto and, subject to
paragraph 3(c) hereof, to retain any recovery or benefit resulting from the
enforcement of any warranty, covenant, representation, service life policy,
aircraft performance guarantee, indemnity, or product support agreement of the
Manufacturer or any subcontractor or vendor under the Purchase Agreement in
respect of 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
-2-
<PAGE>
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 permitted 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 permitted assigns and at Assignor's
expense, cooperate with and take such action as reasonably necessary to enable
Assignee and its successors and permitted 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 Purchase Agreement in
respect of 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
under the Purchase Agreement with respect to the Aircraft, including, without
limitation, in respect of refunds thereunder or resulting from the enforcement
of any warranty, service life policy, aircraft performance guarantee or
indemnity or product support agreement thereunder or the enforcement or exercise
of any right or power under the Purchase Agreement or hereunder (a "Manufacturer
Payment") (excluding, however, from the Manufacturer Payments any amounts the
Manufacturer is obligated to pay to Assignor with respect to the rights reserved
to Assignor in clauses (i) through (v) of paragraph 1 hereof, which shall at all
times be paid to Assignor), 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 all Events 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 Assignee
that the Trust Indenture is no longer in effect in accordance with its terms and
all amounts due and payable under the Secured Certificates have been paid in
full) Assignee. Any amounts received by Assignee pursuant to the immediately
preceding sentence shall, to the extent not theretofore applied in satisfaction
of sums owing to Assignee in accordance with the terms of the Lease, be returned
to Assignor promptly after all Events of Default under the Lease have been cured
or waived.
-3-
<PAGE>
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have knowledge of an Event of Default under the Lease or of the
discontinuance or waiver of an Event of Default unless and until the
Manufacturer shall have received written notice thereof from the Owner Trustee
or the Indenture Trustee (including by mail, courier, telex, or telecopy thereof
from the Indenture Trustee or the Owner Trustee addressed to the Manufacturer's
Vice President - Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, WA 98124
if by mail; 1901 Oakesdale Ave. S.W., M/C 21-34, Renton, WA 98055, if by
courier; 425-237-1706 if by telecopy and 32-9430 (answerback BOEINGREN), if by
telex) 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 Aircraft or other things delivered or
to be delivered pursuant to the Purchase Agreement, the terms and conditions of
the Purchase Agreement (including, without limitation, the warranty disclaimer
and indemnity provisions in the product assurance and customer support
documents, Exhibits B and C, respectively, to the Purchase Agreement) shall
apply to, and be binding upon, Assignee to the same extent as Assignor. Assignee
hereby confirms that it shall be deemed for all purposes to have read and be
familiar with the Purchase Agreement (insofar as it relates to the Aircraft) and
to understand thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any respect the Manufacturer's contract rights
thereunder, except as provided in the Consent and Agreement attached hereto.
-4-
<PAGE>
(d) The parties hereto 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.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Purchase Agreement in respect of the Aircraft without the
prior written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
-5-
<PAGE>
10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. All terms not defined herein, which are used herein
in capitalized form and which are defined in the Lease, shall when used herein
have the meanings specified or referred to 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:______________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Not in its individual capacity
but solely as Owner Trustee,
as Assignee
By:______________________________________
Name:
Title:
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, including
paragraph 4(b), and of the Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
Not in its individual capacity
but solely as Indenture Trustee
By:______________________________________
Name:
Title:
-7-
================================================================================
TRUST AGREEMENT
[NW 1999 _]
Dated as of [____________]
between
[---------------------------------------],
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One Boeing 747-451
Aircraft
================================================================================
<PAGE>
TRUST AGREEMENT
[NW 1999 _]
This TRUST AGREEMENT [NW 1999 _] dated as of [_______________]
between [____________________________________], a [_______________] (the
"Original Owner Participant"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a
national banking association (in its individual capacity, "FSB") and otherwise
not in its individual capacity but solely as trustee hereunder (herein in such
capacity with its permitted successors and assigns called the "Owner Trustee");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein shall have the respective meanings assigned thereto in the
Lease (as hereinafter defined) for all purposes hereof. All definitions
contained in this Section 1.01 shall be equally applicable to both the singular
and plural forms of the terms defined. For all purposes of this Trust Agreement
the following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the
Trust Indenture.
"Indenture Event of Default" has the meaning which the term "Event
of Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1999 _], to be dated
as of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
<PAGE>
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant,
the percentage of its undivided beneficial interest in the Trust Estate created
by this Trust Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such term in
the Lease.
"Replacement Airframe" has the meaning ascribed to such term in the
Trust Indenture.
"Replacement Engine" has the meaning ascribed to such term in the
Trust Indenture.
"Subsequent Owner Participant" means any corporation to which the
Original Owner Participant or any transferee from the Original Owner Participant
or any Subsequent Owner Participant shall have transferred at any time after the
Delivery Date all of the undivided right, title and interest originally held by
the Original Owner Participant in this Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.01 of this Trust
Agreement and Section 8 of the Participation Agreement, provided that any such
transfer: (i) shall be effected by a written agreement, in form and substance
reasonably satisfactory to the Owner Trustee in its individual capacity, among
such transferee, its transferor and the Owner Trustee, which shall provide that
such transferee thereby becomes a party to, and beneficiary of, this Trust
Agreement and an Owner Participant for all purposes hereof and that such
transferee assumes all of the obligations of its transferor under this Trust
Agreement; and (ii) so long as the Lease shall be in effect or any Secured
Certificates remain unpaid, such transferee and its transferor shall have
complied with all of the terms of Section 8(n) of the Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the
Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the
Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the
FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of the Owner Trustee, for its
own account or in its individual capacity, the Owner Participant, the Loan
Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its
individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in
the Trust Indenture.
-2-
<PAGE>
"Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. Authority to Execute Documents. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and deliver the
Operative Documents and any other agreements, instruments or documents to which
the Owner Trustee is a party in the respective forms thereof in which delivered
from time to time by the Owner Participant to the Owner Trustee for execution
and delivery and, subject to the terms hereof, to perform its duties and, upon
instructions from the Owner Participant, exercise its rights under said
Operative Documents in accordance with the terms thereof.
SECTION 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participant, subject, however, to the
provisions of and the Lien created by the Trust Indenture and to the provisions
of the Lease and the Participation Agreement.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. Acceptance of Aircraft. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees
for the benefit of the Owner Participant that it will, on the Delivery Date,
subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
-3-
<PAGE>
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering the
Aircraft;
(d) execute and deliver the Trust Supplement covering the Aircraft;
(e) issue to the Loan Participants Secured Certificates in the
amounts and otherwise as provided in Section 1(a) of the Participation
Agreement;
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party;
(g) effect the registration of the Aircraft in the name of the Owner
Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of
Sale; (ii) an application for registration of the Aircraft in the name of
the Owner Trustee (including without limitation an affidavit from the
Owner Trustee in compliance with the provisions of 14 C.F.R. ss.
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement; and
(h) execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the
directions of the Owner Participant as the Owner Participant may deem
necessary or advisable in connection with the transactions contemplated
hereby.
SECTION 3.02. Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule II of the Participation Agreement
available to the Owner Trustee, in immediately available funds, in
accordance with Section 1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the Original Owner Participant
and the Owner Trustee.
SECTION 3.03. Authorization in Respect of a Termination of the Lease
and Assumption of the Secured Certificates. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified to
be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and
upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in
accordance with the provisions of such Section 8(x).
-4-
<PAGE>
SECTION 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, in the event of a Replacement Airframe and Replacement
Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a
Replacement Engine being substituted pursuant to Section 10(b) of the Lease,
subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease,
as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees of Lessee) to accept
delivery of the Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement Airframe
and Replacement Engines, if any, or the Replacement Engine a bill of sale
or bills of sale (if tendered), and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 10(a) or (b) of the
Lease;
(c) in the case of a Replacement Airframe, make application to the
Federal Aviation Administration for the registration in the name of the
Owner Trustee of the Aircraft of which such Replacement Airframe is a
part;
(d) execute and deliver a Lease Supplement and a Trust Supplement
covering (i) the Aircraft of which such Replacement Airframe is part or
(ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that 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
-5-
<PAGE>
relating to such replaced Airframe or Engine or engine shall be applicable to
such Replacement Airframe or Replacement Engine with the same force and effect
as if such Replacement Airframe or Replacement Engine were the same airframe or
engine as the Airframe or Engine being replaced but for the Event of Loss with
respect to such Airframe or Engine.
SECTION 3.06. Authorization in Respect of a Return of an Engine. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such engine
contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to an Engine to Lessee as contemplated by such Section 5(b);
and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement and 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
-6-
<PAGE>
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the balance,
if any, shall be paid to the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be
distributed by the Owner Trustee to the Owner Participant in accordance with the
provisions of Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
SECTION 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to 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
-7-
<PAGE>
(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.
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.
-8-
<PAGE>
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 extent not
inconsistent with the provisions of the Trust Indenture) as expressly provided
by the terms hereof or in written instructions from the Owner Participant
received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or
obligations shall be read into this Trust Agreement against the Owner Trustee.
FSB agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof) promptly take such action as may be necessary
to duly discharge and satisfy in full all Lessor Liens which it is required to
discharge pursuant to Section 8(h) of the Participation Agreement and otherwise
comply with the terms of said Section binding on it.
SECTION 5.05. Satisfaction of Conditions Precedent. Anything herein
to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
SECTION 5.06. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
-9-
<PAGE>
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, (d)
for liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease
or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any
Tax based on or measured by any fees, commissions or compensation received by it
for acting as trustee in connection with any of the transactions contemplated by
the Operative Documents.
SECTION 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and the
last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSB shall
have any duty (i) to see to any recording or filing of any Operative Document or
of any supplement to any thereof or to see to the maintenance of any such
recording or filing or any other filing of reports with the Federal Aviation
Administration or other governmental agencies, except that FSB, in its
individual capacity, shall comply with the reporting requirements set forth in
14 C.F.R. 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, (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
-10-
<PAGE>
HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE
OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY
WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSB in its individual
capacity warrants that on the Delivery Date the Owner Trustee shall have
received whatever title was conveyed to it by Lessee and that the Aircraft shall
during the Term be free of Lessor Liens attributable to it, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any Operative Document to which the Owner Trustee is a
party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof except to the extent that any such statement
is expressly made herein or therein as a representation by FSB in its individual
capacity or by the Owner Trustee and except that FSB in its individual capacity
hereby represents and warrants that this Trust Agreement has been, and (assuming
due authorization, execution and delivery by the Original Owner Participant of
this Trust Agreement) the Operative Documents to which it or the Owner Trustee
is a party have been (or at the time of execution and delivery of any such
instrument by it or the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself or the
Owner Trustee, as the case may be.
SECTION 6.04. No Segregation of Monies Required; No Interest. Except
as provided in Section 22 of the Lease, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and the Owner Trustee shall not be liable for any interest thereon.
SECTION 6.05. Reliance Upon Certificates, Counsel and Agents. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant or
Lessee mentioned herein or in any of the Operative Documents to which the Owner
Trustee is a party shall be sufficiently evidenced by written instruments signed
by a person purporting to be the chairman of the board, the president, any
executive vice president, any senior vice president or any vice president or a
managing director and in the name of the Owner Participant or Lessee, as the
case may be. The Owner Trustee may accept a copy of a resolution of the Board of
Directors or Executive Committee of Lessee, certified by the secretary or any
assistant secretary of Lessee as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice
-11-
<PAGE>
president or a managing director of Lessee, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon. In the
administration of trusts hereunder, the Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons and the Owner Trustee shall not be
liable for the negligence of any such agent, attorney, counsel, accountant or
other skilled person appointed by it with due care hereunder.
SECTION 6.06. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons, other
than the Owner Participant, as provided herein, having any claim against the
Owner Trustee by reason of the transactions contemplated hereby shall look only
to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. Fees; Compensation. Except as provided in Section 5.03
or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Owner Participant or (subject to the provisions of the Trust Indenture) the
Trust Estate for any fee as compensation for its services hereunder; provided,
however, that the Owner Trustee shall have a lien upon the Trust Estate
(subject, however, to the lien of the Trust Indenture) for any such fee not paid
by Lessee as contemplated by the last 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
-12-
<PAGE>
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 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
-13-
<PAGE>
Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. Transfer of Interests. All provisions of Section 8(n)
of the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. Resignation of Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to the 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,
-14-
<PAGE>
upon the written request of such successor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to such successor
Owner Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to
such successor Owner Trustee all monies or other property then held by such
predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment
of any successor Owner Trustee hereunder, the predecessor Owner Trustee will
execute such documents as are provided to it by such successor Owner Trustee and
will take such further actions as are requested of it by such successor Owner
Trustee as are reasonably required to cause registration of the Aircraft
included in the Trust Estate to be transferred upon the records of the Federal
Aviation Administration, or other governmental authority having jurisdiction,
into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without
further act.
SECTION 9.02. Co-Trustees and Separate Trustees. If at any time it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which all or any part of the Trust Estate is located, or the Owner Trustee
being advised by counsel shall determine that it is so necessary or prudent in
the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee
shall have been directed to do so by the Owner Participant, the Owner Trustee
and the Owner Participant shall execute and deliver an agreement supplemental
hereto and all other instruments and agreements necessary or proper to
constitute another bank or trust company or one or more persons (any and all of
which shall be a Citizen of the United States without making use of a voting
trust, voting powers agreement or similar arrangement) approved by the Owner
Trustee and the Owner Participant, either to act as co-trustee, jointly with the
Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or
separate trustee being herein sometimes referred to as an "additional trustee").
In the event an Indenture 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.
-15-
<PAGE>
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee unless such additional trustee was
appointed by the Owner Trustee without the concurrence of the Owner
Participant during the occurrence of an Indenture Event of Default not
arising from a Lease Event of Default, in which case the Owner Trustee
shall have the power to remove any such additional trustee without the
concurrence of the Owner Participant; and the Owner Participant hereby
appoints the Owner Trustee its 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.
-16-
<PAGE>
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Owner Participant. Subject to Section 10.02 hereof and the first sentence of
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other modification of this Trust Agreement or of any
other Operative Document to which the Owner Trustee is a party which it is
requested to execute by the Owner Participant, except that the Owner Trustee
shall not execute any such amendment, supplement or other modification which, by
the express provisions of any of the above documents, requires the consent of
any other party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A
signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each
holder of a Secured Certificate.
SECTION 10.02. Discretion as to Execution of Documents. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the 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.
-17-
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest execution
of this Trust Agreement by any party hereto, but if this Trust Agreement and the
trusts created hereby shall be or become authorized under applicable law to be
valid for a period commencing on the 21st anniversary of the death of such last
survivor (or, without limiting the generality of the foregoing, if legislation
shall become effective providing for the validity of this Trust Agreement and
the trusts created hereby for a period in gross exceeding the period for which
this Trust Agreement and the trusts created hereby are hereinabove stated to
extend and be valid), then this Trust Agreement and the trust created hereby
shall not terminate under this subsection (b) but shall extend to and continue
in effect, but only if such nontermination and extension shall then be valid
under applicable law, until the day preceding such date as the same shall, under
applicable law, cease to be valid; otherwise this Trust Agreement and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
SECTION 11.02. Owner Participant Has No Legal Title in Trust Estate.
The Owner Participant shall not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 8(n) of the Participation Agreement incorporated
in Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing
-18-
<PAGE>
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 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.
-19-
<PAGE>
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.
-20-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[______________________________________]
By: ___________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
By: ___________________________________
Name:
Title:
-21-
================================================================================
GUARANTEE
[NW 1999 _]
Dated as of [______________]
from
NORTHWEST AIRLINES CORPORATION
One Boeing 747-451 Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee................................................................1
2. No Implied Third Party Beneficiaries.....................................4
3. Waiver; No Set-off; Reinstatement; Subrogation...........................4
4. Amendments, Etc..........................................................4
5. Payments.................................................................4
6. Assignment of Guarantee..................................................5
7. Jurisdictional Matters...................................................5
8. Integration; Counterparts; Successors and Assigns; Headings..............5
9. Notices..................................................................6
10. No Waivers...............................................................6
11. Survival.................................................................6
12. Severability.............................................................6
13. Governing Law............................................................6
14. Enforcement Expenses.....................................................6
15. Termination..............................................................7
16. No Guarantee of Secured Certificates.....................................7
<PAGE>
GUARANTEE
[NW 1999 _]
This GUARANTEE [NW 1999 _], dated as of [______________] (as
amended, modified or supplemented from time to time, this "Guarantee"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "Guarantor"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns, the "Parties", and, individually, a "Party").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the
"Lessee"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter
into a Lease Agreement [NW 1999 _], 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) Boeing 747-451 aircraft,
together with four (4) Pratt & Whitney Model PW4056 engines (such aircraft and
engines, and any substitute Airframe and Engines under the Lease, being
collectively referred to herein as the "Aircraft"), pursuant to a Participation
Agreement [NW 1999 _], dated as of the date hereof (as amended, modified or
supplemented from time to time, the "Participation Agreement"), among the
Lessee, the Parties and certain other entities; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the Lessor will assign by way of collateral security
certain of its right, title and interest in and to this Guarantee to the
Indenture Trustee, pursuant to a Trust Indenture and Security Agreement [NW
1999_], dated as of the date hereof, between the Lessor and the Indenture
Trustee (as amended, modified or supplemented from time to time, the "Trust
Indenture"), as security for the obligations of the Lessor referred to therein;
and
WHEREAS, the capitalized terms used herein that are not defined
herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into the
Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Guarantee.
(a) The Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Lease, the Participation Agreement and the other
Operative Documents and the transactions and the other documents contemplated
thereby, and does
<PAGE>
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 any
other Operative Document 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 any other Operative Document to which the Lessee is a
party in any such proceeding) within 10 Business Days after the date on which
such Nonfinancial Obligation is required to be performed (for avoidance of
doubt, to include any applicable grace period), the Guarantor shall cause such
Nonfinancial Obligation to be performed within 10 Business Days following the
receipt of notice from any Party (such notice to be sent to the Lessee (to the
extent such Party is not stayed or prevented from doing so by operation of law)
and the Guarantor) stating that such Nonfinancial Obligation was not performed
when so required and that any applicable grace period has expired.
(b) The obligations of the Guarantor hereunder shall not be, to the
fullest extent permitted by law, affected by: the genuineness, validity,
regularity or enforceability (or lack thereof) of any of the Lessee's
obligations under the Lease or any other Operative Document to which the Lessee
is a party, any amendment, waiver or other modification of the Lease or such
other Operative Document (except that any such amendment or other modification
shall be given effect in determining the obligations of the Guarantor
hereunder), or by any substitution, release or exchange of collateral for or
other guaranty of any of the Obligations (except to the extent that such
substitution, release or exchange is undertaken in accordance with the terms of
the Operative Documents) without the consent of the Guarantor,
-2-
<PAGE>
or by any priority or preference to which any other obligations of the Lessee
may be entitled over the Lessee's obligations under the Lease and the other
Operative Documents to which the Lessee is a party, or by any other circumstance
that might otherwise constitute a legal or equitable defense to or discharge of
the obligations of a surety or guarantor including, without limitation, any
defense arising out of any laws of the United States of America or any State
thereof which would excuse, discharge, exempt, modify or delay the due or
punctual payment and performance of the obligations of the Guarantor hereunder.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not, to the fullest extent
permitted by law, affect the liability of the Guarantor hereunder: (a) the
extension of the time for or waiver of, at any time or from time to time,
without notice to the Guarantor, the Lessee's performance of or compliance with
any of its obligations under the Operative Documents (except that such extension
or waiver shall be given effect in determining the obligations of the Guarantor
hereunder), (b) any assignment, transfer, sublease or other arrangement by which
the Lessee transfers possession or loses control of the use of the Aircraft, (c)
any defect in the title, condition, design, operation or fitness for use of, or
damage to or loss or destruction of, the Aircraft, whether or not due to the
fault of the Lessee, (d) any merger or consolidation of the Lessee or the
Guarantor into or with any other Person, or any sale, transfer, lease or
disposal of any of its assets or (e) any change in the ownership of any shares
of capital stock of the Lessee.
(c) This Guarantee is an absolute, present and continuing guaranty
of payment and performance and not of collectability and is in no way
conditional or contingent upon any attempt to collect from the Lessee any unpaid
amounts due or otherwise to enforce performance by the Lessee. The Guarantor
specifically agrees, to the fullest extent permitted by law, that it shall not
be necessary or required, and that the Guarantor shall not be entitled to
require, that any Party (i) file suit or proceed to obtain or assert a claim for
personal judgment against the Lessee for the Obligations, or (ii) make any
effort at collection of the Obligations from the Lessee, or (iii) foreclose
against or seek to realize upon any security now or hereafter existing for the
Obligations, including the Trust Estate or the Trust Indenture Estate, 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
-3-
<PAGE>
Lessee under the Lease had such remedies been able to be exercised. The
Guarantor hereby unconditionally waives, to the fullest extent permitted by law,
any requirement that, as a condition precedent to the enforcement of the
obligations of the Guarantor hereunder, the Lessee or all or any one or more of
any other guarantors of any of the Obligations be joined as parties to any
proceedings for the enforcement of any provision of this Guarantee.
2. No Implied Third Party Beneficiaries. This Guarantee shall not be
deemed to create any right in any Person except a Party and shall not be
construed in any respect to be a contract in whole or in part for the benefit of
any other Person.
3. Waiver; No Set-off; Reinstatement; Subrogation. The Guarantor
waives notice of the acceptance of this Guarantee and of the performance or
nonperformance by the Lessee, demand for payment from the Lessee or any other
Person, notice of nonpayment or failure to perform on the part of the Lessee,
diligence, presentment, protest, dishonor and, to the fullest extent permitted
by law, all other demands or notices whatsoever, other than the request for
payment hereunder and notice provided for in Section 1 hereof. The obligations
of the Guarantor shall be absolute and unconditional and shall remain in full
force and effect until satisfaction of all Obligations hereunder and, without
limiting the generality of the foregoing, to the extent not prohibited by
applicable law, shall not be released, discharged or otherwise affected by the
existence of any claims, set-off, defense or other rights that the Guarantor may
have at any time and from time to time against any Party, whether in connection
herewith or any unrelated transactions. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any Financial Obligation is rescinded or must otherwise be returned by any Party
upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding with respect to the Lessee
or otherwise, all as though such payment had not been made. The Guarantor, by
virtue of any payment or performance hereunder to a Party, shall be subrogated
to such Party's claim against the Lessee or any other Person relating thereto;
provided, however, that the Guarantor shall not be entitled to receive payment
from the Lessee in respect of any claim against the Lessee arising from a
payment by the Guarantor 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
-4-
<PAGE>
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 not be enforced in
or by such courts. The Guarantor hereby generally consents to service of process
at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of the Guarantor in New York City
as from time to time may be designated by the Guarantor in writing to the
Parties.
8. Integration; Counterparts; Successors and Assigns; Headings. This
Guarantee (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the Guarantor and
the Parties, with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, and (c) shall be
binding upon the successors and assigns of the Guarantor and shall inure to the
benefit of, and shall be enforceable by, each of the Parties to the fullest
extent permitted by applicable laws. The headings in this Guarantee are for
purposes of reference only, and shall not limit or otherwise affect the meanings
hereof.
-5-
<PAGE>
9. Notices. All requests, notices or other communications hereunder
shall be in writing, addressed as follows:
If to the Guarantor:
to the address or telecopy number set forth in the
Participation Agreement
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
10. No Waivers. No failure on the part of any Party to exercise, no
delay in exercising, and no course of dealing with respect to, any right or
remedy hereunder will operate as a waiver thereof; nor will any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise of such right or remedy or the exercise of any other right or remedy.
11. Survival. All representations and warranties contained herein or
made in writing by the Guarantor in connection herewith shall survive the
execution and delivery of this Guarantee regardless of any investigation made by
any Party or any other Person.
12. Severability. To the fullest extent permitted by applicable law,
any provision of this Guarantee that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or any provision in any other Operative Document, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND
THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
14. Enforcement Expenses. The Guarantor agrees to pay to any Party
any and all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
-6-
<PAGE>
15. Termination. Subject to the provisions of Section 3 hereof, this
Guarantee shall terminate upon the indefeasible payment and performance in full
of all of the Obligations.
16. No Guarantee of Secured Certificates. This Guarantee relates
only to the Obligations described in Section 1 and nothing in this Guarantee
shall be deemed to constitute a guarantee of payment of any of the Secured
Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:______________________________________
Name:
Title:
Accepted as of the above date:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
in its individual capacity
and as Owner Trustee
By:____________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:____________________________
Name:
Title:
-8-
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW 1999 _]
PARTIES
First Security Bank, National Association,
in its individual capacity and as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
[Owner Participant]
================================================================================
PARTICIPATION AGREEMENT
[NW 1999 _]
Dated as of
[----------------]
Among
NORTHWEST AIRLINES, INC.,
Owner,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee under each of
the Pass Through Trust Agreements,
STATE STREET BANK AND TRUST COMPANY,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
---------------------
One Boeing 747-451 Aircraft
N[_____]
================================================================================
<PAGE>
INDEX TO PARTICIPATION AGREEMENT
Page
SECTION 1. Purchase of Secured Certificates by Pass Through Trustees..........2
SECTION 2. Owner's Notice of Closing Date.....................................3
SECTION 3. [Intentionally Omitted]............................................3
SECTION 4. Conditions.........................................................3
(a) Conditions Precedent to Purchase of Secured Certificates......3
(b) Conditions Precedent to the Obligations of the Owner and
the Guarantor.................................................8
SECTION 5. [Intentionally Omitted]............................................9
SECTION 6. Extent of Interest of Certificate Holders.........................10
SECTION 7. Representations and Warranties of the Owner and the Guarantor;
Indemnities.......................................................10
(a) Representations and Warranties...............................10
(b) General Tax Indemnity........................................13
(c) General Indemnity............................................13
(d) Income Tax...................................................13
SECTION 8. Representations, Warranties and Covenants.........................13
SECTION 9. Reliance of Liquidity Provider....................................22
SECTION 10. Other Documents...................................................23
SECTION 11. Certain Covenants of the Owner....................................23
SECTION 12. [Intentionally Omitted]...........................................23
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.............23
SECTION 14. [Intentionally Omitted]...........................................24
SECTION 15. Miscellaneous.....................................................24
SECTION 16. Sale/leaseback Transaction........................................25
(i)
<PAGE>
SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B-1 - Form of Opinion of Simpson Thacher & Bartlett, special counsel
for the Owner and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special counsel
for the Owner and the Guarantor
Exhibit B-3 - Form of Opinion of the Owner's Legal Department
Exhibit C - Form of Opinion of in-house counsel for the Manufacturer
Exhibit D - [Intentionally Omitted]
Exhibit E-1 - [Intentionally Omitted]
Exhibit E-2 - [Intentionally Omitted]
Exhibit F - Form of Opinion of Crowe & Dunlevy, P.C.
Exhibit G - Form of Opinion of Bingham Dana LLP, special counsel for the
Indenture Trustee
Exhibit H-1 - [Intentionally Omitted]
Exhibit H-2 - [Intentionally Omitted]
Exhibit I - Form of ss.1110 Opinion of Cadwalader, Wickersham & Taft, special
counsel for the Owner
Exhibit J-1 - Form of Opinion of Bingham Dana LLP, special counsel for the Pass
Through Trustee
Exhibit J-2 - Form of Opinion of Bingham Dana LLP, special counsel for the
Subordination Agent
(ii)
<PAGE>
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
(iii)
<PAGE>
PARTICIPATION AGREEMENT
[NW 1999 _]
THIS PARTICIPATION AGREEMENT [NW 1999 _] dated as of
[_______________], among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Owner"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the
"Guarantor"), (iii) STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity except as otherwise provided herein, but solely as trustee (in such
capacity, the "Pass Through Trustee") under each of [three] separate Pass
Through Trust Agreements (as defined below), (iv) STATE STREET BANK AND TRUST
COMPANY, 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 (v) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, in its individual capacity and as Indenture Trustee
under the Trust Indenture (as hereinafter defined) (herein, in such latter
capacity together with any successor indenture trustee, called the "Indenture
Trustee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement between the Owner and
the Manufacturer, the Manufacturer has agreed to sell to the Owner, among other
things, certain Boeing 747-451 aircraft, including the Aircraft which has been
[or is being] delivered by the Manufacturer to the Owner and is the subject of
this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Manufacturer has executed the Consent and Agreement [NW 1999
_](herein called the "Consent and Agreement");
WHEREAS, the Indenture Trustee and the Owner concurrently with the
execution and delivery of this Agreement are entering into the Trust Indenture
and Security Agreement [NW 1999 _], dated as of the date hereof (said Trust
Indenture and Security Agreement, as the same may be amended or supplemented
from time to time, being herein called the "Trust Indenture", such term to
include, unless the context otherwise requires, the Trust Indenture Supplement
referred to below) pursuant to which the Owner will issue secured certificates
substantially in the form set forth in Section 2.01 thereof (the "Secured
Certificates", and individually, a "Secured Certificate") in [three] series,
which Secured Certificates are to be secured by the mortgage and security
interests created by the Owner in favor of the Indenture Trustee, and the Owner
shall execute and deliver a Trust Indenture Supplement substantially in the form
of Exhibit A to the Trust Indenture (the "Trust Indenture Supplement") covering
the Aircraft, supplementing the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW 1999 _], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of the Owner under the Operative Documents (the "Guarantee");
<PAGE>
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 Issuance Date
[three] separate trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") were created to facilitate the
transactions contemplated hereby, including, without limitation, the issuance
and sale by each Pass Through Trust of pass through certificates pursuant
thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
on the Closing Date to purchase from the Owner, 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 Issuance Date (i) Citibank, N.A. (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 February 16, 1999 (the "Intercreditor
Agreement");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated
hereby, the Owner and the Guarantor have entered into the Underwriting
Agreement, dated as of February 4, 1999, among the Owner, the Guarantor and the
several underwriters named therein (the "Underwriting Agreement"); and
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Purchase of Secured Certificates by Pass Through
Trustees. (a) Purchase of Secured Certificates by Pass Through Trustees. Subject
to the terms and conditions of this Agreement, the Pass Through Trustee for each
Pass Through Trust agrees to purchase the Secured Certificates set forth on
Schedule II opposite the name of such Pass Through Trust by paying to the Owner
the aggregate purchase price of the Secured Certificates being issued to such
Pass Through Trustee as set forth on Schedule II opposite the name of such Pass
Through Trust. The Pass Through Trustees shall make such payments to the Owner
on a date to be designated pursuant to Section 2 hereof, but in no event later
than [__________], by transferring to the account of the Owner at USBank,
Minneapolis, ABA No. 091-000-022, Account No. 1502-5009-9440, Reference:
Northwest/NW 1999 _, not later than 9:30 a.m., New York City time, on the
Closing Date in immediately available funds in
-2-
<PAGE>
Dollars, the amount set forth opposite the name of such Pass Through Trust on
Schedule II hereto.
Upon the occurrence of the above transfers by the Pass Through
Trustee for each Pass Through Trust to the Owner, the Owner shall issue,
pursuant to Article II of the Trust Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass Through Trusts, Secured
Certificates of the maturity and aggregate principal amount, bearing the
interest rate and for the purchase price set forth on Schedule II hereto
opposite the name of such Pass Through Trust.
(b) [Intentionally Omitted].
(c) General Provisions. The amount of the payment of each Pass
Through Trustee to be made as provided above is hereinafter called such party's
"Commitment" for the Aircraft.
SECTION 2. Owner's Notice of Closing Date. The Owner agrees to give
the Pass Through Trustee and the Indenture Trustee at least two Business Days'
telecopy or other written notice of the Closing Date, which Closing Date shall
be a Business Day, which notice shall specify the amount of each Pass Through
Trustee's Commitment for the Aircraft. As to each Pass Through Trustee, 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. [Intentionally Omitted].
SECTION 4. Conditions. (a) Conditions Precedent to Purchase of
Secured Certificates. It is agreed that the obligations of each Pass Through
Trustee to purchase Secured Certificates and to make available the amount of its
Commitment is subject to the satisfaction prior to or on the Closing Date of the
following conditions precedent:
(i) The Pass Through Trustee 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 make its Commitment available
in accordance with Section 1 hereof.
(iii) [Intentionally Omitted].
(iv) [Intentionally Omitted].
(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
-3-
<PAGE>
and substance to the Pass Through Trustee and shall be in full force and
effect and executed counterparts shall have been delivered to the Pass
Through Trustee or its counsel, provided that only the Subordination Agent
on behalf of each Pass Through Trustee shall receive an executed original
of such Pass Through Trustee's respective Secured Certificate and
provided, further, that an excerpted copy of the Purchase Agreement shall
only be delivered to and retained by the Indenture Trustee, which copy may
be inspected and reviewed by the Indenture Trustee if and only if there
shall occur and be continuing an Event of Default:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft);
(2) the Trust Indenture;
(3) the Trust Indenture Supplement covering the Aircraft dated
the Closing Date;
(4) the Secured Certificates;
(5) the Consent and Agreement; and
(6) the Guarantee
All of the foregoing documents, together with this Agreement, are
sometimes referred to herein, collectively, as the "Operative Documents"
and, individually, as an "Operative Document".
In addition, the Pass Through Trustee 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 Pass Through
Trusts.
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture that are not covered by the recording system
established by the Federal Aviation Act, shall have been executed and
delivered by the Owner, and such financing statement or statements shall
have been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing statements deemed advisable
by the Pass Through Trustee shall have been executed and delivered by the
Owner and duly filed.
(vii) The Pass Through Trustee shall have received the following:
-4-
<PAGE>
(A)(1) an incumbency certificate of the Owner and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Pass Through
Trust Agreements, the Guarantee and any other documents to be
executed on behalf of the Owner or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Owner
and the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Owner or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Owner
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Owner and certified by the Secretary
of State of the State of Delaware in the case of the Guarantor, a
copy of the by-laws of the Owner and the Guarantor, certified by the
Secretary or Assistant Secretary of the Owner and the Guarantor (as
the case may be), and a certificate or other evidence from the
Secretary of State of the State of Minnesota in the case of the
Owner 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
Closing Date, as to the due incorporation and good standing of the
Owner or the Guarantor (as the case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, the Pass Through Trust Agreements
and any other documents to be executed on behalf of the Indenture
Trustee in connection with the transactions contemplated hereby and
the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture Trustee, duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Closing Date, certifying that the
representations and
-5-
<PAGE>
warranties contained herein of the Indenture Trustee are correct as
though made on and as of the Closing Date, except to the extent that
such representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(viii) All appropriate action required to have been taken prior to
the Closing Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of
the United States, and all orders, permits, waivers, authorizations,
exemptions and approvals of such entities required to be in effect on the
Closing Date in connection with the transactions contemplated by this
Agreement shall have been issued, and all such orders, permits, waivers,
authorizations, exemptions and approvals shall be in full force and effect
on the Closing Date.
(ix) On the Closing Date the Pass Through Trustee shall have
received a certificate signed by an authorized officer of the Owner (and
with respect to the matters set forth in clause (4) 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, and the Owner has good title to the Aircraft free and
clear of Liens other than Permitted Liens;
(2) the Trust Indenture and the Trust Indenture 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;
(3) application for registration of the Aircraft in the name
of the Owner has been duly made with the Federal Aviation
Administration; and
(4) the representations and warranties contained herein of the
Owner and the Guarantor are correct as though made on and as of the
Closing Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(x) The Owner and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements.
(xi) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee and the Indenture Trustee, and reasonably
satisfactory as to scope and substance to the Pass Through Trustee, an
opinion substantially in the form of Exhibit
-6-
<PAGE>
B-1 hereto from Simpson Thacher & Bartlett, special counsel for the Owner
and the Guarantor, an opinion substantially in the form of Exhibit B-2
hereto from Cadwalader, Wickersham & Taft, special counsel for the Owner
and the Guarantor, and an opinion substantially in the form of Exhibit B-3
hereto from the Owner's legal department.
(xii) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Guarantor and the Owner
and reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Guarantor and the Owner, an opinion substantially in the form
of Exhibit C hereto from in-house counsel to the Manufacturer, with
respect to the Manufacturer Documents.
(xiii) [Intentionally Omitted].
(xiv) [Intentionally Omitted].
(xv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Guarantor and the Owner,
and reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Guarantor and the Owner, an opinion substantially in the form
of Exhibit F hereto from Crowe & Dunlevy, P.C.
(xvi) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Guarantor and the Owner, and reasonably
satisfactory as to scope and substance to the Pass Through Trustee, the
Guarantor and the Owner, an opinion substantially in the form of Exhibit G
hereto from Bingham Dana LLP, special counsel for the Indenture Trustee.
(xvii) [Intentionally Omitted].
(xviii) The Pass Through Trustee shall have received an independent
insurance broker's report, in form and substance satisfactory to the Pass
Through Trustee, as to the due compliance with the terms of Section 7.04
of the Trust Indenture relating to insurance with respect to the Aircraft.
(xix) [Intentionally Omitted].
(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 Closing Date
to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(xxi) [Intentionally Omitted].
(xxii) [Intentionally Omitted].
-7-
<PAGE>
(xxiii) The Pass Through Trustee shall have received a favorable
opinion substantially in the form of Exhibit I hereto addressed to the
Pass Through Trustee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, from Cadwalader, Wickersham & Taft,
special counsel for the Owner, which opinion shall state (with customary
assumptions and qualifications) that the Indenture Trustee would be
entitled to the benefits of 11 U.S.C. ss.1110 with respect to the
Aircraft.
(xxiv) [Intentionally Omitted].
(xxv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Guarantor and the Owner,
and reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Guarantor and the Owner, an opinion substantially in the form
of Exhibit J-2 hereto from Bingham Dana LLP, special counsel to the
Subordination Agent.
Promptly upon the recording of the Trust Indenture and the Trust
Indenture Supplement covering the Aircraft pursuant to the Federal Aviation Act,
the Owner will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Indenture Trustee and the
Owner an opinion as to the due and valid registration of the Aircraft in the
name of the Owner, the due recording of the Trust Indenture and such Trust
Indenture Supplement and the lack of filing of any intervening documents with
respect to the Aircraft.
(b) Conditions Precedent to the Obligations of the Owner and the
Guarantor. It is agreed that the obligations of the Owner and the Guarantor to
enter into the other Operative Documents are all subject to the fulfillment to
the satisfaction of the Owner and the Guarantor prior to or on the Closing Date
of the following conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Closing Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be
in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, exemptions, authorizations and approvals shall
be in full force and effect on the Closing Date.
(ii) The condition specified in Section 4(a)(ii) hereof shall have
been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than the Owner and the Guarantor) in the manner specified
in Section 4(a)(v), shall each be satisfactory in form and substance to
the Owner and the Guarantor, shall be in full force and effect on the
Closing Date, and an executed counterpart of each thereof
-8-
<PAGE>
(other than the Secured Certificates) shall have been delivered to the
Owner or its special counsel and the Guarantor or its special counsel.
(iv) The Owner and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) a certificate signed by an
authorized officer of the Pass Through Trustee, dated the Closing Date,
certifying that the representations and warranties contained herein of the
Pass Through Trustee are correct as though made on and as of the Closing
Date, except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), and (C) such other
documents and evidence with respect to the Pass Through Trustee as the
Owner 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) The Owner and the Guarantor shall have received (A) an opinion
substantially in the form of Exhibit J-1 hereto addressed to the Guarantor
and the Owner of Bingham Dana LLP, special counsel for the Pass Through
Trustee, and reasonably satisfactory as to scope and substance to the
Guarantor and the Owner, and (B) the opinions set forth in Sections
4(a)(xii), 4(a)(xv), 4(a)(xvi) and 4(a)(xxv) in each case addressed to the
Owner and the Guarantor and dated the Closing Date and in each case in
scope and substance reasonably satisfactory to the Owner 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 Closing Date
to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for the
Owner or the Guarantor to enter into any transaction contemplated by the
Operative Documents.
(viii) [Intentionally Omitted].
(ix) The Owner shall have been paid by the Pass Through Trustee for
each Pass Through Trust the aggregate purchase price set forth on Schedule
II opposite the name of such Pass Through Trust.
SECTION 5. [Intentionally Omitted].
-9-
<PAGE>
SECTION 6. Extent of Interest of Certificate Holders. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full.
SECTION 7. Representations and Warranties of the Owner and the
Guarantor; Indemnities. (a) Representations and Warranties. The Owner and the
Guarantor represent and warrant to the Pass Through Trustee, the Indenture
Trustee, the Liquidity Provider and the Subordination Agent that as of the
Closing Date:
(i) each of the Owner and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to own
or hold under lease its properties, has, or had on the respective dates of
execution thereof, the corporate power and authority to enter into and
perform its obligations under (i) in the case of the Owner, the Owner
Documents, the Pass Through Trust Agreements, the Underwriting Agreement
and the other Operative Documents to which it is a party and (ii) in the
case of the Guarantor, this Agreement, the Pass Through Trust Agreements,
the Underwriting Agreement and the other Operative Documents to which it
is a party, and is duly qualified to do business as a foreign corporation
in each state in which its operations or the nature of its business
requires other than failures to so qualify which would not have a material
adverse effect on the condition (financial or otherwise), consolidated
business or properties of it and its subsidiaries considered as one
enterprise;
(ii) The Owner 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 the Owner or the Guarantor (as
the case may be) of the Owner Documents, the Pass Through Trust
Agreements, the Underwriting Agreement and each other Operative Document
to which the Owner or the Guarantor (as the case may be) is a party, and
the performance of the obligations of the Owner or the Guarantor (as the
case may be) under the Owner Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which the
Owner or the Guarantor (as the case may be) is a party, have been duly
authorized by all necessary corporate action on the part of the Owner or
the Guarantor, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or material
obligations of the Owner or the Guarantor, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on the Owner or the
Guarantor (as the case may be) or the certificate of incorporation or
by-laws of the Owner 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
-10-
<PAGE>
than Permitted Liens) upon the property of the Owner or the Guarantor (as
the case may be) under, any indenture, mortgage, contract or other
agreement to which the Owner 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 the Owner or the
Guarantor (as the case may be) of the Owner Documents, the Pass Through
Trust Agreements, the Underwriting Agreement or any other Operative
Document to which the Owner or the Guarantor (as the case may be) is a
party, nor the performance of the obligations of the Owner or the
Guarantor (as the case may be) under the Owner Documents, the Pass Through
Trust Agreements, the Underwriting Agreement or the other Operative
Documents to which the Owner 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 the Owner 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 the Owner or any Lessee required to be obtained on or prior to
the Closing Date, which orders, permits, waivers, exemptions,
authorizations and approvals have been duly obtained and are, or on the
Closing 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
Closing Date, taken or caused to be taken by the Owner), (D) the
registration of the Aircraft referred to in Section 4(a)(ix)(3), (E) the
registrations and filings referred to in Section 7(a)(vi), and (F)
authorizations, consents, approvals, actions, notices and filings required
to be obtained, taken, given or made either only after the date hereof or
the failure of which to obtain, take, give or make would not be reasonably
likely to have a material adverse effect on the condition (financial or
otherwise), business or properties of the Guarantor and its subsidiaries
considered as one enterprise;
(v) this Agreement, each of the other the Owner Documents, the Pass
Through Trust Agreements and the Guarantee constitute the legal, valid and
binding obligations of the Owner or the Guarantor (as the case may be)
enforceable against the Owner 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 Trust Indenture, as
-11-
<PAGE>
limited by applicable laws which may affect the remedies provided in the
Trust Indenture, which laws, however, do not make the remedies provided in
the Trust Indenture inadequate for practical realization of the benefits
intended to be afforded thereby;
(vi) except for (A) the filing for recording pursuant to the Federal
Aviation Act of a bill of sale on AC form 8050-2 (or such other form as
may be approved by the FAA) relating to the Aircraft from the Manufacturer
to the Owner, (B) the registration of the Aircraft pursuant to the Federal
Aviation Act, (C) the filing for recording pursuant to the Federal
Aviation Act of the Trust Indenture and the Trust Indenture Supplement
covering the Aircraft attached thereto and made a part thereof, (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 such other
states as may be specified in the opinions furnished pursuant to Section
4(a)(xi) hereof, and (E) the taking of possession by the Indenture Trustee
of the original counterparts of the Trust Indenture and the Trust
Indenture 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 security interest in favor of
the Indenture Trustee in the Aircraft as against the Owner and any third
parties in any applicable jurisdiction in the United States;
(vii) neither the Owner, 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 the Owner 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) the Owner is solvent and has no intention or belief that it is
about to incur debts beyond its ability to pay as they mature;
(xii) none of the proceeds from the issuance of the Secured
Certificates will be used directly or indirectly by the Owner to purchase
or carry any "margin security" as such term is defined in Regulation U of
the Board of Governors of the Federal Reserve System; and
-12-
<PAGE>
(xiii) On the Closing Date, all sales or use tax then due and for
which the Owner is responsible pursuant to Section 7(b)(i) hereof shall
have been paid, other than such taxes which are being contested by the
Owner 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 K, 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 L, 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. For purposes of this Section 7, the term "Income
Tax" means any Tax based on or measured by gross or net income or receipts
(other than sales, use, license or property Taxes or Taxes in the nature
thereof) (including, without limitation, capital gains taxes, minimum taxes,
income taxes collected by withholding and taxes on tax preference items), and
Taxes which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
SECTION 8. Representations, Warranties and Covenants.
(a) [Intentionally Omitted].
(b) [Intentionally Omitted].
(c) [Intentionally Omitted].
(d) [Intentionally Omitted].
(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 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 Indenture Trustee agrees that the Owner may elect to effect
a change in registration of the Aircraft, at the Owner's cost and expense, so
long as (a) the country of registry of the Aircraft is a country listed on
Exhibit A hereto 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 Closing Date; and (ii) the Indenture Trustee
shall have received a favorable opinion (subject to customary exceptions)
addressed to the Indenture Trustee, from counsel of recognized reputation
qualified in the laws of the relevant jurisdiction to the effect that:
-13-
<PAGE>
(A) the Owner's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of the
Owner, and the rights and remedies of the Indenture Trustee, under the
Trust Indenture 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's right, title and interest in and to the Aircraft
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 Indenture
Trustee shall have received a certificate from the Owner 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 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 Indenture Trustee (or any Affiliate thereof) for 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 Indenture Trustee,
such opinion shall be waived if insurance reasonably satisfactory to the
Indenture Trustee is provided to cover such risk), and (F) (unless the
Owner shall have agreed to provide insurance covering the risk of
requisition of use of such Aircraft by the government of such jurisdiction
so long as such Aircraft is registered under the laws of such
jurisdiction) the laws of such jurisdiction require fair compensation by
the government of such jurisdiction payable in currency freely convertible
into Dollars for the loss of use of such Aircraft in the event of the
requisition by such government of such use.
In addition, as a condition precedent to any such change in registration, the
Owner shall furnish to the Indenture Trustee an Officer's Certificate to the
effect that the insurance required by Section 7.04 of the Trust Indenture 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. The Owner shall pay all costs, expenses, fees, recording and
registration taxes, including the reasonable fees and expenses of counsel to the
Indenture Trustee, and other charges in connection with any such change in
registration.
(g) Each Loan Participant and each of the Indenture Trustee, the
Subordination Agent and each Pass Through Trustee covenants and agrees that, so
long as no Event of Default shall have occurred and be continuing and the Owner
has not been duly
-14-
<PAGE>
declared in default and, notwithstanding default by any Loan Participant, the
Indenture Trustee, any Pass Through Trustee or the Subordination Agent, that
such Person shall not (and shall not permit any Affiliate or other Person
claiming by, through or under it to) interfere with the Owner's continued
possession, use and operation of, and quiet enjoyment of, the Aircraft.
(h) [Intentionally Omitted].
(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 Collateral 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 Collateral or
the Operative Documents other than a transfer of the Aircraft pursuant to
Article IV of the Trust Indenture 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 to be issued to it pursuant to the Trust Indenture is being acquired
by it for investment and not with a view to resale or distribution (it being
understood that such Loan Participant may pledge or assign as security its
interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its control,
except that the Loan Participants may sell, transfer or otherwise dispose of any
Secured Certificate or any portion thereof, or grant participations therein, in
a manner which in itself does not require registration under the Securities Act
of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) make (and hereby agree to
make), with respect to the Collateral, the election provided for in Section
1111(b)(2) of Title 11 of the United States Code.
(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to the Owner, the Guarantor, the Pass
Through Trustee, the Subordination Agent and the Liquidity Provider 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
-15-
<PAGE>
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 9.01 of the Trust Indenture promptly after
it obtains actual knowledge that it has ceased to be such a Citizen of the
United States (without making use of a voting trust, voting powers
agreement or similar arrangement), and has the full corporate power,
authority and legal right under the laws of the Commonwealth of
Massachusetts and the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this Agreement, the Trust
Indenture and each other Operative Document to which it is a party and to
carry out its obligations under this Agreement, the Trust Indenture, each
other Operative Document to which it is a party and to authenticate the
Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly
authorized by the Indenture Trustee and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound;
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in equity;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity or
as Indenture Trustee as the case may be, to perform its obligations under
the Operative Documents to which it is a party; and
(v) there are no Indenture Trustee's Liens on the Aircraft or any
other portion of the Collateral.
(n) [Intentionally Omitted].
(o) [Intentionally Omitted].
(p) State Street Bank and Trust Company, in its individual capacity,
agrees for the benefit of the Owner to comply with the terms of the Trust
Indenture which it is required to comply with in its individual capacity.
-16-
<PAGE>
(q) Each Loan Participant agrees that it will not transfer any
Secured Certificate (or any part thereof) 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 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 non-exempt prohibited transaction (under Section 4975 of the Code and Section
406 of ERISA).
(r) Each Loan Participant and the Indenture Trustee agrees for the
benefit of the Manufacturer and the Owner that it will not disclose or suffer to
be disclosed the terms of the Purchase Agreement to any third party except (A)
as may be required by any applicable statute, court or administrative order or
decree or governmental ruling or regulation or to any regulatory authorities
having official jurisdiction over them, (B) in connection with the financing of
the Aircraft and the other transactions contemplated by the Operative Documents
(including any transfer of Secured Certificates (including by way of
participation or assignment of an interest, provided such participant or
assignee agrees to hold such terms confidential to the same extent as herein
provided) and any exercise of remedies under the Trust Indenture), (C) with the
prior written consent of the Manufacturer and the Owner, or (D) to the Indenture
Trustee's and each Loan Participant's counsel or special counsel, independent
insurance brokers or other agents who agree to hold such information
confidential.
(s) [Intentionally Omitted].
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Collateral. 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 Owner for any damages or
expenses of the Owner 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 Collateral. 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 Owner for any actual diminution of
the assets of the Collateral resulting from such Indenture Trustee's Liens.
(v) [Intentionally Omitted].
(w) [Intentionally Omitted].
(x) [Intentionally Omitted].
-17-
<PAGE>
(y) (A) The Owner 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 the
Owner is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Owner as an entirety shall be
a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into which the
Owner is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of the Owner as an entirety shall
execute and deliver to the Indenture Trustee an agreement in form and
substance reasonably satisfactory to the Indenture Trustee containing an
assumption by such successor corporation or Person of the due and punctual
performance and observance of each covenant and condition of this
Agreement, the Trust Indenture and the Secured Certificates to be
performed or observed by the Owner;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Trust Indenture shall have occurred
and be continuing; and
(iv) The Owner shall have delivered to the Indenture Trustee a
certificate signed by the President, any Executive Vice President, any
Senior Vice President, the Treasurer or any Vice President and by the
Secretary or an Assistant Secretary of the Owner, and an opinion of
counsel reasonably satisfactory to the Indenture Trustee, 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 the Owner 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 the Owner 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, the Owner
under this Agreement with the same effect as if such successor corporation or
Person had been named as the Owner herein. No such conveyance, transfer or lease
of substantially all of the assets of the Owner as an entirety shall have the
effect of releasing the Owner 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) The Owner shall at all times maintain its corporate
existence except as permitted by subparagraph (A) of this Section 8(y).
(z) The Owner, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Trust Indenture, the Trust
-18-
<PAGE>
Indenture Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture is in effect, the
perfection of the security interests created by the Trust Indenture or will
furnish to 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 it to take such action. The Owner will notify 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) [Intentionally Omitted].
(bb) [Intentionally Omitted].
(cc) 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 the Owner) to make the representations contemplated to be
made by a Loan Participant in this Agreement and to be bound by the terms of
this Agreement and the Trust Indenture (including, without limitation, the
representations and covenants set forth in Sections 8(e), 8(k), 8(l), 8(q), and
8(t) hereof and this Section 8(cc) and Section 2.03 of the Trust Indenture).
(dd) The Pass Through Trustee represents and warrants to the Owner,
the Guarantor, the Indenture Trustee, the Subordination Agent and the Liquidity
Provider, in its capacity as such and in its individual capacity, as follows:
(i) the Pass Through Trustee is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each of the
Pass Through Trust Agreements, the Intercreditor Agreement and this
Agreement and to perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement and this Agreement;
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Pass Through Trustee
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or
-19-
<PAGE>
this Agreement, the purchase by the Pass Through Trustee of the Secured
Certificates pursuant to this Agreement, or the issuance of the
Certificates pursuant to the Pass Through Trust Agreements, contravenes
any law, rule or regulation of the Commonwealth of Massachusetts or any
United States governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Pass Through Trustee and does not
contravene or result in any breach of, or constitute a default under, the
Pass Through Trustee's articles of association or by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or by which it
or any of its properties may be bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement
or this Agreement, nor the consummation by the Pass Through Trustee of any
of the transactions contemplated hereby or thereby, requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Massachusetts governmental
authority or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Pass Through Trustee imposed
by the Commonwealth of Massachusetts or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by the Pass Through Trustee
imposed by the Commonwealth of Massachusetts or any political subdivision
thereof in connection with the acquisition, possession or ownership by the
Pass Through Trustee of any of the Secured Certificates (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and, assuming that the trusts created by the Pass Through
Trust Agreements will not be taxable as corporations, but rather, each
will be characterized as a grantor trust under subpart E, Part I, of
Subchapter J of the Code, such trusts will not be subject to any Taxes
imposed by the Commonwealth of Massachusetts or any political subdivision
thereof;
(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, the Pass
Through Trustee has not directly or indirectly offered any Secured
Certificate for sale to any
-20-
<PAGE>
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 any Underwriter,
the Owner or the Guarantor.
(ee) The Subordination Agent represents and warrants to the Owner,
the Guarantor, the Indenture Trustee, the Pass Through Trustee and the Liquidity
Provider in its capacity as such and in its individual capacity, as follows:
(i) the Subordination Agent is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each of the
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
Commonwealth of Massachusetts or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or fiduciary
powers or any judgment or order applicable to or binding on the
Subordination Agent and do not contravene or result in any breach of, or
constitute a default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties may
be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any Massachusetts
-21-
<PAGE>
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 Commonwealth of Massachusetts 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 Commonwealth of Massachusetts or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Secured Certificates
(other than franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly offered
any Secured Certificate for sale to any Person or solicited any offer to
acquire any Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Secured Certificate for sale to any Person, or
to solicit any offer to acquire any Secured Certificate from any Person;
and the Subordination Agent is not in default under any Liquidity
Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with any Underwriter,
the Owner or the Guarantor.
SECTION 9. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. The Owner 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.
-22-
<PAGE>
SECTION 10. Other Documents. The Indenture Trustee agrees to
promptly furnish to the Owner copies of any supplement, amendment or waiver or
modification of any of the Operative Documents to which the Owner is not a
party. Each Loan Participant agrees that it will not take any action in respect
of the Collateral except through the Indenture Trustee pursuant to the Trust
Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. Certain Covenants of the Owner. The Owner covenants and
agrees with each of the Loan Participants and the Indenture Trustee:
(a) The Owner will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Indenture Trustee shall reasonably require for accomplishing the purposes of
this Agreement and the other Operative Documents; provided that any instrument
or other document so executed by the Owner will not expand any obligations or
limit any rights of the Owner in respect of the transactions contemplated by any
Operative Documents.
(b) The Owner will cause 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 Trust Indenture, the Trust Indenture and the Trust Indenture
Supplement covering the Aircraft shall be filed for recording with the Federal
Aviation Administration.
SECTION 12. [Intentionally Omitted].
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings attributed thereto in the Annex A to
the Trust Indenture. Unless the context otherwise requires, any reference herein
to any of the Operative Documents refers to such document as it may be amended
from time to time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 13(b). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) as follows: (A) if to the Owner, the Guarantor, the Pass Through
Trustee, the Subordination Agent or the Indenture Trustee, to the respective
addresses set forth below the signatures of such parties at the foot of this
Agreement, or (B) 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.
-23-
<PAGE>
(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 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 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. The Owner 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 Owner in New York City as from time to time may be designated by
the Owner in writing to the Indenture Trustee.
SECTION 14. [Intentionally Omitted].
SECTION 15. Miscellaneous.
(a) [Intentionally Omitted].
(b) The representations, warranties, indemnities and agreements of
the Owner, the Guarantor, the Indenture Trustee, the Subordination Agent and the
Pass Through Trustee provided for in this Agreement, and the Owner's, the
Guarantor's, the Indenture Trustee's, the Subordination Agent's and the Pass
Through Trustee's obligations under any and all thereof, shall survive the
making available of the Commitments by each Pass Through Trustee, the transfer
of any interest by any Loan Participant in any Secured Certificate or the
Collateral 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.
The terms of this Agreement shall be binding upon, and inure to the benefit of,
the Owner 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, each Certificate Holder and its successors and
registered assigns and the Indenture Trustee and its successors as Indenture
-24-
<PAGE>
Trustee under the Trust Indenture. The terms of this Agreement shall inure to
the benefit of the Liquidity Provider, its successors and permitted assigns.
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW
YORK.
(d) [Intentionally Omitted].
(e) It is the intention of the parties hereto that the Indenture
Trustee will be entitled to the benefits of 11 U.S.C. ss. 1110 in the event of
any reorganization of the Owner under Chapter 11 of the Bankruptcy Code.
SECTION 16. Sale/leaseback Transaction. Notwithstanding anything to
the contrary contained herein or any other Operative Document, upon not less
than __ days prior written notice to the parties hereto, the Owner shall have
the right to sell the Aircraft and transfer title to the Aircraft to an owner
trustee for the benefit of an owner participant (which shall be a "Transferee"
(as defined in the form of Leased Aircraft Participation Agreement (as such term
is defined in the Note Purchase Agreement)) in a transaction in which such owner
trustee assumes all of the obligations of the Owner under the Secured
Certificates and the Trust Indenture on a non-recourse basis (with the Owner
being released from such obligations, except to the extent accrued prior
thereto), leases the Aircraft to the Owner and assigns such lease to the
Indenture Trustee pursuant to an amended and restated trust indenture. In
connection with such a transaction, each of the parties hereto and each
Certificate Holder will execute and deliver appropriate documentation permitting
the owner trustee to assume the obligations of the Owner under the Secured
Certificates and the Trust Indenture on a non-recourse basis, releasing the
Owner from all obligations in respect of the Secured Certificates and the Trust
Indenture (except to the extent accrued prior thereto), and take all other
actions as are reasonably necessary to permit such assumption by the owner
trustee. In connection with any such transaction, the parties agree that (a) the
documents to be utilized shall be (i) an amended and restated participation
agreement [NW 1999 __] amending and restating the Participation Agreement, such
amended and restated participation agreement to be substantially in the form of
the Leased Aircraft Participation Agreement (as such term is defined in the Note
Purchase Agreement), among the parties hereto, any Certificate Holder which is
not a party hereto and the owner trustee and owner participant, with (x) such
changes to such form to reflect the assumption of the Secured Certificates by
the owner trustee on a non-recourse basis rather than the issuance thereof by
the owner trustee and purchase thereof by the Purchasers and also to reflect the
release of the Owner from all obligations under the Secured Certificates and the
Trust Indenture (except to the extent accrued prior thereto) and (y) such other
changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the revision of the Leased Aircraft Participation Agreement in
connection with a leveraged lease transaction, (ii) a lease agreement [NW 1999
__], such lease agreement to be substantially in the form of the Lease (as such
term is defined in the Note Purchase Agreement), between the Owner and the owner
trustee with such changes as may be permitted in accordance with the provisions
of the Note Purchase Agreement applicable to the revision of the Lease in
-25-
<PAGE>
connection with a leveraged lease transaction, (iii) an amended and restated
trust indenture [NW 1999 __] amending and restating the Trust Indenture, such
amended and restated trust indenture to be substantially in the form of the
Leased Aircraft Indenture (as such term is defined in the Note Purchase
Agreement), between the owner trustee and the Indenture Trustee, with (x) such
changes to such form to reflect the assumption of all of the obligations of the
Owner under the Secured Certificates and the Trust Indenture on a non-recourse
basis and a release of the Contract Rights from the Granting Clause of the Trust
Indenture and (y) such other changes as may be permitted in accordance with the
Note Purchase Agreement applicable to the revision of the Leased Aircraft
Indenture in connection with a leveraged lease transaction, a (iv) purchase
agreement assignment [NW 1999 ___], such purchase agreement assignment to be
substantially in the form of the Aircraft Purchase Agreement Assignment (as such
term is defined in the Note Purchase Agreement) between the Owner and the owner
trustee with such changes as may be permitted in accordance with the provisions
of the Note Purchase Agreement applicable to the Aircraft Purchase Agreement
Assignment in connection with a leveraged lease transaction, (v) a trust
agreement [NW 1999 __], such trust agreement to be substantially in the form of
the Leased Aircraft Trust Agreement (as such term is defined in the Note
Purchase Agreement), between the owner trustee and the owner participant with
such changes as may be permitted in accordance with the provisions of the Note
Purchase Agreement applicable to the Leased Aircraft Trust Agreement in
connection with a leveraged lease transaction, and (vi) an amended and restated
guarantee [NW 1999 __] amending and restating the Guarantee, such amended and
restated guarantee to be substantially in the form of the Leased Aircraft
Guarantee (as such term is defined in the Note Purchase Agreement) with such
changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the Leased Aircraft Guarantee in connection with a leveraged lease
transaction and (b) the Secured Certificates shall be delivered to the Indenture
Trustee for cancellation in exchange for new secured certificates to be issued
to the Certificate Holders by the owner trustee, such new secured certificate to
be substantially in the form contained in Section 2.01 of the Leased Aircraft
Indenture (as such term is defined in the Note Purchase Agreement).
Notwithstanding the foregoing, the Owner shall not have the right to sell the
Aircraft and transfer title to the Aircraft to an owner trustee for the benefit
of the owner participant in a transaction in which such owner trustee assumes
all of the obligations of the Owner under the Secured Certificates and the Trust
Indenture on a non-recourse basis (with the Owner being released from such
obligations), leases the Aircraft to the Owner and assigns such lease to the
Indenture Trustee in a transaction such as that described above unless the Owner
causes to be delivered to the Indenture Trustee an opinion of counsel to the
effect that the Certificate Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such assumption and release and will
be subject to Federal income tax in the same amounts, in the same manner and at
the same time as would have been the case if such assumption and release had not
occurred and that the Pass Through Trusts will not be subject to Federal income
taxation as a result of such assumption and release.
-26-
<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.,
Owner
By:
-------------------------------------
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Treasurer
Telecopy No.: (612) 726-0665
NORTHWEST AIRLINES CORPORATION,
Guarantor
By:
-------------------------------------
Name:
Title:
Address: U.S. Mail
5101 Northwest Drive (A4010)
St. Paul, Minnesota 55111-3034
Overnight Courier
2700 Lone Oak Parkway (A4010)
Eagan, Minnesota 55121
Attn: Treasurer
Telecopy No.: (612) 726-0665
- Signature Page -
<PAGE>
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By:
-------------------------------------
Name:
Title:
Address: Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
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:
-------------------------------------
Name:
Title:
Address: Two International Plaza
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
- Signature Page -
<PAGE>
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent,
Subordination Agent
By:
-------------------------------------
Name:
Title:
Address: 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
Owner: 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: Treasurer
Telecopy No.: (612) 726-0665
Wire Transfer
USBank, Minneapolis
ABA No. 091000022
Acct. No. 150250099440
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. 011-000-028
for credit to State Street Bank and Trust Company
Acct. No. 9903-990-1
Attn: Corporate Trust Department
Reference: Northwest/NW 1999 _
Loan Participant: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
<PAGE>
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
Subordination Agent: State Street Bank and Trust Company
Two International Place
4th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Telecopy No.: (617) 664-5371
<PAGE>
SCHEDULE II
Commitments
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------- --------------
Northwest Airlines
Pass Through Trust
1999-1A 6.81% Series A Secured $[___________]
Certificates due [___________]
1999-1B 7.36% Series B Secured $[___________]
Certificates due [___________]
1999-1C 8.13% Series C Secured $[___________]
Certificates due [___________]
<PAGE>
SCHEDULE III
Pass Through Trust Agreements
1. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1A, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1B, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1C, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1999 _]
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 Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
- --------------------------
* 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 Closing Date.
<PAGE>
Exhibit B-1 to Participation Agreement
[Form of Opinion of Simpson Thatcher & Bartlett
special counsel for the Owner and the Guarantor]
___________, 1999
The Persons Listed on
Annex A hereto
Ladies and Gentlemen:
We have acted as counsel to Northwest Airlines Corporation, a
Delaware corporation ("NWA Corp."), and Northwest Airlines, Inc., a Minnesota
corporation (the "Company"), in connection with the issuance and sale of (i)
$235,505,000 aggregate principal amount of 6.81% Pass Through Trust
Certificates, Series 1999-1A (the "Class A Certificates"), (ii) $111,555,000
aggregate principal amount of 7.36% Pass Through Trust Certificates, Series
1999-1B (the "Class B Certificates") and (iii) $74,140,000 aggregate principal
amount of 8.13% Pass Through Trust Certificates, Series 1999-1C (the "Class C
Certificates" and, together with the Class A Certificates and the Class B
Certificates, the "Certificates") pursuant to the Underwriting Agreement, dated
as of February 4, 1999 (the "Underwriting Agreement"), by and among Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, ABN AMRO
Incorporated, Chase Securities Inc. and Salomon Smith Barney Inc., as
underwriters, and the Company and NWA Corp. Capitalized terms used herein unless
otherwise defined herein have the respective meanings given them in the
Underwriting Agreement.
<PAGE>
The Persons Listed on Annex A hereto ________ __, 1999
In connection with this opinion we have examined the following:
(i) the Pass Through Trust Agreement dated as of June 3, 1996 by and
among Northwest Airlines Holdings Corporation (formerly known as Northwest
Airlines Corporation, "Holdings"), the Company and State Street Bank and
Trust Company ("State Street"), as trustee (the "Trustee"), as amended by
the Supplemental Agreement, dated as of November 20, 1998, among the
Company, NWA Corp., Holdings and the Trustee (the "Basic Agreement");
(ii) the Trust Supplement No. 1999-1A, dated as of February 16,
1999, to the Basic Agreement, by and among NWA Corp., the Company,
Holdings and the Trustee (the Basic Agreement as so supplemented, the
"1999-1A Pass Through Trust Agreement"); the Trust Supplement No. 1999-1B,
dated as of February 16, 1999, to the Basic Agreement, by and among NWA
Corp., the Company, Holdings and the Trustee (the Basic Agreement as so
supplemented, the "1999-1B Pass Through Trust Agreement"); and the Trust
Supplement No. 1999-1C, dated as of February 16, 1999, to the Basic
Agreement, by and among NWA Corp., the Company, Holdings and the Trustee
(the Basic Agreement as so supplemented, the "1999-1C Pass Through Trust
Agreement" and, together with the 1999-1A Pass Through Trust Agreement and
the 1999-1B Pass Through Trust Agreement, the "Pass Through Trust
Agreements"; the Pass Through Trust Agreement related to a Certificate
being referred to as the "Applicable Pass Through Trust Agreement");
(iii) the Intercreditor Agreement dated as of February 16, 1999 (the
"Intercreditor Agreement"), by and among the Trustee, Citibank, N.A. (the
"Liquidity Provider"), and State Street Bank and Trust Company, not in its
individual capacity, except as set forth therein, but solely as
subordination agent (the "Subordination Agent");
(iv) the Revolving Credit Agreement, Class A Certificates, the
Irrevocable Revolving Credit Agreement, Class B Certificates and the
Irrevocable Revolving Credit Agreement, Class C Certificates
(collectively, the "Liquidity Facilities"), each dated as of February 16,
1999, by and between the Subordination Agent and the Liquidity Provider;
(v) the Indemnity Agreement, dated as of February 16, 1999, between
ABN AMRO Bank, N.Y., acting through its Chicago Branch, and the Company;
and
(vi) the form of each of the other agreements listed on Schedule I
to this opinion (such agreements being collectively referred to as the
"Operative Documents").
In addition, we have examined, and have relied as to matters of fact
upon, the documents delivered to you at the closing, and upon originals or
copies, certified or otherwise
-2-
<PAGE>
The Persons Listed on Annex A hereto ________ __, 1999
identified to our satisfaction, of such corporate records, agreements, documents
and other instruments and such certificates or comparable documents of public
officials and of officers and representatives of the Company and NWA Corp., and
have made such other and further investigations, as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth. Our opinion set
forth in paragraph 4 is based on oral advice from the staff of the Commission
that the Registration Statement has been declared effective under the Securities
Act.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Basic Agreement and each Pass Through Trust Agreement
have been duly authorized, executed and delivered by Holdings and NWA
Corp. and, assuming due authorization, execution and delivery thereof by
the Company and the Trustee, constitute valid and legally binding
obligations of NWA Corp., the Company, Holdings and the Trustee in
accordance with their terms.
2. The Basic Agreement has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
3. Assuming the Certificates have been duly authorized,
executed, authenticated and issued by the Trustee, upon payment and
delivery therefor in accordance with the Underwriting Agreement, the
Certificates will constitute valid and legally binding obligations of the
Trustee enforceable against the Trustee in accordance with their terms and
entitled to the benefits of the Applicable Pass Through Trust Agreement.
-3-
<PAGE>
The Persons Listed on Annex A hereto ________ __, 1999
4. No consent, approval, authorization, order, registration
or qualification of or with any Federal or New York governmental agency
or body or any Delaware governmental agency or body acting pursuant to
the Delaware General Corporation Law or, to our knowledge, any Federal
or New York court or any Delaware court acting pursuant to the Delaware
General Corporation Law is required for the valid authorization,
issuance and delivery of the Certificates, the valid authorization,
execution and delivery by the Company, Holdings or NWA Corp. of, and the
performance by the Company, Holdings and NWA Corp. of their respective
obligations under, the Basic Agreement, the Pass Through Trust
Agreements and the Underwriting Agreement, except such as have been
obtained and made under the Securities Act and the Trust Indenture Act
and such as may be required under state securities laws or the Federal
Aviation Act of 1958, as amended (the "Federal Aviation Act").
Our opinions set forth in paragraphs 1 and 3 above are subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law), an implied covenant of good faith and fair dealing and, in
the case of indemnification and contribution provisions therein, considerations
of public policy.
Our opinion is subject to the following additional qualifications:
(a) We express no opinion with respect to the creation, perfection
or priority of any security interest, mortgage, pledge or other lien
purported to be created by the Operative Documents.
(b) We express no opinion with respect to the enforceability of
provisions of the Operative Sale-Leaseback Documents providing for
default interest rates to the extent that such rates would be deemed to
be the imposition of a penalty.
(c) We express no opinion with respect to the rights of any party to
collect or enforce, any insurance maintained by the Company, any proceeds
thereof or payments or refunds of any premiums in respect thereof.
(d) We express no opinion with respect to matters governed by the
Federal Aviation Act and the rules and regulations promulgated thereunder.
-4-
<PAGE>
The Persons Listed on Annex A hereto _______ __, 1999
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the federal law of the United States and the Delaware General
Corporation Law.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
-5-
<PAGE>
Annex A
State Street Bank and Trust Company, as Pass Through Trustee and Indenture
Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
<PAGE>
Schedule 1
OPERATIVE DOCUMENTS
<PAGE>
Exhibit B-2 to Participation Agreement
[Form of Opinion of Cadwalader, Wickersham & Taft,
Special Counsel for the Owner and the Guarantor]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc. [NW 1999__]
Opinion of Special Counsel to the Owner and Guarantor
Gentlemen:
We have acted as special counsel for Northwest Airlines, Inc., a
Minnesota corporation (the "Owner") and Northwest Airlines Corporation, a
Delaware corporation ("Guarantor"), in connection with the transactions
contemplated by the Participation Agreement [NW 1999 __], dated as of
[___________ __, __] (the "Participation Agreement"), among the Owner,
Guarantor, State Street Bank and Trust Company, as Pass Through Trustee under
each of the Pass Through Trust Agreements referred to therein, State Street Bank
and Trust Company, as Subordination Agent, and State Street Bank and Trust
Company, as Indenture Trustee under the Indenture referred to therein.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in or by reference to the Participation Agreement,
unless the context otherwise requires. This opinion is delivered pursuant to
Section 4(a)(xi) of the Participation Agreement.
In rendering this opinion, we have examined, among other things,
executed counterparts of the Participation Agreement, the Trust Indenture, the
Trust Indenture Supplement, the Secured Certificates, the Consent and Agreement
and the Guarantee. As to any facts material to our opinions expressed herein, we
have, without independent investigation, relied upon the representations and
warranties contained in the Participation Agreement and the other Operative
Documents (including, without limitation, in Sections 7 and 8 of the
Participation Agreement) and upon originals or copies (certified or otherwise
identified to our satisfaction) of such corporate records, documents and other
instruments as, in our judgment, are necessary or appropriate to enable us to
render this opinion. We have assumed that all documents executed and delivered
by the Owner and Guarantor and referred to herein have been duly authorized,
executed and delivered pursuant to adequate corporate
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ____________ ___, ____
power and authority. We have also assumed that the Owner is an "air carrier"
within the meaning of the Federal Aviation Act. We have also assumed, and have
not independently verified, the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity with the originals
of all documents submitted to us as copies, and the accuracy of all factual
statements of parties made on or before the date hereof (and have relied thereon
as we have deemed appropriate).
Based upon and subject to the foregoing, and subject further to the
assumptions, limitations and qualifications set forth below, it is our opinion
that:
1. The execution, delivery and performance of the Participation
Agreement, the Secured Certificates, the Trust Indenture and the Trust Indenture
Supplement (collectively, the "Owner Documents") by the Owner do not contravene
any New York law, governmental rule or regulation applicable to or binding on
the Owner, and the execution, delivery and performance of the Guarantee by
Guarantor does not contravene any New York law, governmental rule or regulation
applicable to or binding on Guarantor.
2. Neither the execution and delivery by the Owner of any of the
Owner Documents or the execution and delivery by Guarantor of the Guarantee, nor
the performance by the Owner or Guarantor of their respective obligations
thereunder, requires the consent or approval of, or the giving of notice to, or
the registration with, or the taking of any other action in respect of, any New
York governmental authority, except for such consents, approvals, notices,
registrations and other actions required by the terms of the Operative Documents
after the Closing Date.
3. The Owner Documents constitute the legal, valid and binding
obligations of the Owner enforceable against the Owner in accordance with their
respective terms and the Guarantee constitutes the legal, valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its
terms, except as enforceability may be limited by (A) general principles of
equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of creditors or
lessors generally, (C) applicable laws which may affect the remedies provided in
the Trust Indenture, which laws, however, do not, in our opinion, make the
remedies provided in the Trust Indenture inadequate for the practical
realization of the benefits provided thereby, except that no opinion is
expressed as to the amount or priority of any recovery under any particular
circumstances, and (D) in the case of indemnity provisions contained in such
documents, public policy considerations.
4. Subject to the registration of the Aircraft with the Federal
Aviation Administration in the name of the Owner, and assuming the due and
timely filing or filing for recordation in accordance with the provisions of the
Federal Aviation Act of (A) a bill of sale on AC form 8050-2 (or such other form
as may be approved by the FAA) relating to the Aircraft from the Manufacturer to
the Owner, and (B) the Trust Indenture and the Trust Indenture Supplement
covering the Aircraft attached thereto and made a part thereof, with
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ____________ ___, ____
respect to such portion of the Aircraft as is covered by the recording system
established by the Federal Aviation Administration pursuant to Section 44107 of
Title 49 of the United States Code by virtue of the same constituting an
"aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no
further filing or recording of any document (including any financing statement
with respect to the Trust Indenture under Article 9 of the Uniform Commercial
Code of Minnesota) is necessary in any applicable jurisdiction within the United
States in order to create and perfect the Indenture Trustee' s security interest
in such portion of the Aircraft as against the Owner or any third parties. With
respect to such portion of the Aircraft, if any, as may not be deemed to
constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation
Act, except for the filing of financing statements in the appropriate filing
offices in the State of Minnesota (as to the filing of which we refer you to the
opinion of corporate counsel of the Owner, delivered to you on the date hereof)
and the filing of periodic continuation statements with respect to such filings,
as and when required, under the federal laws of the United States and the laws
of the State of New York, no filing or recording of any document (including any
financing statement) is necessary or advisable under Article 9 of the Uniform
Commercial Code in order to create or perfect the Indenture Trustee's security
interest in such portion of the Aircraft as against the Owner and any third
parties in any applicable jurisdiction within the United States.
In rendering the opinions expressed herein, we have relied
exclusively, and without independent investigation, on the opinion (being
furnished to you today) of Crowe & Dunlevy, P.C., referred to in Section
4(a)(xv) of the Participation Agreement, as to all matters stated in such
opinion (including the qualifications and exceptions therein).
In addition, in rendering our opinions expressed herein, we have
assumed that each agreement referred to herein constitutes the legal, valid and
binding obligation of each party thereto, other than the Owner and Guarantor,
enforceable against each such party in accordance with its terms. We have also
assumed that, except for the filings and recordations contemplated or referred
to herein, there are no filings or recordations with respect to the Aircraft,
the Trust Indenture or the Trust Indenture Supplement with the Federal Aviation
Administration, or of Uniform Commercial Code financing statements naming the
Owner as a debtor in the filing offices of the Secretary of State of the State
of Minnesota or in any other filing office in the State of Minnesota. We have
further assumed that each of the documents and Uniform Commercial Code financing
statements referred to in Paragraph 4 above to be recorded with the Federal
Aviation Administration or filed with the appropriate filing office in the State
of Minnesota was in due form for such recording or filing and that each of the
above-mentioned documents has been duly and timely recorded or filed, as the
case may be, under the Federal Aviation Act and under the laws of the State of
Minnesota. Except as expressly set forth in paragraph 4 above, we express no
opinion as to the right, title or interest in or to the Collateral on the part
of any Person. Moreover, the opinions expressed herein relating to the
enforceability of any agreement or instrument are subject to the further
qualification that no opinion is expressed as to the specific remedy or remedies
that any court, governmental authority, board of arbitration or arbitrator may
grant, impose or render under particular
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ____________ ___, ______
circumstances. In particular, no opinion is expressed concerning the
availability of equitable remedies, as such, for the enforcement of any
provision of any such agreement or instrument.
Finally, we call to your attention that, in connection with our
opinions expressed above, we do not purport to be experts with respect to, or
express any opinion concerning, aviation law or other laws, rules or regulations
applicable to the particular nature of the equipment acquired by the Owner, as
contemplated in the Operative Documents, and which may require the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action in respect of, any federal or state governmental authority in
connection with the operation or maintenance of such equipment on an ongoing
basis, in accordance with the Owner's or Guarantor's undertakings in the
Operative Documents. We are qualified to practice law in the State of New York,
and we do not purport to be experts on, or to express any opinion concerning,
any laws except the laws of the State of New York and the federal laws of the
United States. Further, we do not purport to give any opinion regarding the
securities laws in any jurisdiction or with respect to the Employee Retirement
Income Security Act of 1974, as amended. All references in this opinion to
federal laws are to the federal laws of the United States of America. We express
no opinions except as expressly set forth herein, and no opinion is implied or
may be inferred beyond the opinions expressly stated herein. We assume no
obligation to supplement the opinions expressed herein if any applicable laws
change after the date hereof or if we become aware of any facts that might
change such opinions after the date hereof.
This opinion is being delivered for your sole benefit, and no other
person or entity shall be entitled to rely upon this opinion without our express
written consent.
Very truly yours,
<PAGE>
SCHEDULE A
State Street Bank and Trust Company, as Pass Through Trustee
State Street Bank and Trust Company, as Indenture Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit B-3 to Participation Agreement
[Form of Opinion of Northwest]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc. [NW 1999 __]
Opinion of Counsel to the Owner and Guarantor
Gentlemen:
I act as legal counsel for Northwest Airlines, Inc., a Minnesota
corporation (the "Owner"), and Northwest Airlines Corporation, a Delaware
corporation ("Guarantor"), and in such capacity am familiar with the
transactions contemplated by the Participation Agreement [NW 1999 __], dated as
of [_______ __, ___] (the "Participation Agreement"), among the Owner,
Guarantor, State Street Bank and Trust Company, as Pass Through Trustee under
each of the Pass Through Trust Agreements referred to therein, State Street Bank
and Trust Company, as Subordination Agent, and State Street Bank and Trust
Company, as Indenture Trustee under the Indenture referred to therein.
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in or by reference to the Participation Agreement,
unless the context otherwise requires. This opinion is delivered pursuant to
Section 4(a)(xi) of the Participation Agreement.
In rendering this opinion, I, or lawyers under my direction, have
examined, among other things, executed counterparts of the Participation
Agreement, the Trust Indenture, the Trust Indenture Supplement, the Secured
Certificates, the Consent and Agreement and the Guarantee. As to any facts
material to my opinions expressed herein, I have relied upon the representations
and warranties contained in the Operative Documents (including, without
limitation, in Sections 7 and 8 of the Participation Agreement) and upon
originals or copies (certified or otherwise identified to my satisfaction) of
such corporate records, documents and other instruments as, in my judgment, are
necessary or appropriate to enable me to render this opinion. I have assumed,
and have not independently verified, the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity with
the originals of all documents submitted to me as copies, and the accuracy of
all factual statements of parties made on or before the date hereof (and have
relied thereon as I have deemed appropriate).
<PAGE>
To the Addressees listed
in Schedule A hereto
_____________ __, _____
Page 2
Based upon and subject to the foregoing, and subject further to the
assumptions, limitations and qualifications set forth below, it is my opinion
that:
1. The Owner is a corporation duly organized and validly existing
pursuant to the laws of the State of Minnesota, has the corporate power and
authority to carry on its business as now conducted and to enter into and
perform its obligations under the Participation Agreement, the Secured
Certificates, the Trust Indenture and the Trust Indenture Supplement
(collectively, the "Owner Documents"), and is duly qualified to transaction
business in each jurisdiction in which the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified would
not have a material adverse effect on the Owner and its subsidiaries, taken as a
whole. The Owner is a Certificated Air Carrier. Guarantor is a corporation duly
organized and validly existing pursuant to the laws of the State of Delaware and
has the corporate power and authority to enter into and perform its obligations
under the Guarantee.
2. The execution, delivery and performance of the Owner Documents by
the Owner and of the Guarantee by Guarantor have been duly authorized by all
necessary corporate action on the part of the Owner and Guarantor, as the case
may be, do not require any approval of stockholders of the Owner or Guarantor,
as the case may be, or, to my knowledge after due inquiry and investigation, any
approval or consent of any trustee of holders of any indebtedness or obligations
of the Owner or Guarantor, as the case may be (other than any such approval or
consent as has been obtained), and the execution and delivery of any thereof by
the Owner or Guarantor, as the case may be, nor the performance by the Owner or
Guarantor, as the case may be, of its obligations thereunder does not (A)
contravene any law, governmental rule or regulation or, to my knowledge after
due inquiry and investigation, judgment or order applicable to or binding on the
Owner or Guarantor, as the case may be, or (B) to my knowledge after due inquiry
and investigation, contravene or result in any breach of, or constitute any
default under or result in the creation of any Lien (other than Permitted Liens)
upon any property of the Owner or Guarantor, as the case may be, under, (i) the
Owner's or Guarantor's corporate charter or by-laws or (ii) any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement, or any other agreement or instrument, or permit issued by
any Minnesota or United States governmental authority to which the Owner or
Guarantor, as the case may be, is a party or by which the Owner or Guarantor, as
the case may be, or its properties may be bound or affected.
3. Neither the execution and delivery by the Owner of any of the
Owner Documents or by Guarantor of the Guarantee, nor the performance by the
Owner or Guarantor of their respective obligations thereunder, requires the
consent or approval of, or the giving of notice to, or the registration with, or
the taking of any other action in respect of, any federal or state governmental
authority in the United States, except for (A) the registration of the Aircraft
(including the placement on board of the owner's copy of the application for
<PAGE>
To the Addressees listed
in Schedule A hereto
___________ __, ____
Page 3
registration of the Aircraft and, if necessary, a flying time wire),
recordations, and other actions referred to in Paragraph 5 below, and (B) such
consents, approvals, notices, registrations and other actions required by the
terms of the Owner Documents or the Guarantee after the Closing Date.
4. The Guarantee has been duly entered into and delivered by
Guarantor, and each of the Owner Documents has been duly entered into and
delivered by the Owner.
5. Subject to the registration of the Aircraft with the Federal
Aviation Administration in the name of the Owner, and assuming the due and
timely filing for recordation in accordance with the provisions of the Federal
Aviation Act of (A) a bill of sale on AC form 8050-2 (or such other form as may
be approved by the FAA) relating to the Aircraft from the Manufacturer to the
Owner, and the Trust Indenture, with the Trust Indenture Supplement covering the
Aircraft attached thereto and made a part thereof, with respect to such portion
of the Aircraft as is covered by the recording system established by the Federal
Aviation Administration pursuant to Section 44107 of Title 49 of the United
States Code by virtue of the same constituting an "aircraft" or an "aircraft
engine" as defined in the Federal Aviation Act, no further filing or recording
of any document (including any financing statement with respect to the Trust
Indenture under Article 9 of the Uniform Commercial Code of Minnesota) is
necessary in any applicable jurisdiction within the United States in order to
create and perfect the Indenture Trustee's security interest in such portion of
the Aircraft as against the Owner or any third parties. With respect to such
portion of the Aircraft, if any, as may not be deemed to constitute an
"aircraft" or "aircraft engine," as defined in the Federal Aviation Act, except
for the filing of financing statements in the appropriate filing offices in the
State of Minnesota, which filing has been made, and the filing of periodic
continuation statements with respect to such filings, as and when required,
under Minnesota law no filing or recording of any document (including any
financing statement) is necessary under Article 9 of the Uniform Commercial Code
in order to create or perfect the Indenture Trustee's security interest in such
portion of the Aircraft as against the Owner and any third parties in any
applicable jurisdiction within the United States.
6. There are no legal or governmental proceedings pending or, to the
best of my knowledge, threatened to which the Owner or Guarantor or any of their
respective subsidiaries is a party or to which any of the properties of the
Owner or Guarantor or any of their respective subsidiaries is subject other than
those proceedings summarized in the Guarantor's publicly filed annual, quarterly
and other reports filed with the Securities and Exchange Commission, and
proceedings which I believe would not reasonably be expected to have a material
adverse effect on the Owner and its subsidiaries, taken as a whole, or on the
power or ability of the Owner to perform its obligations under the Owner
Documents.
In rendering the opinions expressed herein, I have relied
exclusively, and without independent investigation, on the opinion (being
furnished to you today) of Crowe &
<PAGE>
To the Addressees listed
in Schedule A hereto
___________ __, ____
Page 4
Dunlevy, P.C., referred to in Section 4(a)(xv) of the Participation Agreement,
as to all matters stated in such opinion, including the qualifications and
exceptions therein.
In addition, in rendering the opinions expressed herein, I have
assumed that each agreement referred to herein constitutes the legal, valid and
binding obligation of each party thereto, other than the Owner and Guarantor,
enforceable against each such party in accordance with its terms. I have also
assumed that, except for the filings and recordations contemplated or referred
to herein, there are no filings or recordations with respect to the Aircraft,
the Trust Indenture or the Trust Indenture Supplement with the Federal Aviation
Administration not shown on the indices of filed but unrecorded documents
maintained by the Federal Aviation Administration and made available to Crowe &
Dunlevy, P.C., for purposes of their aforesaid opinion, or of Uniform Commercial
Code financing statements naming the Owner as a debtor in the filing offices of
the Secretary of State of the State of Minnesota or in any other filing office
in the State of Minnesota. I have further assumed that each of the documents and
Uniform Commercial Code financing statements referred to in Paragraph 5 above to
be recorded with the Federal Aviation Administration or filed with the
appropriate filing office in the State of Minnesota was in due form for such
recording or filing and that each of such documents has been duly and timely
recorded or filed, as the case may be, under the Federal Aviation Act and under
the laws of the State of Minnesota.
I am qualified to practice law in the State of Minnesota, and I do
not purport to be an expert on, or to express any opinion concerning, any laws
except the laws of the State of Minnesota, the Delaware General Corporation Law
and the federal laws of the United States. Further, I do not purport to give any
opinion regarding the securities laws in any jurisdiction or with respect to the
Employee Retirement Income Security Act of 1974, as amended. All references in
this opinion to federal laws are to the Federal laws of the United States.
I assume no obligations to supplement the opinions expressed herein
if any applicable laws change after the date hereof or if I become aware of any
facts that might change such opinions after the date hereof.
I express no opinions except as expressly set forth herein, and no
opinion is implied or may be inferred beyond the opinions expressly stated
herein. This opinion is being delivered for your sole benefits and no other
person or entity shall be entitled to rely upon this opinion without my express
written consent.
<PAGE>
To the Addressees listed
in Schedule A hereto
___________ __, ____
Page 5
Very truly yours,
NORTHWEST AIRLINES, INC.
_______________________________
_______________________________
Associate General Counsel
<PAGE>
SCHEDULE A
Citibank, N.A.
State Street Bank and Trust Company, as Pass Through Trustee and Indenture
Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit C to Participation Agreement
[Form of opinion of in-house counsel to the Manufacturer]
_____________, 1999
To the Addressees Listed
in the Attached Schedule
Subject: One Boeing Model 747-451 Aircraft Bearing
Manufacturer's Serial No. ________
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am licensed to
practice law in the State of Washington. As such, I have represented Boeing in
connection with the sale of the Boeing Model 747-451 aircraft bearing
Manufacturer's Serial No. _________ (including the engines installed thereon but
excluding equipment furnished by Northwest Airlines Inc. ("Northwest") (the
"Aircraft")), pursuant to Purchase Agreement No. 1630 between Boeing and
Northwest, dated December 1, 1989, as subsequently amended (the "Purchase
Agreement").
For the purpose of this opinion, I have examined and relied upon originals, or
copies certified to my satisfaction, of the Purchase Agreement and of the
following documents (the "Documents"):
(i) the Consent and Agreement [NW 1999_], dated as of [] executed by Boeing
(the "Consent and Agreement");
[(ii) the Bill of Sale for the Aircraft executed by Boeing in favor of Northwest
(the "Bill of Sale"); and
(iii) the FAA Bill of Sale for the Aircraft executed by Boeing in favor of
Northwest (the "FAA Bill of Sale")](1).
- ----------
(1) To be inserted if the mortgage financing occurs on the same day as the
delivery of the aircraft to Northwest by Boeing.
<PAGE>
I have also examined such other documents and records as I have deemed relevant
or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Documents have been duly authorized, executed and delivered by,
and constitute the legal, valid, and binding obligations of Boeing enforceable
against it in accordance with the respective terms thereof, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and except as the
enforceability of such obligations may be subject to general principles of
equity.
(c) Boeing has the full power, authority, and legal right to enter into
and perform its obligations under the Documents and Boeing's execution,
performance, and delivery of such documents have been duly authorized by all
necessary corporate action, and do not contravene the Restated Certificate of
Incorporation or By-Laws of Boeing, or any indenture, mortgage, contract,
instrument, or other agreement, in each case known to me, to which Boeing is a
party or by which it or any of its properties is bound.
[(d) Good title to the Aircraft was at the time of delivery to Northwest
vested in Boeing free and clear of all liens, claims, encumbrances, and rights
of others; and good title to the Aircraft has been duly conveyed by Boeing to
Northwest, free and clear of all liens, claims, encumbrances, and rights of
others.
(e) Each of the Bill of Sale and the FAA Bill of Sale constitutes an
effective instrument for the conveyance of good title to the Aircraft to
Northwest, assuming the filing for recordation of the FAA Bill of Sale for the
Aircraft in accordance with the provisions of Title 49 of the United States
Code, as amended.](2)
For the purpose of this opinion, I have assumed that Northwest has the power and
authority to accept title to and delivery of the Aircraft and that the
representative acting on behalf of Northwest was duly authorized to accept title
to and delivery of the Aircraft on its behalf.
With respect to the conclusions set forth herein, I express no opinion as to any
laws other than the laws of the State of Washington, the corporate laws of the
State of Delaware, and the federal laws of the United States.
- ----------
(2) To be inserted if the mortgage financing occurs on the same day as the
delivery of the aircraft to Northwest by Boeing.
-3-
<PAGE>
Very truly yours,
Craig R. Heyamoto
Counsel
-4-
<PAGE>
SCHEDULE
Northwest Airlines, Inc.
Northwest Airlines Corporation
State Street Bank and Trust Company,
not in its individual capacity but solely as Indenture Trustee
State Street Bank and Trust Company,
as Pass Through Trustee
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit F to Participation Agreement
[Form of Opinion of Crowe & Dunlevy, P.C.]
________ __, 1999
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Boeing model 747-451 aircraft with manufacturer's serial
number _____ and United States nationality and registration
marks N [ ] (the "Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed with the Federal Aviation
Administration (the "FAA") today at [ __________ ], the Trust Indenture and
Security Agreement [NW 1999 ] dated as of [ _________ ] (the "Indenture")
between Northwest Airlines, Inc. (the "Owner") and State Street Bank and Trust
Company as Indenture Trustee (the "Indenture Trustee"), to which was attached
the Trust Indenture Supplement [NW 1999 __] dated [ _________________ ] (the
"Indenture Supplement") covering the Aircraft and the Pratt & Whitney model PW
4056 aircraft engines with manufacturer's serial numbers [ ________ ], [
____________ ], [ _____________ ] and [ _______ ] (the "Engines").
Based upon our examination of the above described instruments and of
such records of the FAA as we deemed necessary to render this opinion and as
were made available to us by the FAA, it is our opinion that:
(a) the Indenture with the Indenture Supplement attached, is in
due form for recordation by and has been duly filed for
recordation with the FAA pursuant to and in accordance with
the provisions of Section 44107 of Title 49 of the United
States Code;
(b) legal title to the Aircraft is vested in the Owner and all
instruments necessary to cause the FAA in due course to issue
to the Owner an AC Form 8050-3 Certificate of Aircraft
Registration covering the Aircraft have been duly filed with
the FAA pursuant to and in accordance with the provisions of
Sections 44102 and 44103 of Title 49 of the United States
Code;
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ________________ __, ____
(c) the Aircraft and the Engines are free and clear of Liens (as
such term is defined in the Indenture) other than such as are
created by the Indenture, as supplemented by the Indenture
Supplement;
(d) the Indenture, as supplemented by the Indenture Supplement
creates a duly and validly perfected first priority security
interest in favor of the Indenture Trustee in the Aircraft and
the Engines (insofar as such security interest affects an
interest covered by the recording system established by the
FAA pursuant to Section 44107 of Title 49 of the United States
Code);
(e) the Indenture, as supplemented by the Indenture Supplement, is
not required to be refilled with the FAA or filed or recorded
in any other place within the United States in order to
perfect or maintain the perfection of the security interest
created thereby in the Aircraft and the Engines under the
applicable laws of any jurisdiction within the United States;
and
(f) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
which have been effected) are necessary to perfect in any
jurisdiction within the United States the Owner's title to the
Aircraft or the security interest created by the Indenture, as
supplemented by the Indenture Supplement in the Aircraft and
the Engines under the applicable laws of any jurisdiction
within the United States.
No opinion is herein expressed as to: (i) laws other than the
federal laws of the United States; (ii) the validity or enforceability under
local law of the Indenture, as supplemented by the Indenture Supplement; and
(iii) the recognition of the perfection of the security interest created by the
Indenture, as supplemented by the Indenture Supplement against third parties in
any legal proceedings outside the United States. Since our examination was
limited to records maintained by the FAA Aircraft Registry, our opinion does not
cover liens which are perfected without the filing of notice thereof with the
FAA, such as federal tax liens, liens arising under Section 1368(a) of Title 29
of the United States Code and possessory artisans' liens, and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines. This opinion is rendered in reliance upon the opinion of the
Aeronautical Center Counsel dated [ ________________ ] (a copy of which is
attached hereto) and upon the past practice of the FAA which is consistent with
said opinion.
Very truly yours,
<PAGE>
SCHEDULE A
State Street Bank and Trust Company, as Indenture Trustee
Northwest Airlines, Inc.
Citibank, N.A.
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit G to Participation Agreement
[Form of Opinion of Bingham Dana LLP,
special counsel for the Indenture Trustee]
__________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Leveraged Lease Financing of One
Boeing 747-451 Aircraft [NW 1999__]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Indenture Trustee
(the "Indenture Trustee") under the Trust Indenture and Security Agreement [NW
1999 ] dated as of [______] (the "Indenture") between Northwest Airlines, Inc.
(the "Owner"), and State Street, as Indenture Trustee, in connection with the
execution and delivery of the Participation Agreement (NW 1999 ___] dated as of
[_______] (the "Participation Agreement") by and among the Indenture Trustee,
the Owner, Northwest Airlines Corporation (the "Guarantor"), State Street, as
Pass Through Trustee (the "Pass Through Trustee") and State Street, as
Subordination Agent (the "Subordination Agent") and the transactions
contemplated thereby. Capitalized terms not otherwise defined herein shall have
the meanings specified in Annex A to the Trust Indenture and Section 13 of the
Participation Agreement. This opinion is being delivered pursuant to Section
4(a)(xvi) of the Participation Agreement.
Our representation of State Street and the Indenture Trustee has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
We have examined the Participation Agreement, the Note Purchase
Agreement, the Indenture and the other documents to which State Street,
individually or as Indenture Trustee, is a party (together, the "Operative
Documents"), the Certificate of the Massachusetts Commissioner of Banks relating
to State Street and originals, or copies certified or otherwise identified to
our satisfaction, of such other records, documents, certificates, or other
instruments as we have deemed necessary or advisable for the purposes of this
opinion. For purposes of our opinion rendered in paragraph 1 below, with respect
to the authority of State Street to operate as a state-chartered trust company
and exercise trust powers, our
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- _________________ __, ____
opinion relies upon and is limited by such Certificate of the Massachusetts
Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Indenture Trustee), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Indenture Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
The opinions set forth below are limited solely to the internal substantive laws
of the Commonwealth of Massachusetts as applied by courts located in
Massachusetts and the federal laws of the United States. No opinion is given
herein as to the choice of law or internal substantive rules of law that any
court or other tribunal may apply to the transactions contemplated by the
Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by any law, statute, rule or regulation of the
United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdiction other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have assumed, with your permission that the Operative
Documents are governed by the internal substantive laws of the Commonwealth of
Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than State Street, in its
individual capacity or as Indenture Trustee, as applicable, at all times
relevant thereto, is validly existing and in good standing under the laws
of the jurisdiction in which it is organized, and is qualified to do
business and in good standing under the laws of each jurisdiction where
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- __________________ __, ____
such qualification is required generally or necessary in order for such
party to enforce its rights under such Operative Documents, and (ii) each
party to the Operative Documents, at all times relevant thereto, had and
has the full power, authority and legal right under its certificate of
incorporation, partnership agreement, by-laws, and other governing
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may be
(other than State Street and the Indenture Trustee with respect to the
laws of the United States of America and the internal substantive laws of
the Commonwealth of Massachusetts, but only in each case to the limited
extent the same may be applicable to State Street or the Indenture
Trustee, and relevant to our opinions expressed below) to execute, and to
perform its obligations under, the Operative Documents, and (iii) each
party to the Operative Documents (other than State Street or the Indenture
Trustee, as applicable) has duly executed and delivered each of such
agreements and instruments to which it is a party and that (other than
with respect to State Street and the Indenture Trustee, as applicable) the
execution and delivery of such agreements and instruments and the
transactions contemplated thereby have been duly authorized by proper
corporate or other organizational proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the Indenture
Trustee, as applicable, and (ii) that each of the Operative Documents is a
valid, binding and enforceable obligation of State Street or the Indenture
Trustee, as applicable, to the extent that laws other than those of the
Commonwealth of Massachusetts are relevant thereto (other than the laws of
the United States of America, but only to the limited extent the same may
be applicable to State Street or the Indenture Trustee, as applicable, and
relevant to our opinions expressed below).
(c) The enforcement of any obligations of State Street or the
Indenture Trustee, as applicable, under any of the Operative Documents may
be limited by the receivership, conservatorship and supervisory powers of
bank regulatory agencies generally, as well as by bankruptcy, insolvency,
reorganization, moratorium, marshaling or other laws and rules of law
affecting the enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of debtors' or
guarantors' rights); and we express no opinion as to the status under any
fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of State Street or the Indenture Trustee, as applicable, under
any of the Operative Documents.
(d) We express no opinion as to the availability of any specific or
equitable relief of any kind.
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- __________________ __, _____
whether such enforceability is considered in a proceeding at law or in
equity) and, as to any rights to collateral security, will be subject to a
duty to act in a commercially reasonable manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of powers of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to releases or waivers of unmatured claims or rights,
(vi) the imposition or collection of interest on overdue interest or
providing for a penalty rate of interest or late charges on overdue or
defaulted obligations, or the payment of any premium, liquidated damages,
or other amount which may be held by any court to be a "penalty" or a
"forfeiture," or (vii) so-called "usury savings clauses" purporting to
specify methods of (or otherwise assure) compliance with usury laws or
other similar laws of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as Indenture
Trustee, as the case may be, has the requisite corporate and trust power and
authority to execute, deliver and perform its obligations under the Operative
Documents and in its capacity as Indenture Trustee, to authenticate the Secured
Certificates to be delivered on the Closing Date.
2. State Street, in its individual capacity or as Indenture Trustee,
as the case may be, has duly authorized by all necessary corporate action the
Operative Documents and has duly executed and delivered the Operative Documents,
and the Operative Documents constitute valid and binding obligations of State
Street, in its individual capacity or as
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- __________________ __, ____
Indenture Trustee, as the case may be, enforceable against State Street, in its
individual capacity or as Indenture Trustee, as the case may be, in accordance
with their respective terms.
3. The Secured Certificates to be issued and dated the Closing Date
have been duly authenticated and delivered by State Street as Indenture Trustee
pursuant to the terms of the Indenture.
4. The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Indenture Trustee, as the case may be,
of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us, applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
5. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Indenture Trustee, as the case may be,
of the Operative Documents or the consummation of any of the transactions by
State Street, in its individual capacity or as Indenture Trustee, as the case
may be, contemplated thereby (except as shall have been duly obtained, given or
taken); and such authorization, execution, delivery, performance, consummation
and issuance do not conflict with or result in a breach of the provisions of any
such law.
6. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, in
its individual capacity or as Indenture Trustee, as the case may be, of the
Operative Documents (except for taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative Documents in Massachusetts, and there
are no Taxes under the laws of the Commonwealth of Massachusetts or any
political subdivision thereof (except for Taxes on any fees payable to State
Street in its individual capacity) upon or with respect to the Aircraft or any
Engine or any part of any interest therein, or the purchase, ownership,
delivery, lease, sublease, possession, presence, use, operation, condition,
storage,
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -6- __________________ __, ____
maintenance, modification, alteration, repair, sale, return, transfer or other
disposition of the Aircraft or any Engine which would not have been imposed if
State Street did not have its principal place of business in Massachusetts or
did not perform its administrative duties under the Operative Documents in
Massachusetts.
7. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Indenture Trustee, as the case may be, to enter into or perform
its obligations under the Operative Documents.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
SCHEDULE A
State Street Bank and Trust Company
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit I to Participation Agreement
[Form of CW&T 1110 Opinion]
[Date]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc.
Opinion of Special Counsel to the Owner Concerning
Section 1110 of the Federal Bankruptcy Code
Gentlemen:
We have acted as special counsel for Northwest Airlines, Inc., a
Minnesota corporation (the "Owner"), in connection with the transactions
contemplated by the Participation Agreement [NW 1999 ____], dated as of
[__________] (the "Participation Agreement"), among the Owner, Northwest
Airlines Corporation, as Guarantor, State Street Bank and Trust Company, as Pass
Through Trustee under each of the Pass Through Trust Agreements referred to
therein, State Street Bank and Trust Company, as Subordination Agent, and State
Street Bank and Trust Company, as Indenture Trustee under the Indenture referred
to therein. Capitalized terms used herein without definitions shall have the
respective meanings ascribed to them in or by reference to the Participation
Agreement, unless the context otherwise requires. This opinion is delivered
pursuant to Section 4(a)(xxiii) of the Participation Agreement. As used herein,
the term "Airframe" shall mean the Boeing 747-451 Airframe bearing U.S.
Registration No. N[_________] and Manufacturer's Serial No. [____], the term
"Engines" shall mean the four Pratt & Whitney Model PW4056 Engines bearing
manufacturer's Serial Nos. [__], [__], [__], and [__]. and the term "Aircraft"
shall mean the Airframe and the Engines, collectively, but expressly excludes
any portion of the Aircraft that does not constitute an aircraft, aircraft
engine, appliance, or spare part as such terms are defined in section 40102 of
title 49 of the United States Code.
In acting as such special counsel, we have examined, among other
things, with respect to the Aircraft, executed counterparts of the Participation
Agreement, Consent and Agreement, Trust Indenture, Trust Indenture Supplement,
Guarantee and Secured Certificates. As to any facts material to our opinions
expressed herein, we have, without independent investigation, relied upon the
representations and warranties contained in the Operative Documents (including,
without limitation, in Sections 7 and 8 of the Participation Agreement and
certificates of officers of the Owner including, without limitation, the
certificate of an
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __, ____
officer of the Owner delivered pursuant to Section 4(a)(ix) of the Participation
Agreement and the certificate of an officer of the Owner in the form attached as
Exhibit A hereto) and upon originals or copies (certified or otherwise
identified to our satisfaction) of such corporate records, documents and other
instruments as, in our judgment, are necessary or appropriate to enable us to
render this opinion. We have also assumed, and have not independently verified,
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, the conformity with the originals of all documents submitted
to us as copies, and the accuracy of all factual statements of parties made on
or before the date hereof (and have relied thereon as we have deemed
appropriate). We have delivered to you today our opinion of even date herewith
as to, among other things, the enforceability of certain of the Operative
Documents against the Owner. This Opinion is subject to the same assumptions,
exceptions, limitations and qualifications set forth therein and is given in
reliance on the same matters, including opinion letters, as are stated to be
relied on therein.
You have requested our opinion as to whether the Indenture Trustee
would be entitled to the benefits of section 1110 ("Section 1110") of title 11
of the United States Code (the "Bankruptcy Code") if the Owner were to become a
debtor in a case under chapter 11 of the Bankruptcy Code.
ASSUMPTIONS
The opinions expressed herein are based upon and subject to the
assumed compliance by the relevant parties, at all relevant times, with the
assumptions set forth herein and the assumption that all matters relied on
herein continue to be true and that there are no and will not be any amendments
to the Operative Documents or additional facts of which we are not aware which
would be material to a court's decision on this issue.
We have assumed, in addition to the assumptions set forth above,
that:
(i) the Owner will continue to be the registered owner of the
Aircraft, subject to the security interest of the Indenture Trustee;
(ii) the Owner is and will continue to be a citizen of the United
States (as defined in section 40102 of title 49 of the United States Code)
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of title 49 of the United States
Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo;
(iii) the Trust Indenture constitutes the legal, valid and binding
obligation of the Owner in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) and the Trust Indenture is effective to create a valid security
interest in favor of the Indenture Trustee for the benefit of the Loan
Participants in the Owner's right, title and interest
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __, ____
in and to the Aircraft and that the Indenture Trustee has and will
continue to hold a perfected security interest in the Owner's interest in
the Aircraft; and
(iv) all Uniform Commercial Code financing statements and all
filings necessary under the recording system of the Federal Aviation Act
have been properly filed and duly recorded in all necessary places to
properly record the ownership interest of the Owner in the Aircraft and to
perfect the security interest of the Indenture Trustee in the Owner's
interest in the Aircraft.
DISCUSSION
The Aircraft was first placed in service after October 22, 1994.
Therefore the Aircraft is within the scope of the provisions of Section 1110.
CONCLUSION
Based upon the foregoing, and subject to the assumptions and
qualifications contained herein, it is our opinion that if the Owner were to
become a debtor under chapter 11 of the Bankruptcy Code, the Indenture Trustee
for the benefit of the Loan Participants, would be entitled to the benefits of
Section 1110 with respect to the Airframe and the Engines but may not be
entitled to such benefits with respect to any replacement of the Aircraft after
an Event of Loss in the future.
QUALIFICATIONS
Section 1110 was amended effective October 22, 1994. Our opinion
respecting Section 1110 is based solely on the assumptions set forth herein, our
review of the language of Section 1110 as currently in effect, a review of the
legislative history of the Bankruptcy Reform Act of 1994(3) and a review of the
cases decided under the former version of Section 1110. We are not aware of any
judicial decisions interpreting the amendments to Section 1110 enacted in the
Bankruptcy Reform Act of 1994 that are directly applicable to the facts and
circumstances present in this transaction. Accordingly, our opinion is not based
on directly applicable judicial precedent, but rather on what we believe to be a
sound analysis of such authorities as exist. We call to your attention, however,
the decision of the United States District Court for the District of Colorado in
Western Pacific Airlines, Inc. v. GATX Capital (In re Western Pacific Airlines,
Inc.), 219 BR. 305, on rehearing, 221 B.R. 1 (D. Colo. 1998) where the District
Court concluded that the relief provided by Section 1110 is relevant only if the
debtor does not satisfy the conditions set forth in Section 1110(a)(1)(A) and
(B) during the first 60 days of the bankruptcy case. Thus, in the District
Court's view, once the debtor satisfies those conditions, all rights and
obligations in connection with subsequent defaults are governed by the more
general provisions of the Bankruptcy Code. We believe
- ----------
(3) Pub. L. 103-394.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __, ____
that this decision construes Section 1110 in a manner that is inconsistent with
both the language of Section 1110 and the legislative history explaining the
purpose and operation of Section 1110. Accordingly, we believe that the decision
is an incorrect interpretation of Section 1110.
We express no opinion concerning whether any collateral consisting
of proceeds or any substitute or replacement airframe, engine or part would have
the benefits of Section 1110.
We express no opinion as to the availability or effect of a
preliminary injunction, temporary restraining order or other such temporary
relief, nor do we express any opinion, either implicitly or otherwise, with
respect to any subject not addressed expressly in the Conclusion.
We express no opinion as to the availability of Section 1110 with
respect to any bankruptcy proceedings of any possible lessee of an Aircraft
which may be leased by the Owner. We are admitted to practice in the State of
New York, and we do not purport to be experts on, or to express any opinion
concerning, the laws of any jurisdiction other than the Federal laws of the
United States of America and the State of New York.
We express no opinions except as expressly set forth herein, and no
opinion is implied or may be inferred beyond the opinions expressly stated
herein. We assume no obligation to supplement the opinions expressed herein if
any applicable laws change after the date hereof or if we become aware of any
facts that might change such opinions after the date hereof.
This opinion is being delivered for your sole benefit, and no other
person or entity shall be entitled to rely upon this opinion without our express
written consent.
Very truly yours,
<PAGE>
SCHEDULE A
State Street Bank and Trust Company, as Pass Through Trustee
Northwest Airlines, Inc.
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
EXHIBIT A
NORTHWEST AIRLINES, INC.
OFFICER'S CERTIFICATE
In connection with the opinion dated [______________ ___, ___] (the
"Opinion"), a copy of which is attached hereto as Exhibit A and which relates to
one Boeing 747-451 airframe FAA Registration No. N[______] and MSN [ ], and
Pratt & Whitney Model PW4056 engine MSN [ ], and Pratt & Whitney Model PW4056
engine MSN [____], Pratt & Whitney Model PW4056 engine MSN [_____], and Pratt &
Whitney Model PW4056 engine MSN [____] (collectively, the "Aircraft"), to be
delivered by Cadwalader, Wickersham & Taft ("CW&T") to the parties identified
therein in connection with the execution and delivery of certain of the
Operative Documents (as defined in the Participation Agreement as defined in the
Opinion), I, [____________________], [____________________] of Northwest
Airlines, Inc., do hereby certify that:
1. I understand that CW&T is relying on this Certificate in
connection with the execution and delivery of the Opinion.
2. To the best of my knowledge, information and belief, after due
inquiry, the assumptions contained in the section of the Opinion entitled
"Assumptions" are true and correct as of the date hereof.
3. I have no reason to believe that any statement, fact, or opinion
expressed in the Opinion is untrue, inaccurate or incomplete in any respect.
4. To the best of my knowledge, information and belief, after due
inquiry, all of the statements, representations, warranties, agreements,
disclosures and other information furnished by Northwest, Airlines, Inc. and
contained in the Operative Documents and other documents delivered in connection
with this transaction are true, accurate and complete in all respects.
5. Northwest Airlines, Inc. intends that the Indenture Trustee, for
the benefit of the Loan Participants (as such terms are defined in the
Participation Agreement), be entitled to the benefits of 11 U.S.C. ss. 1110 with
respect to the Aircraft.
6. The Aircraft was first placed in service after October 22, 1994.
7. I have been duly authorized by Northwest Airlines, Inc. to
execute and deliver this Certificate to CW&T.
Dated: [__________ __, ___]
NORTHWEST AIRLINES, INC.
By: _________________________
Name:
Title:
<PAGE>
Exhibit J-1 to Participation Agreement
[Form of Opinion of Bingham Dana LLP,
special counsel for the Pass Through Trustee]
_____________________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Leveraged Lease Financing of One Boeing
747451 Aircraft [NW 1999 ____]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Pass Through Trustee
(the "Pass Through Trustee") under the Pass Through Trust Agreement dated as of
June 3, 1996, among Northwest Airlines Holdings Corporation (formerly known as
Northwest Airlines Corporation, "Holdings"), Northwest Airlines, Inc. and State
Street, as amended by the Supplemental Agreement, dated as of November 20, 1998,
among Northwest Airlines, Inc., Northwest Airlines Corporation, Holdings and
State Street, as supplemented by Trust Supplement No. 1999-1A, Trust Supplement
No. 1999-1B and Trust Supplement No. 1999-1C, each dated as of February 16, 1999
and each among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street (collectively, the "Pass Through Trusts" and,
individually a "Pass Through Trust") in connection with the execution and
delivery of the Participation Agreement [NW 1999__] dated as of [_______] (the
"Participation Agreement") by and among State Street, as Indenture Trustee,
Northwest Airlines, Inc., as Owner (the "Owner"), Northwest Airlines Corporation
(the "Guarantor"), State Street, as Pass Through Trustee and State Street, as
Subordination Agent (the "Subordination Agent") and the transactions
contemplated thereby. Capitalized terms not otherwise defined herein shall have
the meanings specified in Annex A to the Trust Indenture and Section 13 of the
Participation Agreement. This opinion is being delivered pursuant to Section
4(b)(v) of the Participation Agreement.
Our representation of State Street and the Pass Through Trustee has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ___________ __, ____
We have examined the Participation Agreement, the Liquidity Facility
for each of the Class A, Class B, and Class C Trusts, the Intercreditor
Agreement, the Note Purchase Agreement, the Escrow and Paying Agent Agreements
each dated as of February 16, 1999 and each among First Security Bank, National
Association, as Escrow Agent, the underwriters named therein, State Street, as
Pass Through Trustee and State Street, as Paying Agent and each of the Pass
Through Trusts (together, the "Operative Documents"), the Certificate of the
Massachusetts Commissioner of Banks relating to State Street and originals, or
copies certified or otherwise identified to our satisfaction, of such other
records, documents, certificates, or other instruments as we have deemed
necessary or advisable for the purposes of this opinion. For purposes of our
opinion rendered in paragraph 1 below, with respect to the authority of State
Street to operate as a state-chartered trust company and exercise trust powers,
our opinion relies upon and is limited by such Certificate of the Massachusetts
Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Pass Through Trustee), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Pass Through Trustee).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examinations of law as we have deemed necessary for the purposes of this
opinion. The opinions set forth below are limited solely to the internal
substantive laws of the Commonwealth of Massachusetts as applied by courts
located in Massachusetts and the federal laws of the United States. No opinion
is given herein as to the choice of law or internal substantive rules of law
that any court or other tribunal may apply to the transactions contemplated by
the Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities or so-called "Blue
Sky" laws of any state or other jurisdiction. In addition, no opinion is
expressed as to matters governed by any law, statute, rule or regulation of the
United States relating to the acquisition, ownership, registration, use,
operation, maintenance, repair, replacement or sale of or the nature of the
Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdictions other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ___________ __, ____
assumed, with your permissions that the Operative Documents are governed by the
internal substantive laws of the Commonwealth of Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without independent investigation that (i) each
party to the Operative Documents, other than State Street, in its
individual capacity or as Pass Through Trustee, as applicable, at all
times relevant thereto, is validly existing and in good standing under the
laws of the jurisdiction in which it is organized, and is qualified to do
business and in good standing under the laws of each jurisdiction where
such qualification is required generally or necessary in order for such
party to enforce its rights under such Operative Documents, and (ii) each
party to the Operative Documents, at all times relevant thereto, had and
has the full power, authority and legal right under its certificate of
incorporation, partnership agreement, by-laws, and other governmental
organizational documents, and the applicable corporate, partnership, or
other enterprise legislation and other applicable laws, as the case may be
(other than State Street and the Pass Through Trustee with respect to the
laws of the United States of America and the internal substantive laws of
the Commonwealth of Massachusetts, but only in each case to the limited
extent the same may be applicable to State Street or the Pass Through
Trustee, and relevant to our opinions expressed below) to execute, and to
perform its obligations under, the Operative Documents, and (iii) each
party to the Operative Documents (other than State Street or the Pass
Through Trustee, as applicable) has duly executed and delivered each of
such agreements and instruments to which it is a party and that (other
than with respect to State Street and the Pass Through Trustee, as
applicable) the execution and delivery of such agreements and instruments
and the transactions contemplated thereby have been duly authorized by
proper corporate or other organizational proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the Pass
Through Trustee, as applicable, and (ii) that each of the Operative
Documents is a valid, binding and enforceable obligation of State Street
or the Pass Through Trustee, as applicable, to the extent that laws other
than those of the Commonwealth of Massachusetts are relevant thereto
(other than the laws of the United States of America, but only to the
limited extent the same may be applicable to State Street or the Pass
Through Trustee, as applicable, and relevant to our opinions expressed
below).
(c) The enforcement of any obligations of State Street or the Pass
Through Trustee, as applicable, under any of the Operative Documents may
be limited by the receivership, conservatorship and supervisory powers of
bank regulatory agencies generally, as well as by bankruptcy, insolvency,
reorganization, moratorium, marshaling or other laws and rules of law
affecting the enforcement generally of
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ___________ __, ____
creditors' rights and remedies (including such as may deny giving effect
to waivers of debtors' or guarantors' rights); and we express no opinion
as to the status under any fraudulent conveyances laws or fraudulent
transfer laws of any of the obligations of State Street or the Pass
Through Trustee, as applicable, under any of the Operative Documents.
(d) We express no opinion as the availability of any specific or
equitable relief of any kind.
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and, as to any rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to the (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of powers of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to release or waivers of unmatured claims or rights, (vi)
the imposition or collection of interest on overdue interest or providing
for penalty rate of interest or late charges on overdue or defaulted
obligations, or the payment of any premium, liquidated damages, or other
amount which maybe held by any court to be a "penalty" or a "forfeiture"
or (vii) so-called "usury savings clauses" purporting to specify methods
of (or otherwise assure) compliance with usury laws or other similar laws
of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or change of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
In rendering the opinion set forth below in paragraph 6 as to
certain Massachusetts tax matters, we have assumed that, for federal income tax
purposes, the trust created by the Trust Agreement will not be taxable as a
corporation, but rather, will be classified as a grantor trust under subpart E,
Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code
of 1986, as amended.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ___________ __, ____
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as Pass Through
Trustee, as the case may be, has or had, as the case may be, the requisite
corporate and trust power and authority to execute, deliver and perform its
obligations under the Operative Documents and in its capacity as Pass Through
Trustee, to issue and execute the Certificates delivered on the Issuance Date.
2. State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, has duly authorized by all necessary corporate
action the Operative Documents and has duly executed and delivered the Operative
Documents, and the Operative Documents constitute valid and binding obligations
of State Street, in its individual capacity or as Pass Through Trustee, as the
case may be, enforceable against State Street, in its individual capacity or as
Pass Through Trustee, as the case may be, in accordance with their respective
terms.
3. The Certificates issued and dated the Issuance Date have been
duly issued, authenticated and delivered by State Street as Pass Through Trustee
pursuant to the terms of the Operative Documents and are enforceable against
the Pass Through Trustee and are entitled to the benefits of the applicable Pass
Through Trust.
4. The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Pass Through Trustee, as the case may
be, of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us. applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
5. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Pass Through Trustee, as the
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -6- ___________ __, ____
case may be, of the Operative Documents or the consummation of any of the
transactions by State Street, in its individual capacity or as Pass Through
Trustee, as the case may be, contemplated thereby (except as shall have been
duly obtained, given or taken); and such authorization, execution, delivery,
performance, consummation and issuance do not conflict with or result in a
breach of the provisions of any such law.
6. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, in
its individual capacity or as Pass Through Trustee, as the case may be, of the
Operative Document (except for taxes on any fees payable to State Street in its
individual capacity) or in connection with the issuance, execution and delivery
of the Certificates by State Street, as Pass Through Trustee, pursuant to the
Pass Through Trusts which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative Documents in Massachusetts. Neither
State Street, in its individual capacity or as the Pass Through Trustee, as the
case may be, nor the trust created by the Trust Agreement will, as a result of
the transactions contemplated thereby, be subject to any Taxes under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof (except
for Taxes on any fees payable to State Street in its individual capacity) which
would have not been imposed if State Street did not have its principal place of
business in Massachusetts or did not perform its administrative duties under the
Operative Documents in Massachusetts, and there are no Taxes under the laws of
the Commonwealth of Massachusetts or any political subdivision thereof (except
for Taxes on any fees payable to State Street in its individual capacity) upon
or with respect to the Aircraft or any Engine or any part of any interest
therein, or the purchase, ownership, delivery, lease, sublease, possession,
presence, use, operation, condition, storage, maintenance, modification,
alteration, repair, sale, return, transfer or other disposition of the Aircraft
or any Engine which would not have been imposed if State Street did not have its
principal place of business in Massachusetts or did not perform its
administrative duties under the Operative Documents in Massachusetts.
7. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Pass Through Trustee, as the case may be, to enter into or
perform its obligations under the Operative Documents.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
SCHEDULE A
State Street Bank and Trust Company
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
Exhibit J-2 to Participation Agreement
[Form of Opinion of Bingham Dana LLP,
special counsel for the Subordination Agent]
____________, 1999
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
Re: Northwest Airlines, Inc./Leveraged Lease Financing of
One Boeing 747-451 Aircraft [NW 1999____]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company in its individual capacity ("State Street") and as Subordination Agent
(the "Subordination Agent") under the Intercreditor Agreement dated as of
February 16, 1999 (the "Intercreditor Agreement") among State Street in its
capacity as Trustee under the Northwest Airlines Pass Through Trust 1999-lA,
Northwest Airlines Pass Through Trust 1999-lB and Northwest Airlines Pass
Through Trust 1999-iC, Citibank, N.A., as Class A Liquidity Provider, Class B
Liquidity Provider and Class C Liquidity Provider, and State Street, as
Subordination Agent in connection with the execution and delivery of the
Participation Agreement [NW 1999 ______] dated as of [________] (the
"Participation Agreement") by and among State Street, as Subordination Agent,
Northwest Airlines, Inc., as Owner (the "Owner"), Northwest Airlines Corporation
(the "Guarantor"), State Street, as Pass Through Trustee (the "Pass Through
Trustee") and State Street, as Subordination Agent and the transactions
contemplated thereby. Capitalized terms not otherwise defined herein shall have
the meanings specified in Annex A to the Trust Indenture and Section 13 of the
Participation Agreement. This opinion is being delivered pursuant to Section
4(a)(xxv) of the Participation Agreement.
Our representation of State Street and the Subordination Agent has
been as special counsel for the limited purposes stated above. As to all matters
of fact (including factual conclusions and characterizations and descriptions of
purpose, intention or other state of mind), we have relied, with your
permission, entirely upon (i) the representations and warranties of the parties
set forth in the Operative Documents and (ii) certificates delivered to us by
the management of State Street and have assumed, without independent inquiry,
the accuracy of those representations, warranties and certificates.
We have examined the Participation Agreement, the Note Purchase
Agreement and the Intercreditor Agreement (together, the "Operative Documents"),
the Certificate of the Massachusetts Commissioner of Banks relating to State
Street and originals, or copies certified
<PAGE>
Page 2
or otherwise identified to our satisfaction, of such other records, documents,
certificates, or other instruments as we have deemed necessary or advisable for
the purposes of this opinion. For purposes of our opinion rendered in paragraph
1 below, with respect to the authority of State Street to operate as a
state-chartered trust company and exercise trust powers, our opinion relies upon
and is limited by such Certificate of the Massachusetts Commissioner of Banks.
We have assumed the genuineness of all signatures (other than those
on behalf of State Street and the Subordination Agent), the conformity to the
originals of all documents reviewed by us as copies, and the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document (other than
on behalf of State Street and the Subordination Agent).
When an opinion set forth below is given to the best of our
knowledge, or to our knowledge, or with reference to matters of which we are
aware or which are known to us, or with another similar qualification, the
relevant knowledge or awareness is limited to the actual knowledge or awareness
of the individual lawyer in the firm that signed this opinion, the individual
lawyers in the firm who have participated directly in the specific transactions
to which this opinion relates and the partner of the firm responsible for State
Street corporate trust matters, and without any special or additional
investigation undertaken for the purposes of this opinion.
Subject to the limitation set forth below, we have made such
examination of law as we have deemed necessary for the purposes of this opinion.
The opinions set forth below are limited solely to the internal substantive laws
of the Commonwealth of Massachusetts as applied by courts located in
Massachusetts and the federal laws of the United States. No opinion is given
herein as to the choice of law or internal substantive rules of law that any
court or other tribunal may apply to the transactions contemplated by the
Operative Documents. No opinion is expressed herein as to the application or
effect of federal securities laws or as to the securities so-called "Blue Sky"
laws of any state or other jurisdiction. In addition, no opinion is expressed as
to matters governed by any law, statute, rule or regulation of the United States
relating to the acquisition, ownership, registration, use, operation,
maintenance, repair, replacement or sale of or the nature of the Aircraft.
To the extent to which this opinion deals with matters governed by
or relating to the laws of the State of New York, or other jurisdiction other
than the Commonwealth of Massachusetts, by which the Operative Documents are
stated to be governed, we have assumed, with your permission that the Operative
Documents are governed by the internal substantive laws of the Commonwealth of
Massachusetts.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
(a) We have assumed without any independent investigation that (i)
each party to the Operative Documents, other than State Street, in its
individual capacity or as Subordination Agent, as applicable, at all times
relevant thereto, is validly existing
<PAGE>
Page 3
and in good standing under the laws of the jurisdiction in which it is
organized, and is qualified to do business and in good standing under the
laws of each jurisdiction where such qualification is required generally
or necessary in order for such party to enforce its rights under such
Operative Documents, and (ii) each party to the Operative Documents, at
all times relevant thereto, had and has the full power, authority and
legal right under its certificate of incorporation, partnership agreement,
by-laws, and other governing organizational documents, and the applicable
corporate, partnership, or other enterprise legislation and other
applicable laws, as the case may be (other than State Street and the
Subordination Agent with respect to the laws of the United States of
America and the internal substantive laws of the Commonwealth of
Massachusetts, but only in each case to the limited extent the same may be
applicable to State Street or the Subordination Agent, and relevant to our
opinions expressed below) to execute, and to perform its obligations
under, the Operative Documents, and (iii) each party to the Operative
Documents (other than State Street or the Subordination Agent, as
applicable) has duly executed and delivered each of such agreements and
instruments to which it is a party and that (other than with respect to
State Street and the Subordination Agent, as applicable) the execution and
delivery of such agreements and instruments and the transactions
contemplated thereby have been duly authorized by proper corporate or
other organizational proceedings as to such party.
(b) We have assumed without any independent investigation (i) that
each of the Operative Documents is a valid, binding and enforceable
obligation of each party thereto other than State Street or the
Subordination Agent, as applicable, and (ii) that each of the Operative
Documents is a valid, binding and enforceable obligation of State Street
or the Subordination Agent, as applicable, to the extent that laws other
than those of the Commonwealth of Massachusetts are relevant thereto
(other than the laws of the United States of America, but only to the
limited extent the same may be applicable to State Street or the
Subordination Agent, as applicable, and relevant to our opinions expressed
below).
(c) The enforcement of any obligations of State Street or the
Subordination Agent, as applicable, under any of the Operative Documents
may be limited by the receivership, conservatorship and supervisory powers
of bank regulatory agencies generally, as well as by bankruptcy,
insolvency, reorganization, moratorium, marshaling or other laws and rules
of law affecting the enforcement generally of creditors' rights and
remedies (including such as may deny giving effect to waivers of debtors'
or guarantors' rights); and we express no opinion as to the status under
any fraudulent conveyance laws or fraudulent transfer laws of any of the
obligations of State Street or the Subordination Agent, as applicable,
under any of the Operative Documents.
(d) We express no opinion as the availability of any specific or
equitable relief of any kind.
<PAGE>
Page 4
(e) The enforcement of any rights may in all cases be subject to an
implied duty of good faith and fair dealing and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity) and, as to any rights to collateral
security, will be subject to a duty to act in a commercially reasonable
manner.
(f) We express no opinion as to the enforceability of any particular
provision of any of the Operative Documents relating to (i) waivers of
rights to object to jurisdiction or venue, or consents to jurisdiction or
venue, (ii) waivers of rights to (or methods of) service of process, or
rights to trial by jury, or other rights or benefits bestowed by operation
of law, (iii) waivers of any applicable defenses, setoffs, recoupments, or
counterclaims, (iv) the grant of power of attorney to any person or
entity, (v) exculpation or exoneration clauses, indemnity clauses, and
clauses relating to releases or waivers of unmatured claims or rights,
(vi) the imposition or collection of interest on overdue interest or
providing for a penalty rate of interest or late charges on overdue or
defaulted obligations, or the payment of any premium, liquidated damages,
or other amount which may be held by any court to be a "penalty" or a
"forfeiture," or (vii) so-called "usury savings clauses" purporting to
specify methods of (or otherwise assure) compliance with usury laws or
other similar laws of any jurisdiction.
(g) We express no opinion as to the effect of events occurring,
circumstances arising, or changes of law becoming effective or occurring,
after the date hereof on the matters addressed in this opinion letter, and
we assume no responsibility to inform you of additional or changed facts,
or changes in law, of which we may become aware.
(h) No opinion is given herein as to the effect of usury laws (or
other similar laws) of any jurisdiction with respect to the Operative
Documents.
This opinion is rendered solely for the benefit of those
institutions listed on Schedule A hereto and their successors and assigns in
connection with the transactions contemplated by the Operative Documents and may
not be used or relied upon by any other person or for any other purpose.
1. State Street is a Massachusetts trust company, validly formed and
authorized to operate as a state-chartered trust company under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as
Subordination Agent, as the case may be, has the requisite corporate and trust
power and authority to execute, deliver and perform its obligations under the
Operative Documents.
2. State Street, in its individual capacity or as Subordination
Agent, as the case may be, has duly authorized by all necessary corporate action
the Operative Documents and has duly executed and delivered the Operative
Documents, and the Operative Documents constitute valid and binding obligations
of State Street, in its individual capacity or as Subordination Agent, as the
case may be, enforceable against State Street, in its individual
<PAGE>
Page 5
capacity or as Subordination Agent, as the case may be, in accordance with their
respective terms.
3. The authorization, execution, delivery and performance by State
Street, in its individual capacity or as Subordination Agent, as the case may
be, of the Operative Documents and the consummation of the transactions therein
contemplated and compliance with the terms thereof do not and will not result in
the violation of the provisions of the charter documents or by-laws of State
Street and, to the best of our knowledge, do not conflict with, or result in a
breach of any terms or provisions of, or constitute a default under, or result
in the creation or the imposition of any lien, charge or encumbrance upon any
property or assets of State Street under any indenture, mortgage or other
agreement or instrument, in each case known to us, to which State Street is a
party or by which it is bound, or violates any applicable Massachusetts or
federal law, rule or regulation governing State Street's banking or trust
powers, or, to the best of our knowledge, of any judgment, order or decree, in
each case known to us, applicable to State Street of any court, regulatory body,
administrative agency, government or governmental body having jurisdiction over
State Street.
4. No authorization, approval, consent, license or order of, giving
of notice to, registration with, or taking of any other action in respect of,
any federal or state governmental authority or agency pursuant to any federal or
Massachusetts law governing the banking or trust powers of State Street is
required for the authorization, execution, delivery and performance by State
Street, in its individual capacity or as Subordination Agent, as the case may
be, of the Operative Documents or the consummation of any of the transactions by
State Street, in its individual capacity or as Subordination Agent, as the case
may be, contemplated thereby (except as shall have been duty obtained, given or
taken); and such authorization, execution, delivery, performance, consummation
and issuance do not conflict with or result in a breach of the provisions of any
such law.
5. There are no taxes, fees or other governmental charges payable
under the laws of the Commonwealth of Massachusetts or any political subdivision
of such State in connection with the execution and delivery by State Street, in
its individual capacity or as Subordination Agent, as the case may be, of the
Operative Documents (except for taxes on any fees payable to State Street in its
individual capacity) which would not have been imposed if State Street did not
have its principal place of business in Massachusetts or did not perform its
administrative duties under the Operative documents in Massachusetts.
6. To our knowledge, but without having investigated any
governmental records or court dockets, and without having made any other
independent investigation, there are no proceedings pending or overtly
threatened in writing against or affecting State Street in any court or before
any governmental authority, agency, arbitration board of tribunal which, if
adversely determined, individually or in the aggregate, could reasonably be
expected to affect materially and adversely the trust related to the Indenture
or affect the right, power and authority of State Street, in its individual
capacity or as Subordination Agent, as the case may be, to enter into or perform
its obligations under the Operative Documents.
<PAGE>
Page 6
7. Assuming that the Subordination Agent holds each of the Equipment
Notes delivered to and registered in its name pursuant to and as required by the
Intercreditor Agreement, it holds such Equipment Notes in trust as trustee for
the related Trustee in the exercise of the fiduciary powers conferred upon State
Street by Massachusetts law.
Very truly yours,
BINGHAM DANA LLP
<PAGE>
Page 7
SCHEDULE A
State Street Bank and Trust Company
Northwest Airlines, Inc.
Northwest Airlines Corporation
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Citibank, N.A.
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston Corporation
ABN AMRO Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
<PAGE>
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW 1999 _]
Section 7(b) - General Tax Indemnity
(b) General Tax Indemnity.
(i) Indemnity. Except as provided in Section 7(b)(ii) hereof, the Owner
shall pay, protect, save and on written demand shall indemnify and hold harmless
any Tax Indemnitee from and against any and all Taxes howsoever imposed against
any Tax Indemnitee, the Owner or the Aircraft, the Airframe, any Engine or any
Part thereof or interest therein by any Federal, state or local government or
other taxing authority in the United States or by any foreign government or any
political subdivision or taxing authority thereof or by any territory or
possession of the United States or by any international authority ("Taxing
Authority") upon or in connection with or relating to (A) the construction,
financing, refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, ownership, registration, reregistration, insuring,
assembly, possession, repossession, operation, location, use, control,
condition, maintenance, repair, sale, return, abandonment, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
modification, rebuilding, importation, transfer of title, transfer of
registration, exportation or other application or disposition of the Aircraft,
the Airframe, any Engine or any Part thereof or interest therein, (B) the
rentals, receipts or earnings from the Aircraft, the Airframe, any Engine or any
Part, (C) any amount paid or payable pursuant to any Operative Document or any
document related thereto or the property or the income or other proceeds with
respect to the Collateral, (D) the Aircraft, the Airframe, any Engine or any
Part, (E) any or all of the Operative Documents, or the issuance of the Secured
Certificates and any other documents contemplated hereby or thereby and
amendments and supplements hereto and thereto or the execution, delivery or
performance of any thereof or the issuance, acquisition, modification, holding
or subsequent transfer thereof, (F) the payment of the principal of, or interest
or Make-Whole Amount or other premium on, or other amounts payable with respect
to, the Secured Certificates or the Pass Through Certificates, or (G) otherwise
with respect to or in connection with the transactions contemplated by the
Operative Documents.
(ii) Exclusions from General Tax Indemnity. The provisions of Section
7(b)(i) shall not apply:
<PAGE>
(1) with respect to any Tax Indemnitee to any Income Tax (as defined in
Section 7(d) hereof) imposed by (A) the United States Federal government or (B)
any U.S. state or local taxing jurisdiction;
(2) with respect to any Tax Indemnitee, to any Income Taxes imposed by any
foreign or international government, jurisdiction or taxing authority or
territory or possession of the United States except to the extent that such Tax
Indemnitee would be subject to such Income Tax if the sole connection between
such Tax Indemnitee and the Taxing Authority had been the location and operation
of the Aircraft or the activities of the Owner or any lessee within such Taxing
Authority;
(3) to any capital gains taxes, excess profits taxes, value added taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes or
estate or similar taxes;
(4) to any Tax imposed as a result of a transfer or disposition by a Tax
Indemnitee including, without limitation, a transfer or disposition of all or
any portion of its respective equitable or legal ownership interest in a Secured
Certificate (including sales of participations therein), the Collateral (as
defined in the Trust Indenture) or any Operative Document or any interest in
such Tax Indemnitee;
(5) to any Tax based on or measured by any fees received by the Pass
Through Trustee, the Indenture Trustee or any Agent in connection with any
transaction contemplated by the Operative Documents;
(6) [Intentionally Omitted]
(7) to any Tax in the nature of an intangible or similar tax upon or with
respect to the value or principal amount of the interest of any Tax Indemnitee
in any of the Secured Certificates;
(8) with respect to any Tax Indemnitee to any Tax imposed on or with
respect to a transferee (or subsequent transferee) of an original Tax Indemnitee
to the extent such Taxes would not have been required to be withheld or imposed
on or with respect to such original Tax Indemnitee;
(9) to any Tax which would not have been imposed but for an Indenture
Trustee's Lien;
(10) to any Tax to the extent such Tax would not have been imposed but for
a present or future connection between the Tax Indemnitee or any Affiliate
thereof and the jurisdiction imposing such Taxes (including, without limitation,
the Tax Indemnitee or an Affiliate thereof being or having been a citizen or
resident thereof, or being or having been organized, present or
EXHIBIT K - PAGE 2
<PAGE>
engaged in a trade or business therein, or having or having had, a
permanent establishment or fixed place of business therein, or engaging,
or having engaged, in one or more transactions or activities therein
unrelated to the transactions contemplated by the Operative Documents),
other than a connection arising solely by reason of the transactions
contemplated by the Operative Documents;
(11) to any Tax imposed on a Tax Indemnitee to the extent imposed as
a result of such Tax Indemnitee's failure to comply with any
certification, information, documentation, reporting or similar procedure
that is required by law, treaty or regulation as a condition to the
allowance of any reduction in the rate of such Tax or any exemption or
other relief from such Tax;
(12) to any Tax on a Tax Indemnitee to the extent arising out of, or
caused by, or to the extent such Tax would not have been incurred but for,
(A) the willful misconduct or gross negligence of such Tax Indemnitee or
any of its Affiliates or (B) the inaccuracy or breach of any
representation, warranty, covenant or agreement by such Tax Indemnitee or
any of its Affiliates in any Operative Document;
(13) to any Tax on a Tax Indemnitee to the extent consisting of
interest, penalties, fines or additions to Tax resulting from the
negligence or willful misconduct of such Tax Indemnitee or any of its
Affiliates in connection with the filing of, or failure to file, any tax
return, the payment of, or failure to pay any Tax, or the conduct of any
proceeding in respect thereof unless resulting from the failure by the
Owner to perform its obligations under Section 7(b)(v) hereof; or
(14) to any excise tax imposed on any Tax Indemnitee under Section
4975 of the Internal Revenue Code as a result of the use by such Tax
Indemnitee or any of its Affiliates of the assets of an "employee benefit
plan" (as defined in Section 3(3) of ERISA) to purchase a Secured
Certificate or otherwise acquire any interest in any Secured Certificate.
(iii) Calculation of General Tax Indemnity Payments. Any payment which the
Owner shall be required to make to or for the account of any Tax Indemnitee with
respect to any Tax which is subject to indemnification under this Section 7(b)
shall be in an amount which, after reduction by the amount of all Taxes required
to be paid by such Tax Indemnitee in respect of the receipt or accrual of such
amount and after consideration of any current savings of such Tax Indemnitee
resulting by way of any deduction, credit or other tax benefit attributable to
such indemnified Tax that actually reduces any Taxes for which the Owner is not
required to indemnify such Tax Indemnitee pursuant to this Section 7(b) or the
Tax Indemnity Agreement, shall be equal to the payment otherwise required
hereunder.
EXHIBIT K - PAGE 3
<PAGE>
If, by reason of any Tax payment made to or for the account of a Tax
Indemnitee by the Owner pursuant to this Section 7(b), such Tax Indemnitee or
any of its Affiliates subsequently realizes a tax deduction or credit (including
a foreign tax credit) not previously taken into account in computing such
payment, such Tax Indemnitee shall promptly pay to the Owner an amount equal to
the sum of (I) the actual reduction in Taxes, if any, realized by such Tax
Indemnitee which is attributable to such deduction or credit and (II) the actual
reduction in Taxes realized by such Tax Indemnitee as a result of any payment
made by such Tax Indemnitee pursuant to this sentence. For purposes of this
Section 7(b)(iii), items of foreign Tax of any Tax Indemnitee shall be deemed to
be utilized by such Tax Indemnitee as credits or deductions for any taxable year
in accordance with the following priorities:
First, all available foreign Taxes for which such Tax Indemnitee was
not indemnified or held harmless by anyone;
Second, all available foreign Taxes for which such Tax Indemnitee
was indemnified or held harmless by the Owner, and all available
foreign taxes indemnified under any other transaction (except any
described in Clause Third), on a pari passu basis; and
Third, any remaining foreign Taxes arising from any transaction in
which there is an express agreement that such Taxes shall be
utilized after foreign taxes from other transactions.
Once the foreign Tax for which such Tax Indemnitee was indemnified by the Owner
is deemed to be utilized pursuant to the ordering rules contained in this
paragraph, it shall not subsequently be recharacterized as not having been
utilized as a result of a foreign tax liability arising in a subsequent year.
Any Taxes that are imposed on any Tax Indemnitee as a result of the
disallowance or reduction of any tax benefit referred to in this subsection as
to which such Tax Indemnitee has made in full the payment to the Owner required
hereby (or as to which such Tax Indemnitee would have made its payment but for
Section 7(b)(viii) or which tax benefit was otherwise taken into account in
computing the Owner's indemnity obligation pursuant to this Section 7) in a
taxable year subsequent to the utilization by such Tax Indemnitee shall be
treated as a Tax for which the Owner is obligated to indemnify such Tax
Indemnitee pursuant to the provisions of this Section 7(b), without regard to
the exclusions set forth in Section 7(b)(ii) hereof (other than clauses (12) or
(13) thereto).
Each Tax Indemnitee shall in good faith use reasonable efforts in filing
its tax returns and in dealing with Taxing Authorities to seek and claim any tax
savings which would result in payments to the Owner under this Section 7(b).
(iv) General Tax Indemnity -- Contests. At the Owner's request, the Owner
shall be entitled at its sole cost and expense (A) in the case of a contest
involving only
EXHIBIT K - PAGE 4
<PAGE>
Taxes indemnified hereunder ("Indemnified Taxes") or (B) in any proceeding
involving a claim for one or more Indemnified Taxes as well as a claim for other
Taxes, where the contest of the claim for Indemnified Taxes can be severed from
the contest of other Taxes, to assume responsibility for and control of the
contest ("Owner Controlled Contest"). Unless otherwise required by law, any such
contest shall be conducted by and in the name of the Owner. If a written claim
shall be made against and received by any Tax Indemnitee for any Tax for which
the Owner is obligated pursuant to this Section 7(b), such Tax Indemnitee shall
notify the Owner promptly of such claim (it being understood and agreed that
failure to provide such notice shall not adversely affect or otherwise prejudice
any Tax the Owner's right to indemnity under this Section 7(b) except to the
extent such failure has a materially adverse effect on the ability to contest
such claim). If the Tax cannot be contested in a Owner Controlled Contest, upon
request from the Owner within thirty (30) days after receipt of such notice,
such Tax Indemnitee shall in good faith at the Owner's sole cost and expense
contest the imposition of such Tax (a "Tax Indemnitee Controlled Contest").
After consulting with the Owner and the Owner's counsel concerning the forum in
which the adjustment is most likely to be favorably resolved, such Tax
Indemnitee may select in its sole discretion after considering in good faith the
Owner's and the Owner's counsel recommendation the forum for such contest and
determine whether any such contest shall be by (A) resisting payment of such
Tax, (B) paying such Tax under protest or (C) paying such Tax and seeking a
refund or other repayment thereof. Except as otherwise provided in clause (Z)
below, during the pendency of a contest pursuant to this Section 7(b)(iv) the
Owner may withhold payment of any Tax to the extent provided by applicable law.
In no event shall such Tax Indemnitee be required, or the Owner be permitted, to
contest the imposition of any Tax for which the Owner is obligated pursuant to
this Section 7(b) unless (W) no Event of Default shall have occurred and be
continuing (unless the Owner shall have provided security reasonably
satisfactory to such Tax Indemnitee securing the Owner's performance of its
obligations under this Section 7(b)), (X) the Owner shall have agreed to pay to
such Tax Indemnitee on demand all reasonable costs and expenses on an after-tax
basis that such Tax Indemnitee may incur in connection with contesting such
claim (including, without limitation, all reasonable legal and accounting fees),
(Y) such action to be taken will not result in a material risk of sale,
forfeiture or loss of, or the creation of any Lien on, the Aircraft, the Engines
or any Part, other than Permitted Liens, unless the Owner shall have provided
such Tax Indemnitee security against such risk in form and amount reasonably
acceptable to such Tax Indemnitee, and (Z) if such contest shall be conducted in
a manner requiring the payment of the claim, the Owner shall have paid the
amount required directly to the appropriate authority or made an advance of the
amount thereof to such Tax Indemnitee on an interest-free basis and agreed to
indemnify such Tax Indemnitee on an after-tax basis against any Taxes payable by
such Tax Indemnitee with respect to such advance.
Notwithstanding anything to the contrary in this Section 7(b), in any Tax
Indemnitee Controlled Contest the Tax Indemnitee may not settle or agree to any
claim without the prior written consent of the Owner, and the Tax Indemnitee
shall conduct
EXHIBIT K - PAGE 5
<PAGE>
any such administrative proceedings and judicial contest in good faith in an
attempt to minimize the amount payable by the Owner under this Section 7(b). The
term "after-tax basis" for purposes of this Section 7(b) shall mean an amount
which, after deduction of all Taxes required to be paid by or on behalf of the
Tax Indemnitee in respect of the receipt or accrual of such amount, is equal to
the payment required under the provisions of this Section 7(b) which require
payments to be made on an after-tax basis.
If any Tax Indemnitee shall obtain a refund of all or any part of any Tax
paid by the Owner, such Tax Indemnitee shall pay the Owner an amount equal to
the amount of such refund, including interest received attributable thereto,
plus any net tax benefit (or minus any net tax detriment) realized by such Tax
Indemnitee as a result of any refund received and payment by such Tax Indemnitee
made pursuant to this sentence.
Nothing contained in this Section 7(b)(iv) shall require any Tax
Indemnitee to contest, or permit the Owner to contest, a claim which such Tax
Indemnitee would otherwise be required to contest pursuant to this Section
7(b)(iv), if such Tax Indemnitee shall waive payment by the Owner of any amount
that might otherwise be payable by the Owner under this Section 7(b) in respect
of such claim and any other claim, the contest of which would be adversely
affected.
(v) General Tax Indemnity -- Reports. If any report, return or statement
is required to be filed with respect to any Tax which is subject to
indemnification under this Section 7(b), the Owner shall timely file the same at
its sole expense (except for any such report, return or statement which the Tax
Indemnitee is required by law to file in its own name). The Owner shall have no
obligation under the preceding sentence if such Tax Indemnitee, after receipt of
the Owner's written request, shall have failed to furnish the Owner with such
information in a timely fashion as is in such Tax Indemnitee's control and is
not otherwise reasonably available to the Owner and is necessary to file such
returns.
(vi) Verification. At the Owner's written request after the Owner receives
a Tax Indemnitee's computations showing the amount of any indemnity payable by
the Owner to such Tax Indemnitee pursuant to this Section 7(b) or any amount
payable by any Tax Indemnitee to the Owner pursuant to this Section 7(b), such
computations shall be subject to confidential verification in writing by any
nationally recognized firm of certified public accountants selected by the Owner
and reasonably acceptable to such Tax Indemnitee, The accounting firm shall
complete its review within thirty (30) days of the Owner's receipt of such Tax
Indemnitee's computations. The computations of such accounting firm shall (i) be
delivered simultaneously to the Owner and such Tax Indemnitee and (ii) absent
manifest error, be final, binding and conclusive upon the Owner and such Tax
Indemnitee. If the Owner pays such indemnity in whole or in part before
completion of the verification procedure, appropriate adjustments will be made
promptly after completion of the verification procedure (and nothing in this
Section
EXHIBIT K - PAGE 6
<PAGE>
7(b)(vi) shall be construed as changing the time when any such indemnity is
payable under this Section 7(b)) to take into account any redetermination of the
indemnity by the accounting firm. The fee and disbursements of such firm shall
be paid by the Owner unless such verification shall disclose an error made by
such Tax Indemnitee in favor of such Tax Indemnitee exceeding the lesser of five
percent (5%) of the original claim or $10,000, in which case such fee and
disbursements shall be paid by such Tax Indemnitee. Such Tax Indemnitee shall
cooperate with such accounting firm and (subject to such accounting firm's
execution of a confidentiality agreement satisfactory to such Tax Indemnitee)
shall supply such accounting firm with all information reasonably necessary to
permit accomplishment of such review and determination. The sole responsibility
of such accounting firm shall be to verify the computations of the amount
payable hereunder and the interpretation of this Agreement shall not be within
the scope of such accounting firm's responsibilities.
(vii) General Tax Indemnity -- Payment. Except as provided in Section
7(b)(iv) hereof, the Owner shall pay any Tax for which it is liable pursuant to
this Section 7(b) directly to the appropriate taxing authority if legally
permissible or upon demand of a Tax Indemnitee shall pay such Tax and any other
amounts due hereunder to such Tax Indemnitee within fifteen (15) Business Days
of such demand, but in no event shall any such payments be required to be made
by the Owner more than five (5) Business Days prior to the date the Tax to which
any such payment hereunder relates is due in immediately available funds. Any
such demand for payment from a Tax Indemnitee shall specify in reasonable detail
the payment and the facts upon which the right to payment is based. Each Tax
Indemnitee shall promptly forward to the Owner any notice, bill or advice
received by it concerning any Tax, provided, however, that the failure of any
Tax Indemnitee to forward any such notice, bill or advice shall not adversely
affect or otherwise prejudice such Tax Indemnitee's rights to indemnification
under this Section 7(b) unless such failure materially adversely affects the
ability to contest any claim reflected therein. Within thirty (30) days after
the date of each payment by the Owner of any Tax indemnified against hereunder,
the Owner shall furnish the appropriate Tax Indemnitee the original or a
certified copy of a receipt for the Owner's payment of such Tax or such other
evidence of payment of such Tax as is reasonably acceptable to such Tax
Indemnitee.
(viii) Application of Payments During Existence of Event of Default. Any
amount payable to the Owner pursuant to the terms of this Section 7(b) shall not
be paid to or retained by the Owner if at the time of such payment or retention
an Event of Default shall have occurred and be continuing under the Trust
Indenture. At such time as there shall not be continuing any such Event of
Default, such amount shall be paid to the Owner to the extent not previously
applied against the Owner's obligations hereunder as and when due after the
Indenture Trustee shall have declared the Trust Indenture in default pursuant to
Section 4 thereof.
(ix) Reimbursements by Tax Indemnitees Generally. If, for any reason, the
Owner is required to make any payment with respect to any Taxes imposed on any
Tax
EXHIBIT K - PAGE 7
<PAGE>
Indemnitee, any Pass Through Trustee, any Loan Participant or the Subordination
Agent in respect of the transactions contemplated by the Operative Documents or
on the Aircraft, the Airframe, the Engines or any Part, which Taxes are not the
responsibility of the Owner under this Section 7(b), then such Tax Indemnitee,
Pass Through Trustee, Loan Participant or the Subordination Agent, as the case
may be, shall pay to the Owner an amount which equals the amount paid by the
Owner with respect to such Taxes plus interest thereon computed at an annual
interest rate equal to the Base Rate plus one percent from the date of payment
by the Owner.
(x) Forms, etc. Each Tax Indemnitee agrees to furnish to the Owner from
time to time such duly executed and properly completed forms that are requested
by the Owner or that the Tax Indemnitee knows, or has reason to know in the
ordinary course of its business, may be necessary or appropriate in order to
claim any reduction of or exemption from any withholding tax imposed by any
taxing authority in respect of any payments otherwise required to be made by the
Owner pursuant to the Operative Documents, which reduction or exemption may be
available to such Tax Indemnitee.
(xi) Non-Parties. If a Tax Indemnitee is not a party to this Agreement,
the Owner may require the Tax Indemnitee to agree to the terms of this Section
7(b) prior to making any payment to such Tax Indemnitee under this Section 7(b).
EXHIBIT K - PAGE 8
<PAGE>
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW 1999 _]
Section 7(c) - General Indemnity
(c) General Indemnity. The Owner hereby agrees to indemnify each
Indemnitee against, and agrees to protect, defend, save and keep harmless each
thereof from (whether or not the transactions contemplated herein or in any of
the other Operative Documents are consummated), any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket
costs, expenses and disbursements, of whatsoever kind and nature (collectively
called "Expenses") imposed on, incurred by or asserted against any Indemnitee,
in any way relating to or arising out of (A) any of the Operative Documents or
any lease or sublease of the Aircraft or the enforcement of any of the terms
thereof or any amendment, modification or waiver in respect thereof and, only in
the case of the Indemnitee who is the Subordination Agent or the Liquidity
Provider, the Intercreditor Agreement and the Liquidity Facilities, (B) the
manufacture, purchase, acceptance or rejection of the Airframe or any Engine,
(C) the Aircraft (or any portion thereof or any Engine or engine affixed to the
Airframe) whether or not arising out of the finance, refinance, ownership,
delivery, nondelivery, storage, lease, sublease, sub-sublease, possession, use,
non-use, operation, maintenance, registration, reregistration, condition,
modification, alteration, replacement, repair, substitution, sale, return or
other disposition of the Aircraft (or any portion thereof or any Engine or
engine affixed to the Airframe) including, without limitation, latent or other
defects, whether or not discoverable, strict tort liability and any claim for
patent, trademark or copyright infringement or (D) the offer, sale or delivery
of the Secured Certificates (the indemnity in this clause (D) to extend also to
any person who controls an Indemnitee within the meaning of Section 15 of the
Securities Act of 1933, as amended); provided that the foregoing indemnity as to
any Indemnitee shall not extend to any Expense resulting from or arising out of
or which would not have occurred but for one or more of the following: (A) any
representation or warranty by such Indemnitee (or any member of the Related
Indemnitee Group) in the Operative Documents, the Intercreditor Agreement, the
Liquidity Facilities or the Pass Through Trust Agreements or in connection
therewith being incorrect in any material respect, or (B) the failure by such
Indemnitee (or any member of the Related Indemnitee Group) to perform or observe
any agreement, covenant or condition in any of the Operative Documents, the
Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust
Agreements applicable to it including, without limitation, the creation or
existence of a Loan Participant Lien or an Indenture Trustee's Lien (except to
the extent such failure was caused directly by the failure of the Owner to
perform any obligation under an Owner Document), or (C) the willful misconduct
or the gross negligence of such Indemnitee (or any member of the Related
Indemnitee Group) (other than gross negligence imputed to such Indemnitee (or
any
<PAGE>
member of the Related Indemnitee Group) solely by reason of its interest in the
Aircraft), or (D) with respect to any Indemnitee, a disposition (voluntary or
involuntary) by such Indemnitee of all or any part of such Indemnitee's interest
in the Airframe, any Engine or in the Operative Documents other than during the
continuance of an Event of Default under the Trust Indenture, or (E) any Tax
whether or not the Owner is required to indemnify for such Tax pursuant to
Section 7(b) hereof (it being understood that Section 7(b) hereof provides for
the Owner's liability with respect to Taxes), or (F) in the case of an
Indemnitee which is a Loan Participant, a Certificate Holder or the Indenture
Trustee (in its individual or trust capacity) and the affiliates, successors and
assigns thereof, a failure on the part of the Indenture Trustee to use ordinary
care to distribute in accordance with the Trust Indenture any amounts received
and distributable by it thereunder, or (G) the authorization or giving or
withholding of any future amendments, supplements, waivers or consents with
respect to any of the Operative Documents other than such as have been consented
to, approved, authorized or requested by the Owner, or (H) subject to the next
succeeding paragraph, any loss of tax benefits or increase in tax liability
under any tax law whether or not the Owner is required to indemnify therefor
pursuant to this Agreement, or (I) any Expense which is specified to be for the
account of an Indemnitee pursuant to any Operative Document without express
right of reimbursement under any Operative Document, or (J) as to any Indemnitee
the funding of such Indemnitee's participation in the transaction contemplated
by the Operative Documents giving rise to a "prohibited transaction" within the
meaning of the provisions of the Code or the Regulations of the United States
Department of Labor implementing ERISA or any other violation of the fiduciary
responsibility provisions of ERISA. The foregoing indemnity shall not extend to
any Expense to the extent that such Expense is not caused by, or does not arise
out of, an act, omission or event which occurs prior to the termination of the
Lien of the Trust Indenture and the payment of all other payments required to be
paid by the Owner under the Operative Documents.
The Owner further agrees that any payment or indemnity pursuant to
this Section 7(c) in respect of any Expenses shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any Federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or possession of the United States or any international authority,
shall be equal to the excess, if any, of (A) the amount of such Expense over (B)
the net reduction in Taxes required to be paid by such recipient resulting from
the accrual or payment of such Expense.
If, by reason of any Expense payment made to or for the account of
an Indemnitee by the Owner pursuant to this Section 7(c), such Indemnitee
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing such
payment, such Indemnitee shall promptly pay to the Owner, but only if the Owner
shall have made all payments then due and owing to such Indemnitee under the
Operative Documents, an amount equal to the sum of (I) the actual reduction in
Taxes realized by such Indemnitee which is attributable to such deduction or
credit, and (II) the actual reduction in Taxes realized by such Indemnitee as a
result of any payment made by such Indemnitee pursuant to this sentence.
EXHIBIT L - PAGE 2
<PAGE>
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to the Owner; provided
that the failure to provide such notice shall not release the Owner from any of
its obligations to indemnify hereunder, and no payment by the Owner to an
Indemnitee pursuant to this Section 7(c) shall be deemed to constitute a waiver
or release of any right or remedy which the Owner may have against such
Indemnitee for any actual damages as a result of the failure by such Indemnitee
to give the Owner such notice. The Owner shall be entitled, at its sole cost and
expense, acting through counsel acceptable to the respective Indemnitee, (A) so
long as the Owner has agreed in a writing acceptable to such Indemnitee that the
Owner is liable to such Indemnitee for such Expense hereunder (unless such
Expense is covered by the proviso to the first paragraph of this Section 7(c)),
in any judicial or administrative proceeding that involves solely a claim for
one or more Expenses, to assume responsibility for and control thereof, (B) so
long as the Owner has agreed in a writing acceptable to such Indemnitee that the
Owner is liable to such Indemnitee for such Expense hereunder (unless such
Expense is covered by the proviso to the first paragraph of this Section 7(c)),
in any judicial or administrative proceeding involving a claim for one or more
Expenses and other claims related or unrelated to the transactions contemplated
by the Operative Documents, to assume responsibility for and control of such
claim for Expenses to the extent that the same may be and is severed from such
other claims (and such Indemnitee shall use its best efforts to obtain such
severance), and (C) in any other case, to be consulted by such Indemnitee with
respect to judicial proceedings subject to the control of such Indemnitee.
Notwithstanding any of the foregoing to the contrary, the Owner shall not be
entitled to assume responsibility for and control of any such judicial or
administrative proceedings (M) while an Event of Default shall have occurred and
be continuing, (N) if such proceedings will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted Lien)
on the Aircraft, the Collateral or any part thereof, or (O) if such proceeding
could in the good faith opinion of such Indemnitee entail any material risk of
criminal liability or present a conflict of interest making separate
representation necessary. The affected Indemnitee may participate at its own
expense and with its own counsel in any judicial proceeding controlled by the
Owner pursuant to the preceding provisions.
The affected Indemnitee shall supply the Owner with such information
reasonably requested by the Owner as is necessary or advisable for the Owner to
control or participate in any proceeding to the extent permitted by this Section
7(c). Such Indemnitee shall not enter into a settlement or other compromise with
respect to any Expense without the prior written consent of the Owner, which
consent shall not be unreasonably withheld or delayed, unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this
Section 7(c).
The Owner shall supply the affected Indemnitee with such information
reasonably requested by such Indemnitee as is necessary or advisable for such
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).
EXHIBIT L - PAGE 3
<PAGE>
When the Owner or the insurers under a policy of insurance
maintained by the Owner (or any Lessee) undertakes the defense of an Indemnitee
with respect to an Expense, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such Indemnitee shall be
indemnified hereunder unless such fees or expenses were incurred at the written
request of the Owner or such insurers, provided that no such defense shall be
compromised or settled on a basis that admits any gross negligence or willful
misconduct on the part of such Indemnitee without such Indemnitee's prior
consent.
In the case of any Expense indemnified by the Owner hereunder which
is covered by a policy of insurance maintained by the Owner (or any Lessee)
pursuant to Section 7.04 of the Trust Indenture or otherwise, it shall be a
condition of such indemnity with respect to any particular Indemnitee that such
Indemnitee shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such Expense as may be required to retain the
benefits of such insurance with respect to such Expense. Notwithstanding any of
the foregoing to the contrary, with respect to any Expense which is covered
under policies of insurance maintained by the Owner (or any Lessee) pursuant to
Section 7.04 of the Trust Indenture or otherwise, the rights of an Indemnitee to
control or participate in any proceeding shall be modified to the extent
necessary to comply with the requirements of such policies and the rights of the
insurers thereunder.
Upon payment of any Expense or Tax pursuant to this Section 7, the
Owner or, if any Expense or Tax has been paid by insurers, the insurers, without
any further action, shall be subrogated to any claims the affected Indemnitee
may have relating thereto other than claims under Section 5.03 of the Trust
Indenture. Such Indemnitee agrees to give such further assurances or agreements
and to cooperate with the Owner or the insurers to permit the Owner or the
insurers to pursue such claims, if any, to the extent reasonably requested by
the Owner or the insurers.
In the event that the Owner shall have paid an amount to an
Indemnitee pursuant to this Section 7(c), and such Indemnitee subsequently shall
be reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay to the Owner an amount equal to the amount of such
reimbursement (but in no event more than such payment from the Owner) plus any
net tax benefit (or minus any net tax detriment) realized by such Indemnitee as
a result of any reimbursement received and payment made by such Indemnitee
pursuant to this sentence, provided that (i) no Event of Default has occurred
and is continuing and (ii) such Indemnitee shall have no obligation to reimburse
the Owner if the Owner has not paid such Indemnitee all amounts required
pursuant to this Section 7(c) and any other amounts then due to such Indemnitee
from the Owner under any of the Operative Documents.
The Owner's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from the Owner pursuant to any provision
EXHIBIT L - PAGE 4
<PAGE>
of this Agreement may proceed directly against the Owner without first seeking
to enforce any other right of indemnification.
EXHIBIT L - PAGE 5
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
Dated as of [_______________]
Between
NORTHWEST AIRLINES, INC.,
Owner
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 BOEING 747-451 AIRCRAFT
BEARING U.S. REGISTRATION MARK N[______]
OWNED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
GRANTING CLAUSE................................................................1
ARTICLE I DEFINITIONS..........................................................4
ARTICLE II THE SECURED CERTIFICATES............................................4
SECTION 2.01. Form of Secured Certificates....................................4
SECTION 2.02. Issuance and Terms of Secured Certificates......................9
SECTION 2.03. [Intentionally Omitted]........................................11
SECTION 2.04. Method of Payment..............................................11
SECTION 2.05. Application of Payments........................................13
SECTION 2.06. Termination of Interest in Collateral..........................14
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates....14
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates......16
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................16
SECTION 2.10. Mandatory Redemptions of Secured Certificates..................16
SECTION 2.11. Voluntary Redemptions of Secured Certificates..................17
SECTION 2.12. Redemptions; Notice of Redemption..............................17
SECTION 2.13. Assumption of Secured Certificates.............................18
SECTION 2.14. [Intentionally Omitted]........................................18
SECTION 2.15. Subordination..................................................18
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS.................19
SECTION 3.01. Basic Distributions............................................19
SECTION 3.02. Event of Loss; Replacement; Optional Redemption................20
SECTION 3.03. Payments After Event of Default................................21
SECTION 3.04. Certain Payments...............................................23
SECTION 3.05. Other Payments.................................................23
SECTION 3.06. Payments to the Owner..........................................23
SECTION 3.07. Application of Payments Under Guarantee........................24
ARTICLE IV EVENTS OF DEFAULT, REMEDIES OF INDENTURE TRUSTEE...................24
SECTION 4.01. Event of Default...............................................24
SECTION 4.02. Remedies.......................................................26
SECTION 4.03. Return of Aircraft, Etc........................................28
SECTION 4.04. Remedies Cumulative............................................29
SECTION 4.05. Discontinuance of Proceedings..................................29
SECTION 4.06. Waiver of Past Defaults........................................29
-i-
<PAGE>
Page
----
SECTION 4.07. Appointment of Receiver........................................30
SECTION 4.08. Indenture Trustee Authorized to Execute Bills of Sale, Etc.....30
SECTION 4.09. Rights of Certificate Holders to Receive Payment...............30
ARTICLE V DUTIES OF THE INDENTURE TRUSTEE.....................................31
SECTION 5.01. Notice of Event of Default.....................................31
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.......31
SECTION 5.03. Indemnification................................................32
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.................................................32
SECTION 5.05. No Action Except Under Trust Indenture or Instructions.........33
SECTION 5.06. Investment of Amounts Held by Indenture Trustee................33
ARTICLE VI THE INDENTURE TRUSTEE..............................................33
SECTION 6.01. Acceptance of Trusts and Duties................................33
SECTION 6.02. Absence of Duties..............................................34
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents...34
SECTION 6.04. No Segregation of Monies; No Interest..........................35
SECTION 6.05. Reliance; Agreements; Advice of Counsel........................35
SECTION 6.06. Compensation...................................................36
SECTION 6.07. Instructions from Certificate Holders..........................36
ARTICLE VII COVENANTS OF THE OWNER............................................36
SECTION 7.01. Liens..........................................................36
SECTION 7.02. Registration, Maintenance and Operation; Possession and
Leases; Insignia.............................................37
SECTION 7.03. Replacement and Pooling of Parts; Alterations, Modifications
and Additions................................................42
SECTION 7.04. Insurance......................................................45
SECTION 7.05. Inspection.....................................................50
SECTION 7.06. Loss, Destruction, Requisition, etc............................50
SECTION 7.07. Interests in the Purchase Agreement............................56
ARTICLE VIII INDEMNIFICATION..................................................58
SECTION 8.01. Scope of Indemnification.......................................58
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES....................................59
SECTION 9.01. Resignation of Indenture Trustee; Appointment of Successor.....59
SECTION 9.02. Appointment of Additional and Separate Trustees................61
ARTICLE X SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
DOCUMENTS.........................................................62
-ii-
<PAGE>
Page
----
SECTION 10.01. Instructions of Majority; Limitations.........................62
SECTION 10.02. Indenture Trustees Protected..................................64
SECTION 10.03. Documents Mailed to Certificate Holders.......................64
SECTION 10.04. No Request Necessary for Trust Indenture Supplement...........64
ARTICLE XI MISCELLANEOUS......................................................64
SECTION 11.01. Termination of Trust Indenture................................64
SECTION 11.02. No Legal Title to Collateral in Certificate Holders...........65
SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding..............65
SECTION 11.04. Trust Indenture for Benefit of the Owner, Indenture Trustee
and Certificate Holders.....................................65
SECTION 11.05. Notices.......................................................65
SECTION 11.06. Severability..................................................66
SECTION 11.07. No Oral Modification or Continuing Waivers....................66
SECTION 11.08. Successors and Assigns........................................66
SECTION 11.09. Headings......................................................66
SECTION 11.10. Normal Commercial Relations...................................67
SECTION 11.11. Governing Law; Counterpart Form...............................67
SECTION 11.12. Voting By Certificate Holders.................................67
SECTION 11.13. Bankruptcy....................................................67
ANNEX A Definitions
EXHIBIT A Form of Trust Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
SCHEDULE III Schedule of Permitted Lessees
-iii-
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW 1999 _]
TRUST INDENTURE AND SECURITY AGREEMENT [NW 1999 _], dated as of
[_______________] ("Trust Indenture") between NORTHWEST AIRLINES, INC., a
Minnesota corporation (the "Owner") 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 referred to in Article I hereof;
WHEREAS, the parties desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner to the Pass Through
Trustees (or their designee) of the Secured Certificates specified on Schedule I
hereto (it being understood that not all Series may be issued, in which case,
references in this Trust Indenture to Series not issued shall be disregarded)
and (ii) to provide for the assignment, mortgage and pledge by the Owner to the
Indenture Trustee, as part of the Collateral hereunder, among other things, of
all of the Owner's right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all payments and other amounts received
hereunder in accordance with the terms hereof, as security for, among other
things, the Owner'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 and authenticated and delivered by the Indenture
Trustee hereunder, the valid, binding and enforceable obligations of the Owner;
and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner 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 of all the agreements, covenants and
provisions herein and in the
<PAGE>
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 hereunder and under the Participation Agreement to the Certificate
Holders by the Owner 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 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 in,
to and under the following described property, rights and privileges, (including
all property hereafter specifically subjected to the Lien of this Trust
Indenture by the Trust Indenture Supplement or any mortgage supplemental
hereto), to wit:
(1) the Aircraft (including the Airframe and the Engines and all
replacements thereof and substitutions therefor as provided herein), all as more
particularly described in the Trust Indenture Supplement executed and delivered
with respect to the Aircraft or any such replacements or substitutions therefor,
as provided in this Trust Indenture;
(2) the Contract Rights, but subject always to the provisions of
Section 7.07 hereof;
(3) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 7.04
hereof, but excluding any insurance maintained by the Owner and not required
under Section 7.04 hereof;
(4) 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 required hereby to be held by the Indenture Trustee hereunder;
and
(5) all proceeds of the foregoing.
SUBJECT TO all of the terms and conditions of this Trust Indenture
and the rights of the Owner hereunder.
Concurrently with the delivery hereof, the Owner is delivering to
the Indenture Trustee executed copies of the Participation Agreement and the
Consent and Agreement.
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
-2-
<PAGE>
whatsoever, and for the uses and purposes and in all cases and as to all
property specified in paragraphs (1) through (5) 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 shall remain liable under each of the
Indenture Agreements to which it is a party to perform all of the obligations
assumed by it thereunder, except to the extent prohibited or excluded from doing
so pursuant to the terms and provisions thereof, and the Indenture Trustee and
the Certificate Holders shall have no obligation or liability under the
Indenture Agreements, by reason of or arising out of the assignment hereunder,
nor shall the Indenture Trustee or the Certificate Holders be required or
obligated in any manner to perform or fulfill any obligations of the Owner 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 does hereby constitute the Indenture Trustee the true and
lawful attorney of the Owner, 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 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) 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 Collateral, 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
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 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 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 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 to any Person beyond those obligations and
liabilities specifically set forth in this Trust Indenture and in the other
Operative Documents.
The Owner agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Owner will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as
-3-
<PAGE>
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 Owner 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 11.01 hereof, any of its right,
title or interest hereby assigned, to anyone other than the Indenture Trustee
and its predecessor(s) in this transaction.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
Unless otherwise defined herein or the context requires otherwise,
capitalized terms utilized but not defined herein shall have the respective
meanings set forth or incorporated by reference in Annex A hereto for all
purposes of the 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.
NORTHWEST AIRLINES, INC. SERIES [___] SECURED CERTIFICATE DUE [_____] ISSUED IN
CONNECTION WITH THE BOEING 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION
NUMBER N[_____].
No.____ Date: [________]
$__________________
-4-
<PAGE>
INTEREST RATE MATURITY DATE
[________]
[________,_______]
NORTHWEST AIRLINES, INC. (the "Owner"), 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 [February/August 1, _____], and thereafter on [August 1]
and [February 1] 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 1999 _], dated as of [_______________],
between the Owner and State Street Bank and Trust Company (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this Secured Certificate and not defined herein
shall have the respective meanings assigned in the Trust Indenture.
This Secured Certificate shall bear interest, payable on demand, at
the Past Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when
due (whether at stated maturity, by acceleration or otherwise).
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
-5-
<PAGE>
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 to the Indenture Trustee for cancellation.
The holder hereof, by its acceptance of this Secured Certificate,
agrees that, except as provided in the Trust Indenture, each payment received by
it hereunder shall be applied, first, to the payment of accrued interest on this
Secured Certificate (as well as any interest on any overdue Principal Amount,
any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such payment,
second, to the payment of the Principal Amount of this Secured Certificate then
due, third, to the payment of Make-Whole Amount, if any, and any other amount
due hereunder or under the Trust Indenture, and fourth, the balance, if any,
remaining thereafter, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred
to in the Trust Indenture which have been or are to be issued by the Owner
pursuant to the terms of the Trust Indenture. The Collateral 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 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 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 an owner trustee as
provided in Section 2.13 of the Trust Indenture.
[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
-6-
<PAGE>
prior payment in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of [Series A Secured Certificates](1) [Series A and Series
B Secured Certificates](2), and this Secured Certificate is issued subject to
such provisions. The Certificate Holder of this Secured Certificate, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Indenture Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in the Trust Indenture and (c) appoints the Indenture Trustee his
attorney-in-fact for such purpose.]**
Unless the certificate of authentication hereon has been executed by
or on behalf of the Indenture Trustee by manual signature, this Secured
Certificate shall not be entitled to any benefit under the Trust Indenture or be
valid or obligatory for any purpose.
THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
- ----------
(1) To be inserted in the case of a Series B Secured Certificate.
(2) To be inserted in the case of a Series C Secured Certificate.
** To be inserted for each Secured Certificate other than any Series A
Secured Certificate.
-7-
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this Secured Certificate to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
NORTHWEST AIRLINES, INC.,
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:
-8-
<PAGE>
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 [February/August 1, ____], and on each [August 1] and
[February 1] 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
-9-
<PAGE>
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day, no interest shall accrue on the amount of
such payment during such extension.
The Owner agrees to pay to the Indenture Trustee for distribution in
accordance with Section 3.04 hereof Owner'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, (ii) interest on Interest Drawings, Final Drawings, and Applied
Downgrade Advances and Applied Non-Extension Advances (as defined in the
Liquidity Facilities) under any Liquidity Facility except to the extent included
in Net Interest and Related Charges, and (iii) fees payable to the Liquidity
Provider payable (whether or not in fact paid) under Section 7(a) of the Note
Purchase Agreement (as originally in effect or amended). As used in this
Section, "Owner'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, Applied Downgrade Advance and/or Applied
Non-Extension 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, Applied Downgrade Advance or Applied Non-Extension 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 or Applied Non-Extension Advance which becomes a Final
Drawing) which remains in a Cash Collateral Account, Designated Interest Rate
means the weighted average Investment Earnings of funds in the Cash Collateral
Accounts. As used in this Section, a Payment Default when used in connection
with a Secured Certificate or Equipment Note means a default in the payment of
principal thereof or interest thereon which has not been cured other than solely
because of acceleration. The following terms are used in this Section as defined
in the Intercreditor Agreement without regard to any amendment, modification or
supplement thereto after the Closing Date: Cash Collateral
-10-
<PAGE>
Accounts, Equipment Notes, Final Drawing, Indentures, Interest Drawing and
Investment Earnings.
The Secured Certificates shall be executed on behalf of the Owner by
its President or one of its Vice Presidents, its Treasurer 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
shall bind the Owner, 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 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 signed by a Vice President, its Treasurer or other authorized
officer of the Owner; 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. [Intentionally Omitted].
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 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), all amounts paid by the Owner 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
-11-
<PAGE>
prior to the time specified above, the Indenture Trustee, in its individual
capacity and not as trustee, agrees to compensate such holders for loss of use
of funds at the Debt Rate until such payment is made and the Indenture Trustee
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made without any presentment or
surrender of any Secured Certificate, except that, in the case of the final
payment in respect of any Secured Certificate, such Secured Certificate shall be
surrendered to the Indenture Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Trust Indenture to the
contrary, the Indenture Trustee shall not be required to make, or cause to be
made, wire transfers as aforesaid prior to the first Business Day on which it is
practicable for the Indenture Trustee to do so in view of the time of day when
the funds to be so transferred were received by it if such funds were received
after 12:00 noon, New York City time, at the place of payment. Prior to the due
presentment for registration of transfer of any Secured Certificate, the Owner
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 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, 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) 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),
-12-
<PAGE>
or in either of the two preceding calendar years, and has not notified the
Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date
of such payment (and the Indenture Trustee has no reason to know that any
information set forth in such form is inaccurate), the Indenture Trustee shall
withhold only the amount, if any, required by Law (after taking into account any
applicable exemptions claimed by the Certificate Holder) to be withheld from
payments hereunder or under the Secured Certificates held by such holder in
respect of United States federal income tax (and such withholding shall
constitute payment in respect of such Secured Certificate). If a Certificate
Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a
properly completed and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to avoid
withholding of United States federal income tax), during the calendar year in
which the payment is made (but prior to the making of such payment), and has not
notified the Indenture Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the Indenture Trustee
has no reason to know that any information set forth in such form is inaccurate)
or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly
completed and currently effective U.S. Internal Revenue Service Form W-9, if
applicable, prior to a payment hereunder or under the Secured Certificates held
by such holder, no amount shall be withheld from payments in respect of United
States federal income tax. If any Certificate Holder has notified the Indenture
Trustee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations thereunder or
the administrative interpretation thereof are at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Secured Certificates held by such holder, the Indenture
Trustee agrees to withhold from each payment due to the relevant Certificate
Holder withholding taxes at the appropriate rate under Law and will, on a timely
basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary
evidence in connection therewith as required by applicable law.
The Owner shall not have any liability for the failure of the
Indenture Trustee to withhold taxes in the manner provided for herein or if any
Certificate Holder provides false or inaccurate information on any form required
to be delivered under this Section 2.04.
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;
-13-
<PAGE>
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
SECTION 2.06. Termination of Interest in Collateral.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Collateral 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 (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 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 shall execute, and the Indenture Trustee
shall authenticate and deliver, the Secured Certificates which the Certificate
-14-
<PAGE>
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 evidencing the
same respective obligations, and entitled to the same security and benefits
under this Trust Indenture, as the Secured Certificates surrendered upon such
registration of transfer or exchange. Every Secured Certificate presented or
surrendered for registration of transfer, shall (if so required by the Indenture
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Certificate
Holder or such holder's attorney duly authorized in writing, and the Indenture
Trustee shall require evidence satisfactory to it as to the compliance of any
such transfer with the Securities Act, and the securities Laws of any applicable
state. The Indenture Trustee shall make a notation on each new Secured
Certificate of the amount of all payments of Principal Amount previously made on
the old Secured Certificate or Secured Certificates with respect to which such
new Secured Certificate is issued and the date to which interest on such old
Secured Certificate or Secured Certificates has been paid. Interest shall be
deemed to have been paid on such new Secured Certificate to the date on which
interest shall have been paid on such old Secured Certificate, and all payments
of the Principal Amount marked on such new Secured Certificate, as provided
above, shall be deemed to have been made thereon. The Owner 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 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 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 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(e), 8(k), 8(l), 8(q), 8(r), 8(t), 8(cc), 10, 13(b), 13(c), 15(b), 15(c) and
16, and shall be deemed to have represented and warranted (except as provided
above), and covenanted, to the parties to the Participation Agreement as to the
matters represented, warranted and covenanted by the 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 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 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
-15-
<PAGE>
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. If the Secured
Certificate being replaced has been destroyed, lost or stolen, the holder of
such Secured Certificate shall furnish to the Owner and the Indenture Trustee
such security or indemnity as may be required by them to save the Owner and the
Indenture Trustee harmless and evidence satisfactory to the Owner 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 the Owner 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 shall use
all reasonable efforts to issue new Secured Certificates within 10 Business Days
of the date of the written request therefor from the Certificate Holder.
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. Mandatory Redemptions of Secured Certificates.
On the date on which the Owner is required pursuant to Section
7.06(a)(i) hereof 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.
SECTION 2.11. Voluntary Redemptions of Secured Certificates.
Any or all of the Secured Certificates may be redeemed by the Owner
upon at least 30 days' revocable prior written notice to the Indenture Trustee
and the Certificate Holders, and 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
-16-
<PAGE>
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) No redemption of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
(b) Notice of redemption 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, 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 2.11,
such notice shall be revocable and shall be deemed revoked if the Indenture
Trustee receives written notice of such revocation from the Owner 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 (or any person on
behalf of the Owner) shall, to the extent an amount equal to the redemption
price for the Secured Certificates to be redeemed on the redemption date shall
not then be held in the Collateral, 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.
(d) Notice of redemption 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 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
in accordance with said notice, such Secured Certificate shall be redeemed at
the redemption price. If any Secured Certificate called for redemption 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.
-17-
<PAGE>
SECTION 2.13. Assumption of Secured Certificates.
Pursuant to the provisions of Section 16 of the Participation
Agreement, an owner trustee shall be entitled to assume on a non-recourse basis
all of the obligations of the Owner hereunder and under the Secured Certificates
by an amended and restated trust indenture, an amended and restated
participation agreement, and the issuance of new secured certificates having
substantially the same tenor as the Secured Certificates. If an owner trustee
shall assume such obligations of the Owner, the Owner shall be released and
discharged from any further obligations hereunder and under the Secured
Certificates (except with respect to any such obligations that accrued prior
thereto) and the Secured Certificates shall be delivered to the Indenture
Trustee for cancellation.
SECTION 2.14. [Intentionally Omitted].
SECTION 2.15. Subordination.
(a) The Owner 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 4.01(e) or (f) 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.
-18-
<PAGE>
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
PAYMENTS
SECTION 3.01. Basic Distributions.
Except as otherwise provided in Section 3.03 hereof, each periodic
payment of principal or interest on the Secured Certificates received by the
Indenture Trustee shall be promptly distributed in the following order of
priority:
(i) so much of such 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
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
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.
-19-
<PAGE>
SECTION 3.02. Event of Loss; Replacement; Optional Redemption.
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 or (ii) pursuant to the optional redemption of the Secured
Certificates pursuant to Section 2.11 hereof 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 the Owner, 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 accordance with Section 7.06 hereof, any insurance, condemnation or similar
proceeds which result from such Event of Loss and are paid over to the Indenture
Trustee shall be held by the Indenture Trustee as permitted by Section 6.04
hereof (provided that such moneys shall be invested as provided in Section 5.06
hereof) as additional security for the obligations of the Owner under the
Operative Documents and such proceeds (and such investment earnings), to the
extent not theretofore applied as provided herein, shall be released to the
Owner at the Owner's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided herein.
-20-
<PAGE>
SECTION 3.03. Payments After Event of Default.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to 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 4.02(b) hereof, as well as all payments or
amounts then held by the Indenture Trustee as part of the Collateral, 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 Collateral
(all such property being herein called the "Mortgaged Property")
pursuant to Section 4.03(b) hereof) incurred by the Indenture
Trustee (to the extent not previously reimbursed), the expenses of
any sale, taking or other proceeding, reasonable attorneys' fees and
expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Certificate Holders in the protection, exercise or enforcement of
any right, power or remedy or any damages sustained by the Indenture
Trustee or any Certificate Holder, liquidated or otherwise, upon
such Event of Default shall be applied by the Indenture Trustee as
between itself and the Certificate Holders in reimbursement of such
expenses and any other expenses for which the Indenture Trustee or
the Certificate Holders are entitled to reimbursement under any
Operative Document and in the case the aggregate amount to be so
distributed is insufficient to pay as aforesaid, then ratably,
without priority of one over the other, in proportion to the amounts
owed each hereunder;
Second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Certificate Holders for
payments made pursuant to Section 5.03 hereof (to the extent not
previously reimbursed) shall be distributed to such then existing or
prior Certificate Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or payments made
by each such then existing or prior Certificate Holder pursuant to
said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Principal Amount
of all Series A Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series A Secured
Certificates to the date of distribution, shall be distributed
to the Certificate Holders of Series A, and in case the
aggregate amount so to be distributed shall be insufficient to
pay in full
-21-
<PAGE>
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.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
-22-
<PAGE>
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 Participation Agreement or any other
Operative Document shall be applied forthwith to the purpose for which such
payment was made in accordance with the terms of the 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 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 pursuant to Section 7 of the Participation Agreement,
directly to the Person entitled thereto. Any payment received by the Indenture
Trustee under 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.
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 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 in the order of priority specified in Section 3.01 hereof and after payment
in full of all amounts then due in accordance with Section 3.01 hereof, in the
manner provided in clause "Fourth" of Section 3.03 hereof.
SECTION 3.06. Payments to the Owner.
Any amounts distributed hereunder by the Indenture Trustee to the
Owner shall be paid to the Owner (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 to the Indenture Trustee from time
to time.
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.
-23-
<PAGE>
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. 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) the failure of the Owner to pay (i) Principal Amount of,
interest on, or Make-Whole Amount, under any Secured Certificate when due,
and such failure shall have continued unremedied for a period of ten (10)
Business Days, or (ii) any other amount payable by it to the Certificate
Holders under this Trust Indenture (other than any such failure arising by
virtue of a tax withheld pursuant to Section 2.04(b) hereof) or under the
Participation Agreement, and such failure shall have continued unremedied
for ten (10) Business Days after receipt by the Owner of written demand
therefor from the Indenture Trustee or any Certificate Holder; or
(b) the Owner shall fail to carry and maintain, or cause to be
carried and maintained, insurance on and in respect of the Aircraft in
accordance with the provisions of Section 7.04; or
(c) the Owner shall fail to observe or perform (or caused to be
observed or performed), 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 the Owner of written notice thereof from the Indenture Trustee
provided, however, that if the Owner shall have undertaken to cure any
such failure which arises under clause (ii) or clause (iii) of the first
sentence of Section 7.02(a), or under the second sentence of Section
7.02(a) as it relates to maintenance, service, repair or overhaul or under
Section 7.03 and, notwithstanding the diligence of the Owner 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 4.01 so long as the Owner is
proceeding with due diligence to cure such failure and such failure is
remedied not later than three hundred sixty-five (365) days after receipt
by the Owner of such written notice; or
(d) any representation or warranty made by the Owner herein or in
the Participation Agreement or any document or certificate furnished by
the Owner in connection herewith or therewith or pursuant hereto or
thereto (except the representations and warranties set forth in the Pass
Through Trust Agreement, the Underwriting Agreement or the Note Purchase
Agreement or any document or
-24-
<PAGE>
instrument furnished pursuant to any 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 Indenture Trustee or the Certificate
Holders) within thirty (30) days after the receipt by the Owner of a
written notice from the Indenture Trustee advising the Owner of the
existence of such incorrectness; or
(e) the commencement of an involuntary case or other proceeding in
respect of the Owner 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 the Owner 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 the Owner, a receiver, trustee or liquidator of the Owner, or
of any substantial part of its property, or sequestering any substantial
part of the property of the Owner 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 the Owner 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 the Owner to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the Owner or for
all or substantially all of its property, or the making by the Owner of
any assignment for the benefit of creditors, or the Owner shall take any
corporate action to authorize any of the foregoing.
provided, however, that, notwithstanding anything to the contrary
contained in this Section 4.01, any failure of the Owner 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 the Owner is continuing to comply
with all of the terms of Section 7.06 hereof.
SECTION 4.02. Remedies.
(a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue unremedied, then in every such case, the
Indenture Trustee may do one or more of the following, 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
-25-
<PAGE>
provisions of Section 7.02(b) hereof and in possession of the United States
Government or an agency or instrumentality of the United States, the Indenture
Trustee shall not, on account of any Event of Default, be entitled to do any of
the following in such manner as to limit the Owner's control under this Trust
Indenture (or any Lessee's control under any Lease) 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 the Indenture Trustee by registered or certified mail to the Owner (and
any Lessee) with a copy addressed to the Contracting Office Representative for
the Air Mobility Command of the United States Air Force under any contract with
the Owner (or any Lessee) relating to the Aircraft; provided further, that the
Indenture Trustee shall give the Owner twenty (20) days' prior written notice of
its intention to sell the Aircraft:
subject to the provisions of the Granting Clause hereof:
(i) cause the Owner upon the written demand of the Indenture
Trustee and at the Owner's expense, to deliver promptly, and the
Owner shall deliver promptly, the Airframe or any Engine as the
Indenture Trustee may so demand to the Indenture Trustee;
(ii) sell the Airframe and/or any Engine at public or private
sale, whether or not the Indenture Trustee shall at the time have
possession thereof, as the Indenture Trustee may determine, or lease
or otherwise dispose of, all or any part of the Airframe or any
Engine as the Indenture Trustee, in its sole discretion, may
determine, all free and clear of any rights of the Owner, except as
hereinafter set forth in this Section 4.02; or
(iii) exercise any or all of the rights and powers and pursue
any and all remedies of a secured party under the Uniform Commercial
Code of the State of New York.
(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)
at any time, by delivery of written notice or notices to the Owner, 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 4.02(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
-26-
<PAGE>
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 this Section 4.02, 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 Collateral, 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 Pass Through Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.
ECTION 4.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and
the Secured Certificates have been accelerated, subject to Section 4.02 hereof,
at the request of the Indenture Trustee, the Owner 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
Collateral to which the Indenture Trustee shall at the time be entitled
hereunder. If the Owner 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 to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner 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 may
-27-
<PAGE>
enter any of the premises of the Owner 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 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, revenues, issues, income,
products and profits of the Mortgaged Property and every part thereof, 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, 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), and all other payments which the Indenture Trustee may be required
or authorized to make under any provision of this Trust Indenture, as well as
just and reasonable compensation for the services of the Indenture Trustee, and
of all persons properly engaged and employed by the Indenture Trustee with
respect hereto.
SECTION 4.04. 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 or to be an acquiescence therein.
-28-
<PAGE>
SECTION 4.05. 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 and the Indenture
Trustee 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 or the Indenture
Trustee shall continue as if no such proceedings had been instituted.
SECTION 4.06. 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 X hereof, cannot be modified or amended
without the consent of each Certificate Holder.
SECTION 4.07. 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 hereby consents to the
appointment of such a receiver and will not oppose any such appointment. Any
receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
ECTION 4.08. Indenture Trustee Authorized to Execute Bills of Sale,
Etc.
The Owner irrevocably appoints the Indenture Trustee the true and
lawful attorney-in-fact of the Owner in its name and stead and on its behalf,
for the purpose, if an Event of Default shall have occurred and be continuing,
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 hereby ratifying and confirming all that
such attorney or any substitute shall do by virtue hereof in accordance with
applicable law.
-29-
<PAGE>
Nevertheless, if so requested by the Indenture Trustee or any purchaser, the
Owner 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 4.09. 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 any payment of Principal
Amount of, interest on, Make-Whole Amount, if any, due and payable under any
Secured Certificates, the Indenture Trustee shall give prompt written notice
thereof to the Owner and each Certificate Holder. Subject to the terms of
Sections 4.02, 4.06, 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 twenty (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; provided, however, that the Indenture
Trustee may not sell the Aircraft or any Engine without the consent of a
Majority in Interest of Certificate Holders. For all purposes of this Trust
Indenture, in the absence of Actual Knowledge on the part of the Indenture
Trustee, the Indenture Trustee shall not be deemed to have knowledge of a
Default or an Event of Default (except the failure of the Owner to pay any
payment of Principal Amount or interest within one (1) Business Day after the
same shall become due, which failure shall constitute knowledge of a Default)
unless notified in writing by the Owner or one or more Certificate Holders.
-30-
<PAGE>
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations.
(a) Subject to the terms of Sections 4.02(a), 4.06, 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; and (ii) give such notice or direction or exercise such right,
remedy or power hereunder with respect to any part of the Collateral as shall be
specified in such instructions.
The Indenture Trustee will execute and the Owner will file or cause
to be filed such continuation statements with respect to financing statements
relating to the security interest created hereunder in the Collateral as
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 promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee hereunder.
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 is otherwise
contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Collateral, or to otherwise take or
refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Collateral, except as expressly provided by the
terms of this Trust Indenture or as expressly provided in written instructions
-31-
<PAGE>
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 8.01 hereof), promptly take
such action as may be necessary duly to discharge all liens and encumbrances on
any part of the Collateral which result from claims against it in its individual
capacity not related to the ownership of the Aircraft or the administration of
the Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.
SECTION 5.05. No Action Except Under Trust Indenture or
Instructions.
The Indenture Trustee agrees that it will not use, operate, store,
lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Collateral except in accordance with the powers granted
to, or the authority conferred upon, the Indenture Trustee pursuant to this
Trust Indenture and in accordance with the express terms hereof.
SECTION 5.06. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee 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 the Owner 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.
-32-
<PAGE>
ARTICLE VI
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 Collateral in accordance with the terms hereof. The Indenture Trustee, in
its individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for its 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), and (ii) as provided in the fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof.
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, the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing 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 the Owner 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 Collateral, (iv) to confirm,
verify or inquire into the failure to receive any financial statements from the
Owner, or (v) to inspect the Aircraft at any time or ascertain or inquire as to
the performance or observance of any of the Owner's covenants herein with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents.
THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT
MAKE AND SHALL NOT BE DEEMED TO HAVE MADE AND 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. The Indenture Trustee, in
-33-
<PAGE>
its individual or trust capacities, does not make, nor shall it be deemed to
have made, any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Participation Agreement, the Secured
Certificates, the Purchase Agreement, 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 Indenture Trustee, in each
case expressly made in this Trust Indenture or in the Participation Agreement.
The Loan Participants and the Certificate Holders 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, or the Owner as provided in Article III hereof need not be segregated
in any manner except to the extent required by Law or Section 5.06, 7.04(g),
7.06(f) or 7.07(c) 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 the Owner so long as no Default or Event of 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.
The Indenture Trustee shall not 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 Indenture Trustee may accept a copy of a resolution of the Board of
Directors (or Executive Committee thereof) of any party to the Participation
Agreement, certified by the Secretary or an Assistant Secretary thereof as duly
adopted and in full force and effect, as conclusive evidence that such
resolution has been duly adopted and that the same is in full force and effect.
As to the aggregate unpaid Principal Amount of Secured Certificates outstanding
as of any date, the Owner 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 the Owner the manner of
ascertainment of which is not specifically described herein, the Indenture
Trustee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of the Owner, as to such fact or matter, and such certificate
shall constitute full protection to the Indenture Trustee for any action taken
or omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Indenture 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
-34-
<PAGE>
at the expense of the Collateral, consult with counsel, accountants and other
skilled persons to be selected and retained by it, 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. 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 Collateral for the
payment of such compensation, to the extent that such compensation shall not be
paid by the Owner, 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
Collateral toward such payments. The Indenture Trustee agrees that it shall have
no right against the Loan Participants or the Certificate Holders for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.07. 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 6.07.
ARTICLE VII
COVENANTS OF THE OWNER
SECTION 7.01. Liens.
The Owner 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, except (i) the Lien of this 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 7.02(b) and 7.03(b) hereof, (iii) Loan Participant Liens and Indenture
Trustee's Liens, (iv) Liens for taxes of the Owner (or any Lessee) 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
-35-
<PAGE>
of this Trust Indenture, (v) materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising in the ordinary course of the Owner's
(or, if a Lease is then in effect, Lessee'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 this
Trust Indenture, (vi) Liens arising out of any judgment or award against the
Owner (or any Lessee), 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 the Owner (or any Lessee) shall have
provided a bond, cash collateral or other security adequate in the reasonable
opinion of the Indenture Trustee, and (viii) Liens approved in writing by the
Indenture Trustee. The Owner 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 7.02 Registration, Maintenance and Operation; Possession and
Leases; Insignia.
(a)(I) Registration and Maintenance. The Owner, at its own cost and
expense, shall (or shall cause any Lessee to): (i) cause the Aircraft to be duly
registered in its name, and, subject to the second paragraph of this Section
7.02(a) and Section 8(f) of the Participation Agreement, to remain duly
registered in the name of the Owner under the Federal Aviation Act, provided
that the Owner 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 this
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 initially subjected to the
Lien hereof, ordinary wear and tear excepted, and as may be necessary to enable
the applicable airworthiness certification for the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all Boeing
Model 747-400 aircraft powered by engines of the same type as those with which
the Airframe shall be equipped at the time of such grounding and registered in
the United States have been grounded by the 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 Lease is in effect, the same manner and standard
of maintenance, service, repair or overhaul used by
-36-
<PAGE>
the Owner with respect to similar aircraft operated by the Owner in similar
circumstances and utilizing, during any period that a Lease is in effect, the
same manner and standard of maintenance, service, repair or overhaul used by the
Lessee with respect to similar aircraft operated by the Lessee in similar
circumstances; provided, however, that in all circumstances the Aircraft shall
be maintained by the Owner (or any Lessee) 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; and (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. (II) Operation. The
Owner will not maintain, use, service, repair, overhaul or operate the Aircraft
(or permit any Lessee 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 the Owner (or, if a Lease is then in effect, any Lessee) 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 the first priority Lien of this Trust Indenture and does not involve any
material risk of sale, forfeiture or loss of the Aircraft. The Owner will not
operate the Aircraft, or permit any Lessee to operate the Aircraft, in any area
excluded from coverage by any insurance required by the terms of Section 7.04;
provided, however, that the failure of the Owner 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 the Owner (or
any Lessee) or to extraordinary circumstances involving an isolated occurrence
or series of incidents not in the ordinary course of the regular operations of
the Owner (or any Lessee) and in each such case the Owner (or such Lessee, as
the case may be) is taking all reasonable steps to remedy such failure as soon
as is reasonably practicable.
The Indenture Trustee, upon compliance with all of the terms of
Section 8(f) of the Participation Agreement, shall, at the request and sole
expense of the Owner, cooperate with the Owner to take all actions required to
change the registration of the Aircraft to another country.
(b) Possession and Leases. The Owner will not, without the prior
written consent of the Indenture Trustee, lease 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 4.01(a) or 4.01(e) or Event of Default shall
have occurred and be continuing at the time of such lease, 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 this Trust Indenture on the Airframe or (subject to the
further proviso (B) to clause (i) of this Section 7.02(b)) any Engine, and so
long as the Owner (or any Lessee) shall comply with the provisions of Sections
7.02(a) and 7.04 hereof, the Owner (or, except with respect to clause (x) below,
any Lessee) may, without the prior written consent of the Indenture Trustee:
-37-
<PAGE>
(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 the Owner (or, if a Lease
is then in effect, by Lessee) 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 the Owner'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 the Owner shall (or
shall cause Lessee to) comply with Section 7.06(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 7.03(c) hereof;
(iii) install an Engine on an airframe which is owned by the
Owner (or any Lessee) 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 the Owner's
title to such Engine and the first priority Lien of this 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 the Owner (or
any Lessee) or purchased by the Owner (or any Lessee) 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;
-38-
<PAGE>
(v) install an Engine on an airframe owned by the Owner (or
any Lessee), leased to the Owner (or any Lessee) or purchased by the
Owner (or any Lessee) 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 the Owner shall (or shall cause any
Lessee to) comply with Section 7.06(b) hereof in respect thereof,
the Indenture Trustee not intending hereby to waive any right or
interest it may have to or in such Engine under applicable law until
compliance by the Owner with such Section 7.06(b);
(vi) to the extent permitted by Section 7.03(b) hereof,
subject any appliances, Parts or other equipment owned by the Owner
and removed from the Airframe or any Engine to any pooling
arrangement referred to in Section 7.03(b) hereof;
(vii) subject (or permit any Lessee to subject) the Airframe
or any Engine to the Civil Reserve Air Fleet Program and transfer
(or permit any Lessee 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 the Owner (or any Lessee) shall (A) promptly notify the
Indenture Trustee upon subjecting the Airframe or any Engine to the
Civil Reserve Air Fleet Program in any contract year and provide the
Indenture Trustee 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
4.02 hereof, and (B) promptly notify the Indenture Trustee upon
transferring possession of the Airframe or any Engine to the United
States of America or any agency or instrumentality thereof pursuant
to such program;
(viii) enter into a Wet Lease for the Airframe and Engines or
engines then installed thereon with any third party provided that if
the Owner (or any Lessee) shall enter into any Wet Lease for a
period of more than one year (including renewal options) the Owner
shall provide the Indenture Trustee 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) 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 the
Indenture Trustee; or
(x) the Owner may, at any time, enter into any lease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by the
Indenture Trustee, which approval shall not be unreasonably withheld
or (3) any Permitted Lessee if (A)
-39-
<PAGE>
in any such case, the Lessee under such lease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such lease is entered into, (B) in
the event that the Lessee under such lease 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 Lessee is principally based at the time such
lease is entered into (or, in the case of a lease to a proposed
Lessee principally based in Taiwan, maintains diplomatic relations
at least as good as those in effect on the Closing Date) and (C) in
the event that the Lessee under such lease is a foreign air carrier,
the Indenture Trustee shall have received an opinion of counsel to
the Owner to the effect that (I) the terms of the proposed lease
will be legal, valid, binding and (subject to customary exceptions
in foreign opinions generally) enforceable against the proposed
Lessee in the country in which the proposed Lessee is principally
based, (II) there exist no possessory rights in favor of the Lessee
under such lease under the laws of such Lessee's country of domicile
that would, upon bankruptcy or insolvency of or other default by the
Owner and assuming at such time such Lessee is not insolvent or
bankrupt, prevent the return or repossession of the Aircraft in
accordance with the terms of this Trust Indenture, (III) the laws of
such Lessee'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 Lessee's country of domicile would give recognition
to the Owner's title to the Aircraft, to the registry of the
Aircraft in the name of the Owner (or the proposed Lessee, as
"lessee", as appropriate) and to the Lien of this Trust Indenture.
The rights of any Lessee 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 Lease permitted by this paragraph (b) shall be expressly
subject and subordinate to, all the terms of this Trust Indenture and to the
Lien of this Trust Indenture, including, without limitation, the covenants
contained in Section 7.02(a) hereof and the Indenture Trustee's rights to
foreclosure and repossession pursuant to Section 4.02 hereof and to avoid such
Lease upon such repossession, and the Owner shall remain primarily liable
hereunder for the performance of all of the terms of this Trust Indenture to the
same extent as if such Lease or transfer had not occurred, and, except as
otherwise provided herein, the terms of any such Lease shall not permit any
Lessee to take any action not permitted to be taken by the Owner in this Trust
Indenture with respect to the Aircraft. No pooling agreement, lease or other
relinquishment of possession of the Airframe or any Engine or Wet Lease shall in
any way discharge or diminish any of the Owner's obligations to the Indenture
Trustee hereunder or constitute a waiver of the Indenture Trustee's rights or
remedies hereunder. Any lease permitted under this Section 7.02(b) shall
expressly prohibit any further sublease by the Lessee. The Indenture Trustee
agrees, for the benefit of the Owner (and any Lessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine (other than an
Engine) owned by the Owner
-40-
<PAGE>
(or any Lessee), any lessor of any engine (other than an Engine) leased to the
Owner (or any Lessee) and any conditional vendor of any engine (other than an
Engine) purchased by the Owner (or any Lessee) subject to a conditional sale
agreement or any other security agreement, that no interest shall be created
hereunder in any engine so owned, leased or purchased and that neither the
Indenture Trustee nor its successors or assigns will acquire or claim, as
against the Owner (or any Lessee) 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 the Indenture Trustee shall not be for the benefit of any lessor or secured
party of any airframe (other than the Airframe) leased to the Owner (or any
Lessee) or purchased by the Owner (or any Lessee) 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 the Owner (or any Lessee),
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 the Indenture Trustee, any right, title or
interest in an Engine as a result of such Engine being installed on such
airframe. The Owner shall provide to the Indenture Trustee (i) written notice of
any Lease hereunder (such notice to be given not later than five days prior to
entering into such Lease, if practicable, but in any event promptly after
entering into any such Lease) and (ii) a copy of each Lease which has a term of
more than three months.
(c) Insignia. On or prior to the Closing Date, or as soon as
practicable thereafter, the Owner 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:
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 Indenture Trustee as permitted herein). Except as above
provided, the Owner will not allow the name of any Person (other than the Owner)
to be placed on the Airframe or on any Engine as a designation that might be
interpreted as a claim of the ownership; provided that nothing herein contained
shall prohibit the Owner (or any Lessee) from placing its customary colors and
insignia on the Airframe or any Engine.
SECTION 7.03. Replacement and Pooling of Parts; Alterations,
Modifications and Additions.
(a) Replacement of Parts. The Owner, at its own cost and expense,
will so long as the Airframe or an Engine is subject to the Lien of this Trust
Indenture promptly
-41-
<PAGE>
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
7.03 or if the Airframe or an Engine to which a Part relates has suffered an
Event of Loss. In addition, the Owner (or any Lessee) 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 the Owner (or any Lessee), except as otherwise provided in
paragraph (c) of this Section 7.03, 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 7.03 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 7.03, all Parts at any time removed
from the Airframe or any Engine shall remain subject to the Lien of this Trust
Indenture, 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 7.03 and
except in the case of replacement property temporarily installed on an emergency
basis), (i) title to such replacement Part shall be owned by the Owner, (ii)
such replacement Part shall become subject to the Lien of this Trust Indenture
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) the replaced Part shall thereupon be free
and clear of all rights of the Indenture Trustee, and shall no longer be subject
to the Lien of this Trust Indenture or 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 7.03 may be subjected by the
Owner (or any Lessee) to a normal pooling arrangement customary in the airline
industry of which the Owner (or, if a Lease is then in effect, any Lessee) is a
party entered into in the ordinary course of the Owner's (or any Lessee'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 the Owner (or any Lessee), at its expense, as
promptly thereafter as practicable, either (i) causes such replacement Part to
become subject to the Lien of this Trust Indenture free and clear of all Liens
except Permitted Liens (other than pooling arrangements), at which time such
temporary replacement Part shall become a
-42-
<PAGE>
Part or (ii) replaces such replacement Part by incorporating or installing in or
attaching to the Airframe or Engine a further replacement Part which is subject
to the Lien of this Trust Indenture, free and clear of all Liens except
Permitted Liens (other than pooling arrangements).
(c) Alterations, Modifications and Additions. The Owner, 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 the Owner (or, if a Lease is then
in effect, any Lessee) 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 the Indenture Trustee. In addition, the Owner (or any
Lessee), 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 the Owner (or any Lessee) may deem desirable in the
proper conduct of its business, including, without limitation, removal of Parts
which the Owner (or any Lessee) has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such
Engine (such parts, "Obsolete Parts"); provided that no such alteration,
modification or addition shall materially diminish the value, utility or
remaining useful life of the Airframe or such Engine below the value, utility or
remaining useful life thereof immediately prior to such alteration, modification
or addition, assuming the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Trust Indenture, except that the
value (but not the utility or remaining useful life) of the Airframe or any
Engine may be reduced by the value of Obsolete Parts which shall have been
removed so long as the aggregate value of all Obsolete Parts which shall have
been removed and not replaced shall not exceed $800,000. 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, become subject to the Lien of this Trust Indenture.
Notwithstanding the foregoing sentence, the Owner (or any Lessee) 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 on the Closing Date 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
7.02 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 the Owner (or
any Lessee) of any Part as provided above, such Part shall, without further act,
be free and clear of all rights of the Indenture Trustee, such Part shall not be
subject to the Lien of this Trust Indenture and such Part shall no longer be
deemed part of the Airframe or Engine from which it was removed.
-43-
<PAGE>
SECTION 7.04. Insurance.
(a) Public Liability and Property Damage Insurance.
(I) Except as provided in clause (II) of this Section 7.04(a), the
Owner will carry or cause to be carried at its or any Lessee'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 the Owner (or, if a Lease is then in
effect, if and to the extent maintained by Lessee) with respect to other
aircraft owned or leased, and operated by the Owner (or such Lessee) 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 the
Owner (or, if a Lease is then in effect, by Lessee) of the same type as the
Aircraft and (y) $400,000,000 per occurrence and (ii) cargo liability insurance,
in the case of both clause (i) and clause (ii), (A) of the type and covering the
same risks as from time to time applicable to aircraft operated by the Owner
(or, if a Lease is then in effect, by Lessee) of the same type as the Aircraft
and (B) which is maintained in effect with insurers of recognized
responsibility. Any policies of insurance carried in accordance with this
paragraph (a) and any policies taken out in substitution or replacement for any
of such policies (A) shall be amended to name the Indenture Trustee (but without
imposing on such party liability to pay the premiums for such insurance) (and,
if any Lease shall be in effect, the Owner in its capacity as lessor under the
Lease) as an additional insured as its interest may appear, (B) shall provide
that in respect of the interest of the Indenture Trustee (and, if any Lease
shall be in effect, the Owner in its capacity as lessor under the Lease) in such
policies the insurance shall not be invalidated by any action or inaction of the
Owner (or, if any Lease is then in effect, any Lessee) or any other Person and
shall insure the Indenture Trustee (and, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease) regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by the Owner (or, if any Lease is then in effect, any Lessee), (C) may provide
for self-insurance to the extent permitted by Section 7.04(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 the Indenture Trustee (or, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease), or such insurance shall lapse
for non-payment of premium, such cancellation, lapse or change shall not be
effective as to the Indenture Trustee (or, if any Lease shall be in effect, the
Owner in its capacity as lessor under the Lease) for thirty (30) days (seven (7)
days in the case of war risk and allied perils coverage) after issuance to the
Indenture Trustee (or, if any Lease shall be in effect, the Owner in its
capacity as lessor under the Lease) 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 the Indenture Trustee (or, if any Lease
shall be in effect, the Owner in its capacity as lessor under the Lease), (2)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as
-44-
<PAGE>
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 the Indenture
Trustee (or, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) to the extent of any moneys due to the Indenture Trustee
(or, if any Lease shall be in effect, the Owner in its capacity as lessor under
the Lease).
(II) During any period that the Aircraft is on the ground and not in
operation, the Owner 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 the Owner (or, if a
Lease is then in effect, by Lessee) of the same type as the Aircraft which are
on the ground and not in operation; and (B) the scope of the risks covered and
the type of insurance shall be the same as from time to time shall be applicable
to aircraft owned or operated by the Owner (or, if a Lease is then in effect, by
Lessee) of the same type which are on the ground and not in operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except as
provided in clause (II) of this Section 7.04(b), the Owner shall maintain or
cause to be maintained in effect, at its or any Lessee'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 the Owner (or, if a Lease is then in effect, by Lessee) with respect to other
aircraft owned or operated by the Owner (or such Lessee) on the same routes,
except that the Owner (or such Lessee) 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 the Owner (or, if a Lease is then in effect, by
Lessee) of the same type as the Aircraft; provided that such insurance shall at
all times while the Aircraft is subject to this Trust Indenture be for an amount
(subject to self-insurance to the extent permitted by Section 7.04(d)) not less
than the 100% of the then aggregate unpaid Principal Amount of the Secured
Certificates (the "Loan Loss Value"). 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 the Indenture
Trustee (and, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) as an additional insured, as its interest may appear
(but without imposing on such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent permitted in
Section 7.04(d), (iii) shall provide that (A) in the event of a loss involving
proceeds in excess of $7,000,000 (or, if the Aircraft is then under a Lease, in
excess of $4,000,000), the proceeds in respect of such loss up to an amount
equal to the aggregate unpaid Principal Amount of the Secured Certificates plus
all accrued
-45-
<PAGE>
and unpaid interest thereon (the "Balance Due") shall be payable to 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 the Owner (or
any Lessee) shall arrange for any payment of insurance proceeds in respect of
such loss to be held for the account of the Indenture Trustee whether such
payment is made to the Owner (or any Lessee) or any third party), it being
understood and agreed that in the case of any payment to the Indenture Trustee
otherwise than in respect of an Event of Loss, 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 the Owner or
its order, and (B) the entire amount of any loss involving proceeds of
$7,000,000 (or, if the Aircraft is then under a Lease, of $4,000,000) or less or
the amount of any proceeds of any loss in excess of the Balance Due shall be
paid to the Owner or its order unless an Event of Default shall have occurred
and be continuing and the insurers have been notified thereof by 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
the Indenture Trustee, such cancellation, lapse or change shall not be effective
as to the Indenture Trustee (or, if any Lease shall be in effect, the Owner in
its capacity as lessor under the Lease) for thirty (30) days (seven (7) days in
the case of hull war risk and allied perils coverage) after issuance to the
Indenture Trustee (or, if any Lease shall be in effect, the Owner in its
capacity as lessor under the Lease), 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 interest of the Indenture
Trustee (and, if any Lease shall be in effect, the Owner in its capacity as
lessor under the Lease) in such policies the insurance shall not be invalidated
by any action or inaction of the Owner (or, if a Lease is then in effect, any
Lessee) or any other Person and shall insure the Indenture Trustee (and, if any
Lease shall be in effect, the Owner in its capacity as lessor under the Lease)
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Owner (or, if a Lease is then in effect, any
Lessee), (vi) shall be primary without any right of contribution from any other
insurance which is carried by the Indenture Trustee (or, if any Lease shall be
in effect, the Owner in its capacity as lessor under the Lease), (vii) shall
waive any right of subrogation of the insurers against the Indenture Trustee
(and, if any Lease shall be in effect, the Owner in its capacity as lessor under
the Lease), 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 the Indenture Trustee or the Owner (or any Lessee)
to the extent of any moneys due to the Indenture Trustee. In the case of a loss
with respect to an engine (other than an Engine) installed on the Airframe, the
Indenture Trustee shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of any third party that is entitled to
receive such proceeds.
As between the Indenture Trustee and the Owner, it is agreed that
all insurance payments received as the result of the occurrence of an Event of
Loss will be applied as follows:
-46-
<PAGE>
(x) if such payments are received as a result of an Event of
Loss with respect to the Airframe (or the Airframe and the Engines
installed thereon) that has been or is being replaced by the Owner
as contemplated by Section 7.06(a) hereof, such payments shall be
paid over to, or retained by, the Indenture Trustee as security and
upon completion of such replacement shall be paid over to the Owner;
(y) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon) that has not
been or is not being replaced by the Owner as contemplated by
Section 7.06(a) hereof, so much of such payments remaining, after
reimbursement of the Indenture Trustee for reasonable costs and
expenses, as shall not exceed the Balance Due shall be applied in
reduction of the Owner's obligation to pay such Balance Due, if not
already paid by the Owner, or, if already paid by the Owner, shall
be applied to reimburse the Owner for its payment of such Balance
Due, and the balance, if any, of such payments remaining thereafter
will be paid over to, or retained by, the Owner (or if directed by
the Owner, any Lessee); and
(z) if such payments are received with respect to an Engine or
Part under the circumstances contemplated by Section 7.06(b) hereof,
so much of such payments remaining, after reimbursement of the
Indenture Trustee for reasonable costs and expenses, shall be paid
over to, or retained by, the Owner (or if directed by the Owner, any
Lessee), provided that the Owner shall have fully performed, or
concurrently therewith will fully perform, the terms of Section
7.06(b) hereof with respect to the Event of Loss for which such
payments are made.
As between the Indenture Trustee and the Owner, 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
7.02 and 7.03, if not already paid for by the Owner (or any Lessee), and any
balance (or if already paid for by the Owner (or any Lessee), all such insurance
proceeds) remaining after compliance with such Sections with respect to such
loss shall be paid to the Owner (or any Lessee if directed by the Owner).
(II) During any period that the Aircraft is on the ground and not in
operation, the Owner 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 the Owner (or, if a Lease is then in effect, by Lessee) of the same type
similarly on the ground and not in operation, provided that the Owner shall
maintain insurance against risk of loss or damage to the Aircraft in an amount
equal to the Loan Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in operation.
-47-
<PAGE>
(c) Reports, etc. The Owner will furnish, or cause to be furnished,
to the Indenture Trustee, on or before the Closing Date and on or before July 1
in each year thereafter during the Term commencing July, _____, 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 the Indenture
Trustee (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 the Indenture Trustee or the Loan Participants to anyone except (A)
to permitted transferees of the Loan Participants' or the Indenture Trustee who
agree to hold such information confidential, (B) to the Loan Participants' 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. The Owner will cause such Insurance
Brokers to agree to advise the Indenture Trustee in writing of any default in
the payment of any premium and of any other act or omission on the part of the
Owner 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, the Owner will also cause such
Insurance Brokers to agree to advise the Indenture Trustee 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 7.04. In addition, the
Owner will also cause such Insurance Brokers to deliver to the Indenture
Trustee, 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 the Owner to such
party on the Closing Date. In the event that the Owner or any Lessee shall fail
to maintain or cause to be maintained insurance as herein provided, the
Indenture Trustee may at its sole option provide such insurance and, in such
event, the Owner shall, upon demand, reimburse the Indenture Trustee for the
cost thereof to Indenture Trustee, without waiver of any other rights Indenture
Trustee may have.
(d) Self-Insurance. The Owner may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 7.04(b), insuring for a maximum
amount which is less than the Loan Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 7.04
under a program applicable to all aircraft in the Owner's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 7.04(a) and
Section 7.04(b) exceed during any policy year, with respect to all of the
aircraft in the Owner's fleet (including, without limitation, the Aircraft), the
lesser of (a) 50% of the largest replacement value of any single aircraft in the
Owner'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 the Owner carries insurance. In addition, the Owner (and any
Lessee) 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.
-48-
<PAGE>
(e) Additional Insurance by the Owner. The Owner (and any Lessee)
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
7.04.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 7.04 requiring insurance, the
Indenture Trustee 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 the Indenture Trustee, 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 the Owner (or any Lessee) 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 7.04.
(g) Application of Payments During Existence of an Event of Default.
Any amount referred to in paragraph (b) of this Section 7.04 which is payable to
or retainable by the Owner (or any Lessee) shall not be paid to or retained by
the Owner (or any Lessee) 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 the Indenture Trustee as security for the obligations of the Owner (or
any Lessee) under this Trust Indenture and applied against the Owner's
obligations hereunder as and when due. Upon the earlier of (a) such time as
there shall not be continuing any such Event of Default or (b) the termination
of this Trust Indenture in accordance with Section 11.01 hereof, such amount
shall be paid to the Owner (or such Lessee) to the extent not previously applied
in accordance with the preceding sentence.
SECTION 7.05. Inspection.
At all reasonable times and upon at least 15 days' prior written
notice to the Owner, the Indenture Trustee or its authorized representative 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 the Indenture Trustee's expense) of
the books and records of the Owner 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 the Owner; provided that no exercise of such inspection
right shall interfere with the operation or maintenance of the Aircraft by, or
the business of, the Owner (or any Lessee). The Indenture Trustee shall not have
any duty to make any such inspection nor shall it incur any liability or
obligation by reason of not making such inspection.
SECTION 7.06. 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, the Owner shall forthwith (and in any
event, within fifteen (15) days after such occurrence) give the Indenture
Trustee written notice of such Event of Loss, and
-49-
<PAGE>
within forty-five (45) days after such Event of Loss the Owner shall give the
Indenture Trustee written notice of its election to perform one of the following
options (it being agreed that if the Owner shall not have given such notice of
election within such period, the Owner shall be deemed to have elected the
option set forth in clause (i) below). The Owner may elect either to:
(i) redeem the Secured Certificates in accordance with Section
2.10 hereof 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 the Owner to the Indenture
Trustee; or
(ii) substitute an aircraft or an airframe or an airframe and
one or more engines, as the case may be;
provided that, if the Owner does not perform its obligation to effect such
substitution in accordance with this Section 7.06(a) during the period of time
provided herein, then the Owner shall pay or cause to be paid to the Indenture
Trustee on the Business Day next succeeding the 120th day following the
occurrence of such Event of Loss the amount specified in clause (i) above.
In the event the Owner shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be), the Owner
shall at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (x) cause to be
subjected to the Lien of this Trust Indenture, in replacement of the Airframe
with respect to which the Event of Loss occurred, a Replacement Airframe and, if
any Engine shall have been installed on the Airframe when it suffered an Event
of Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines, if any, to be 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 Airframe or Engine, as the case
may be, subject to such Event of Loss assuming that the Aircraft had been
maintained in accordance with this Trust Indenture; provided that the
Replacement Airframe and the Replacement Engines, if any, shall be of the same
or improved model as the Airframe or Engine, as the case may be, that are
replaced and (y) prior to or at the time of any such substitution, the Owner (or
any Lessee), at its own expense, will (1) furnish the Indenture Trustee a copy
of the original bill of sale respecting such Replacement Airframe and the
Replacement Engines, if any, and appropriate instruments assigning to the
Indenture Trustee the benefits, if any, of all manufacturer's and vendor's
warranties generally available and permitted to be assigned by the Owner with
respect to such Replacement Airframe and Replacement Engines, if any, (2) cause
a Trust Indenture Supplement to be duly executed by the Owner and filed for
recording pursuant to the Federal Aviation Act, or the applicable laws, rules
and regulations of any other jurisdiction in which the Replacement Airframe and
Replacement Engines, if any, 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 Replacement Airframe and Replacement Engines, if any, to be
filed in such place or
-50-
<PAGE>
places as are deemed necessary or desirable by counsel for the Indenture Trustee
to perfect the Indenture Trustee's interest therein, (4) furnish the Indenture
Trustee with such evidence of compliance with the insurance provisions of
Section 7.04 with respect to such Replacement Airframe and Replacement Engines,
if any, as the Indenture Trustee's counsel may reasonably request, (5) furnish
the Indenture Trustee with (A) an opinion of in-house counsel to the Owner, or
other counsel satisfactory to the Indenture Trustee, stating that the
Replacement Airframe and Replacement Engines, if any, has or have been validly
subjected to the Lien of this Trust Indenture, the instruments subjecting such
Replacement Airframe and Replacement Engines, if any, to the Lien of this Trust
Indenture, have been duly filed for recordation pursuant to the Federal Aviation
Act or any other law then applicable to the registration of the Replacement
Airframe and Replacement Engines, if any, and no further action, filing or
recording of any document is necessary or advisable in order to establish and
perfect the Lien of this Trust Indenture on such Replacement Airframe and
Replacement Engines, if any (B) a certificate signed by a duly authorized
officer of the Owner stating the following: (i) a description of the replaced
Airframe and Engines, if any, which shall be identified by manufacturer, model,
FAA registration number (or other applicable registration information) and
manufacturer's serial number; (ii) a description of the Replacement Airframe and
Replacement Engines, if any, to be received (including the manufacturer, model,
FAA registration number (or other applicable registration information) and
manufacturer's serial number) as consideration for the replaced Airframe and
Engines, if any; (iii) that the Replacement Airframe and Replacement Engines, if
any, is or are of the same or an improved model as the Airframe and Engines, if
any, requested to be released from this Trust Indenture; (iv) the value, utility
and remaining useful life (without regard to hours or cycles) of the Replacement
Airframe and Replacement Engines, if any, as of the date of such certificate
(which in the judgment of the Owner shall be not less than the then value,
utility and remaining useful life (without regard to hours or cycles) of the
Airframe and Engines, if any, requested to be released (assuming such Airframe
and Engines, if any, was or were in the condition and repair required to be
maintained under this Trust Indenture)); and (v) that no Event of Default or
Default has occurred which has not been remedied or waived, and that the Owner
will not be in default, by the making and granting of the request for release
and the addition of a Replacement Airframe and Replacement Engines, if any, in
the performance of any of the terms and covenants of the Owner, and (C) a
certificate from either an aircraft engineer (who may be an employee of the
Owner) or a firm of independent aircraft appraisers selected by the Owner
confirming the accuracy of the information set forth in sub-clause (iv) of the
immediately preceding clause (5)(B) of this Section 7.06(a), and (6) furnish the
Indenture Trustee with an opinion of counsel (which shall be Cadwalader,
Wickersham & Taft and, if not, other counsel chosen by the Owner and reasonably
acceptable to the Indenture Trustee) reasonably satisfactory to the Indenture
Trustee to the effect that the Indenture Trustee will be entitled to the
benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the
Replacement Airframe, 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 the Indenture Trustee. For all
purposes hereof, the property so substituted shall after such transfer be deemed
part of the property subject to the Lien of this
-51-
<PAGE>
Trust Indenture and shall be deemed an "Aircraft", "Airframe" and "Engine", as
the case may be, as defined herein.
Upon the Owner having provided a Replacement Airframe and
Replacement Engines, if any, as provided for in this Section 7.06(a), (x) the
Lien of this Trust Indenture shall continue with respect to such Replacement
Airframe and Replacement Engines, if any, as though no Event of Loss had
occurred; the Indenture Trustee shall, at the cost and expense of the Owner,
release from the Lien of this Trust Indenture the replaced Airframe and Engines,
if any, with respect to which such Event of Loss occurred, by executing and
delivering to the Owner such documents and instruments, prepared at the Owner's
expense, as the Owner may reasonably request to evidence such release; and (y)
the Indenture Trustee shall assign to the Owner all claims it may have against
any other Person arising from the Event of Loss and the Owner shall receive all
insurance proceeds and proceeds from any award in respect of condemnation,
confiscation, seizure or requisition, including any investment interest thereon,
to the extent not previously applied to the purchase price of the Replacement
Airframe and Replacement Engines, if any, as provided in Sections 7.04(b) and
7.06(c)(i) hereof.
(b) Substitution with Respect to an Engine. The Owner shall (i) so
long as no Default or Event of Default has occurred which has not been remedied
or waived, have the right to substitute a Replacement Engine for any Engine at
its option at any time, on at least thirty (30) days' prior written notice to
the Indenture Trustee and (ii) substitute a Replacement Engine for an Engine if
an Event of Loss shall have occurred with respect to such Engine (under
circumstances in which there has not occurred an Event of Loss with respect to
the Airframe) within sixty (60) days after the occurrence of such Event of Loss
(such Replacement Engine to be 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) and having a value, utility
and remaining useful life (without regard to hours or cycles) at least equal to
the replaced Engine assuming that such replaced Engine had been maintained in
accordance with the provisions of this Trust Indenture. Prior to or at the time
of any such substitution, the Owner, at its own expense, will (1) furnish the
Indenture Trustee with (A) a copy of the original bill of sale with respect to
such Replacement Engine and (B) appropriate instruments assigning to the
Indenture Trustee the benefits, if any, of all manufacturer's and vendor's
warranties generally available and permitted to be assigned by the Owner with
respect to such Replacement Engine, (2) cause a Trust Indenture Supplement to be
duly executed by the Owner 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 Aircraft may then be registered as permitted by
Section 8(f) of the Participation Agreement, (3) cause a financing statement or
statements covering the Lien created by this Trust Indenture with respect to the
Replacement Engine to be filed in such place or places as are deemed necessary
or desirable by counsel for the Indenture Trustee to perfect the Indenture
Trustee's interest therein, (4) furnish the Indenture Trustee with such evidence
of compliance with the insurance provisions of Section 7.04 hereof with respect
to such Replacement Engine as the Indenture Trustee may reasonably request, and
(5) furnish the Indenture Trustee with (A) an opinion of in-house counsel to the
Owner, or other counsel
-52-
<PAGE>
satisfactory to the Indenture Trustee, stating that the Replacement Engine has
been validly subjected to the Lien of this Trust Indenture, the instruments
subjecting such Replacement Engine to the Lien of this Trust Indenture 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 Lien of this Trust Indenture on such Replacement
Engine and (B) a certificate signed by a duly authorized officer of the Owner
stating the following: (i) a description of the replaced 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 replaced Engine; (iii) that such Replacement Engine is
substantially the same as the replaced Engine (or an improved model); and (iv)
the value, utility and remaining useful life (without regard to hours or cycles)
of the Replacement Engine as of the date of such certificate (which in the
judgment of the Owner shall not be less than the then value, utility and
remaining useful life (without regard to hours or cycles) of the Engine
requested to be released (assuming such Engine was in the condition and repair
required to be maintained under this Trust Indenture).
Upon the Owner having provided a Replacement Engine, as provided for
in this Section 7.06(b), (x) the Lien of this Trust Indenture shall continue
with respect to such Replacement Engine; the Indenture Trustee shall, at the
cost and expense of the Owner, release from the Lien of this Trust Indenture the
replaced Engine by executing and delivering to the Owner such documents and
instruments, prepared at the Owner's expense, as the Owner may reasonably
request to evidence such release; and (y) the Indenture Trustee shall assign to
the Owner all claims it may have against any other Person arising from an Event
of Loss of such replaced Engine giving rise to such substitution and the Owner
shall receive all insurance proceeds and proceeds from any award in respect of
condemnation, confiscation, seizure or requisition, including any investment
interest thereon, to the extent not previously applied to the purchase price of
the Replacement Engine, as provided in Sections 7.04(b) and 7.06(c)(ii) hereof.
For all purposes hereof, each such Replacement Engine shall, after such
conveyance, be deemed part of the property subject to the Lien of this Trust
Indenture, and shall be deemed an "Engine".
(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 7.04) received at any time by
the Indenture Trustee or by the Owner 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 then installed thereon), that has been
or is being replaced by the Owner as contemplated by Section 7.06(a)
hereof, such payments shall be paid over to, or retained by the
Indenture Trustee as security and upon completion of such
replacement and compliance by the Owner with the provisions of
Section 7.06(a) with respect to the Event of Loss for which such
payments are made, be paid over to the Owner;
-53-
<PAGE>
(ii) if such payments are received with respect to the
Airframe (or the Airframe and any Engines installed thereon) or an
Engine or Part (not involving an Event of Loss as to the Airframe)
that has been or is being replaced by the Owner pursuant to Section
7.06(b) hereof, such payments shall be paid over to, or retained by,
the Owner; and
(iii) if such payments are received with respect to the
Airframe (or the Airframe and any Engines installed thereon) that
has not been replaced by the Owner as contemplated by Section
7.06(a) hereof, so much of such payments remaining, after
reimbursement of the Indenture Trustee for reasonable costs and
expenses as shall not exceed the Balance Due, shall be applied in
reduction of the Owner's obligation to pay such Balance Due, if not
already paid by the Owner, or, if already paid by the Owner, shall
be applied to reimburse the Owner for its payment of such Balance
Due, and the balance, if any, of such payments remaining thereafter
will be paid over to, or retained by, the Owner (or if directed by
the Owner, any Lessee).
(d) Requisition for Use of the Aircraft. In the event of the
requisition for use by any government or any instrumentality or agency thereof,
so long as it does not constitute an Event of Loss, of the Airframe and the
Engines or engines installed on the Airframe, so long as the Airframe or an
Engine is subject to the Lien of this Trust Indenture, the Owner shall promptly
notify the Indenture Trustee of such requisition, and all of the Owner's
obligations under this Trust Indenture with respect to the Aircraft shall
continue to the same extent as if such requisition had not occurred. All
payments received by the Indenture Trustee or the Owner from such government or
instrumentality or agency thereof for the use of such Airframe and Engines or
engines shall be paid over to, or retained by, the Owner (or, if directed by the
Owner, any Lessee).
(e) Requisition for Use of an Engine. In the event of an Event of
Loss of an Engine resulting from the requisition for use of such Engine (but not
the Airframe) by any government or agency or instrumentality the Owner will
replace such Engine hereunder by complying (or causing any Lessee to comply)
with the terms of Section 7.06(b) hereof and any payments received by the
Indenture Trustee or the Owner from such government with respect to such
requisition shall be paid over to, or retained by, the Owner.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 7.06 which is payable to or retainable by
the Owner (or any Lessee) shall not be paid to or retained by the Owner (or such
Lessee) 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 the
Indenture Trustee as security for the obligations of the Owner (or such Lessee)
under this Trust Indenture and applied against the Owner's obligations hereunder
as and when due. Upon the earlier of (a) such time as there shall not be
continuing any such Event of Default or (b) the termination of this Trust
Indenture in accordance with Section 11.01 hereof, such amount shall be paid to
the Owner (or such Lessee) to the extent not previously applied in accordance
with the preceding sentence.
-54-
<PAGE>
Section 7.07. Interests in the Purchase Agreement.
The grant by the Owner to the Indenture Trustee of the Owner's
interests in and to the Contract Rights as set forth in clause (2) of the
Granting Clause hereof is subject to the following:
(a) If and so long as (A) the Aircraft shall be subject to this
Trust Indenture and (B) the Manufacturer shall not have received written notice
from the Indenture Trustee (including by mail, courier, telex, or telecopy
thereof from the Indenture Trustee addressed to the Manufacturer's Vice
President - Contracts at P.O. Box 3707, Mail Code 21-34, Seattle, WA 98124 if by
mail; 1901 Oakesdale Ave. S.W., M/C 21-34, Renton, WA 98055, if by courier;
425-237-1706 if by telecopy and 32-9430 (answerback BOEINGREN), if by telex)
that an Event of Default under this Trust Indenture has occurred and is
continuing, (1) the Indenture Trustee authorizes the Owner, on behalf of but to
the exclusion of the Indenture Trustee, to exercise in the Owner's own name (i)
such rights and powers of the "Buyer" under the Purchase Agreement and (ii) such
rights as the Indenture Trustee may have with respect to the Aircraft under any
warranty, covenant, representation, service life policy, aircraft performance
guarantee, indemnity or product support agreement of the Manufacturer or any
subcontractor or vendor with respect thereto and, subject to paragraph 7.07(c)
hereof, to retain any recovery or benefit resulting from the enforcement of any
warranty, covenant, representation, service life policy, aircraft performance
guarantee, indemnity, or product support agreement of the Manufacturer or any
subcontractor or vendor under the Purchase Agreement in respect of the Aircraft,
and (2) the Indenture Trustee shall, at the Owner's expense, cooperate with the
Owner and take such actions as the Owner reasonably deems necessary to enable
the Owner to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee that an Event of Default under this Trust Indenture
has occurred and is continuing and thereafter until the Manufacturer shall have
received written notice from the Indenture Trustee that such Event of Default
has been cured or waived: (i) at the Indenture Trustee's option, the
authorization given to the Owner under paragraph 7.07(a) hereof to enforce such
rights and claims shall henceforth cease to be effective and the Indenture
Trustee and its successors and permitted assigns shall, to the exclusion of the
Owner, be entitled to assert and enforce such rights and claims as substitute
party plaintiff or otherwise, and the Owner shall, at the request of the
Indenture Trustee or its successors or permitted assigns and at the Owner's
expense, cooperate with and take such action as reasonably necessary to enable
the Indenture Trustee and its successors and permitted assigns to enforce such
rights and claims, and the Indenture Trustee, 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) the Owner will be deemed to have irrevocably constituted
the Indenture Trustee and its successors and permitted assigns the Owner's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely the Indenture Trustee's rights acquired and to be acquired
hereunder) with full power (in the name of the Owner 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 Purchase Agreement in respect of
-55-
<PAGE>
the Aircraft, to the extent that the same have been assigned pursuant to clause
(2) of the Granting Clause hereof, and for such period as the Indenture Trustee
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 the Indenture Trustee may deem to be necessary or advisable in the
premises.
(c) Notwithstanding clause (2) of the Granting Clause hereof, this
Section 7.07 and anything in this Trust Indenture to the contrary, all amounts
that the Manufacturer is obligated to pay to the Owner under the Purchase
Agreement with respect to the Aircraft, including, without limitation, in
respect of refunds thereunder or resulting from the enforcement of any warranty,
service life policy, aircraft performance guarantee or indemnity or product
support agreement thereunder or the enforcement or exercise of any right or
power under the Purchase Agreement or hereunder (a "Manufacturer Payment")
(excluding, however, from the Manufacturer Payments any amounts the Manufacturer
is obligated to pay to the Owner with respect to the rights reserved to the
Owner in clauses (i) through (v) of the definition of Contract Rights, which
shall at all times be paid to the Owner), will be payable and applicable as
follows: all the Manufacturer Payments shall be paid to the Owner unless and
until the Manufacturer shall have received written notice from the Indenture
Trustee that an Event of Default under this Trust Indenture has occurred and is
continuing, whereupon the Manufacturer will, until the Manufacturer shall have
received written notice from the Indenture Trustee that all Events of Default
under this Trust Indenture have been cured or waived, make any and all such
payments directly to the Indenture Trustee. Any amounts received by the
Indenture Trustee pursuant to the immediately preceding sentence shall, to the
extent not theretofore applied in satisfaction of the Secured Obligations, be
returned to the Owner promptly after all Events of Default under this Trust
Indenture have been cured or waived.
(d) For all purposes of this Trust Indenture, the Manufacturer shall
not be deemed to have knowledge of an Event of Default under this Trust
Indenture or of the discontinuance or waiver of an Event of Default unless and
until the Manufacturer shall have received written notice thereof from the
Indenture Trustee (including by mail, courier, telex, or telecopy thereof from
the Indenture Trustee addressed to the Manufacturer's Vice President - Contracts
at P.O. Box 3707, Mail Code 21-34, Seattle, WA 98124 if by mail; 1901 Oakesdale
Ave. S.W., M/C 21-34, Renton, WA 98055, if by courier; 425-237-1706 if by
telecopy and 32-9430 (answerback BOEINGREN), if by telex) and, in acting in
accordance with the terms and conditions of the Purchase Agreement and this
Trust Indenture, the Manufacturer may rely conclusively upon any such notice.
(e) Anything herein contained to the contrary notwithstanding: (i)
the Owner 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 Trust Indenture
had not been executed; (ii) the exercise by the Indenture Trustee of any of the
rights assigned hereunder shall not release the Owner from any of its duties or
obligations to the Manufacturer under the Purchase Agreement in respect of the
-56-
<PAGE>
Aircraft except to the extent that such exercise by the Indenture Trustee shall
constitute performance of such duties and obligations; and (iii) except as
provided in paragraph (f) of this Section 7.07, the Indenture Trustee shall not
have any obligation or liability under the Purchase Agreement by reason of, or
arising out of, this Trust Indenture or be obligated to perform any of the
obligations or duties of the Owner 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.
(f) Without in any way releasing the Owner from any of its duties or
obligations under the Purchase Agreement, the Indenture Trustee 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 Aircraft or other things
delivered or to be delivered pursuant to the Purchase Agreement, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the product assurance and
customer support documents, Exhibits B and C, respectively, to the Purchase
Agreement) shall apply to, and be binding upon, the Indenture Trustee to the
same extent as the Owner. The Indenture Trustee 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.
(g) Nothing contained in this Trust Indenture shall (i) subject the
Manufacturer to any liability to which it would not otherwise be subject under
the Purchase Agreement or (ii) modify in any respect the Manufacturer's contract
rights thereunder, except as provided in the Consent and Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification.
The Owner hereby agrees, except as otherwise provided in Section
2.03 hereof, to assume liability for, and does hereby indemnify, protect, save
and keep harmless the Indenture Trustee (in its individual and trust
capacities), and its successors, assigns, agents and servants, from and against
any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Indenture Trustee on or measured by any
compensation received by the Indenture Trustee for its services under this Trust
Indenture), claims, actions, suits, costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on, incurred by or asserted against the Indenture Trustee (whether or
not also indemnified against by any other Person under any other document) in
any way relating to or arising out of this Trust Indenture or any other
Operative Document to which it is a party or the enforcement of any of the terms
of any
-57-
<PAGE>
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 Collateral or the action or inaction of the Indenture Trustee hereunder.
Without limiting the foregoing, the Indenture Trustee agrees that, prior to
seeking indemnification from the Collateral, 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 Participation
Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be
entitled to any indemnification for any Taxes or 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 the Owner's
indemnities under such Sections. In addition, if necessary, the Indenture
Trustee shall be entitled to indemnification from the Collateral for any
liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense
or disbursement indemnified against pursuant to this Section 8.01 to the extent
not reimbursed by 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 Collateral.
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. 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 the Owner
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 the Owner, which consent shall not be unreasonably withheld, except
that such consent shall not be necessary if an Event of Default is continuing)
remove the Indenture Trustee without cause by an instrument in writing delivered
to the Owner 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 Event of
Default shall have occurred and be continuing, shall be subject to the Owner's
reasonable
-58-
<PAGE>
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 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 and the predecessor Indenture Trustee 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 9.01, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act.
SECTION 9.02. 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 Collateral shall be situated or to make any claim or bring any suit
with respect to or in connection with the Collateral, this Trust Indenture, any
other Indenture Agreement, the Secured Certificates or any of the transactions
contemplated by the Participation Agreement, (ii) the Indenture
-59-
<PAGE>
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), 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, 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 Collateral, or to act as separate trustee or trustees of all
or any part of the Collateral, 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 9.02. If the
Owner shall not have taken any action requested of it under this Section 9.02(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 9.02(a) without the concurrence of the
Owner; and the Owner 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 9.02(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 9.02(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 9.02(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 Collateral or otherwise payable under any Operative Document to the
Indenture Trustee shall be promptly paid over by it to the Indenture Trustee.
All other rights, powers, duties and obligations conferred or imposed upon any
additional or separate trustee shall be exercised or performed by the Indenture
Trustee and such additional or separate trustee jointly except to the extent
that applicable Law of any jurisdiction in which any particular act is to be
performed renders the Indenture Trustee incompetent or unqualified to perform
such act, in which event such rights, powers, duties and obligations (including
the holding of title to all or part of the Collateral 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
-60-
<PAGE>
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 9.02 shall be
subject to, and shall have the benefit of Articles IV, V, VI, VIII, IX and XI
hereof insofar as they apply to the Indenture Trustee. The powers of any
additional or separate trustee appointed pursuant to this Section 9.02 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, 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 under this Section 9.02(c) when and to the extent
it could so act under Section 9.02(a) hereof.
ARTICLE X
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations.
(a) The Indenture Trustee agrees with the Certificate Holders that
it shall not enter into any amendment, waiver or modification of, supplement or
consent to the Purchase Agreement, the Consent and Agreement, this Trust
Indenture, the Guarantee or the Participation Agreement, or any other agreement
included in the Collateral, 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 affect 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 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 Purchase Agreement, 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 10.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.02(c),
4.02(d), 5.02, 7.06(a) or 7.06(b) hereof, the definitions of "Event
-61-
<PAGE>
of Default", "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 and the Owner, (iii) reduce, modify or
amend any indemnities in favor of the Certificate Holders or (iv) permit the
creation of any Lien on the Collateral 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 Collateral, except as provided in connection with the exercise
of remedies under Article IV hereof.
(b) The Owner 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 in accordance with the terms of the
hereof 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 for the benefit of the Certificate Holders, or to surrender any rights or
power herein conferred upon the Owner; (vi) to add to the rights of the
Certificate Holders; and (vii) to include on the Secured Certificates any legend
as may be required by law.
SECTION 10.02. Indenture Trustee Protected.
If, in the opinion of the institution acting as Indenture Trustee
hereunder, any document required to be executed by it pursuant to the terms of
Section 10.01 hereof adversely affects any right, duty, immunity or indemnity
with respect to such institution under this Trust Indenture, such institution
may in its discretion decline to execute such document.
SECTION 10.03. Documents Mailed to Certificate Holders.
Promptly after the execution by the Owner or the Indenture Trustee
of any document entered into pursuant to Section 10.01 hereof, the Indenture
Trustee shall mail, by first class mail, postage prepaid, a copy thereof to the
Owner and to each Certificate Holder at
-62-
<PAGE>
its address last set forth in the Secured Certificate Register, but the failure
of the Indenture Trustee to mail such copies shall not impair or affect the
validity of such document.
SECTION 10.04. No Request Necessary for Trust Indenture Supplement.
No written request or consent of the Indenture Trustee or the
Certificate Holders pursuant to Section 10.01 hereof shall be required to enable
the Owner to execute and deliver a Trust Indenture Supplement specifically
required by the terms hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. 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 shall direct the Indenture
Trustee to execute and deliver to or as directed in writing by the Owner an
appropriate instrument releasing the Aircraft and the Engines from the Lien of
this Trust Indenture and releasing the Guarantee and the Purchase Agreement 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 the Owner; 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 Collateral and the
final distribution by the Indenture Trustee of all monies or other property or
proceeds constituting part of the Collateral 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 11.02. No Legal Title to Collateral in Certificate Holders.
No holder of a Secured Certificate shall have legal title to any
part of the Collateral. 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 Collateral 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
Collateral.
-63-
<PAGE>
SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding.
Any sale or other conveyance of the Collateral, 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 and such holders in and to such Collateral or
part thereof. No purchaser or other grantee shall be required to inquire as to
the authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Indenture Trustee.
SECTION 11.04. Trust Indenture for Benefit of the Owner, Indenture
Trustee, and Certificate Holders.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner, the Indenture Trustee and
the Certificate Holders, any legal or equitable right, remedy or claim under or
in respect of this Trust Indenture.
SECTION 11.05. 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, addressed to it at its office at 5101 Northwest Drive, St. Paul,
MN 55111-3034, Attention: Treasurer (Telecopy No. (612) 726-0665), (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 Certificate Holder, addressed to
such party at such address as such party shall have furnished by notice to the
Owner 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
Participation Agreement or in the Secured Certificate Register. Whenever any
notice in writing is required to be given by the Owner or the Indenture Trustee
or any Certificate Holder 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 11.06. 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.
-64-
<PAGE>
SECTION 11.07. 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 and the Indenture Trustee, in
compliance with Section 10.01 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 11.08. Successors and Assigns.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. 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 11.09. 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 11.10. Normal Commercial Relations.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner, the Indenture Trustee, any Certificate Holder or any
bank or other Affiliate of such Certificate Holder may conduct any banking or
other financial transactions, and have banking or other commercial
relationships, with the Owner 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 the Owner for any purpose whatsoever, whether
related to any of the transactions contemplated hereby or otherwise.
SECTION 11.11. 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.
-65-
<PAGE>
SECTION 11.12. 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 11.13. Bankruptcy.
It is the intention of the parties that the Indenture Trustee, 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 herein in
the event of a case under Chapter 11 of the Bankruptcy Code in which the Owner
is a debtor, and in any instance where more than one construction is possible of
the terms and conditions hereof or any other pertinent Operative Document, each
such party agrees that a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits.
-66-
<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.
NORTHWEST AIRLINES, INC.,
By: _____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein,
but solely as Indenture Trustee,
Indenture Trustee
By: _____________________________________
Name:
Title:
-67-
<PAGE>
ANNEX A
DEFINITIONS
Unless the context otherwise requires, the following terms shall
have the following meanings for all purposes of the Trust Indenture and Security
Agreement [NW 1999 _] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Actual Knowledge" shall mean, as it applies to the Indenture
Trustee, actual knowledge of a Responsible Officer in the Corporate
Trust Office of the Indenture Trustee.
"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 (or any airframe from time to
time substituted for such Airframe pursuant to Section 7.06 of the
Trust Indenture) together with the initial Engines (or any engine
substituted for either of such Engines pursuant to the terms of the
Trust Indenture), whether or not any such initial or substituted
Engines may from time to time be installed on such initial or
substituted Airframe or may be installed on any other airframe or on
any other aircraft.
"Airframe" means: (i) the Boeing 747-451 aircraft (except
Engines or engines from time to time installed thereon) identified
by U.S. registration mark and manufacturer's serial number in the
initial Trust Indenture 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 7.06(a) of the Trust Indenture; and (ii)
any and all Parts 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).
"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.
<PAGE>
ANNEX A
"Average Life Date" for each Secured Certificate to be
redeemed shall be the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the
redemption date of such Secured Certificate. "Remaining Weighted
Average Life" of such Secured Certificate, at the redemption date of
such Secured Certificate, shall be the number of days equal to the
quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of
principal, including the payment due on the maturity date of such
Secured Certificate, by (ii) the number of days from and including
the redemption date to but excluding the scheduled payment date of
such principal installment; by (b) the then unpaid principal amount
of such Secured Certificate.
"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.
"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" shall mean (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 Ratings Services, a
division of McGraw-Hill, Inc. ("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.
-2-
<PAGE>
ANNEX A
"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.
"Closing" means the closing of the transactions contemplated
by the Participation Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" 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.
"Commitment" means the amount the payment of each Pass Through
Trustee to be made as provided in Section 1 of the Participation
Agreement.
"Contract Rights" means all of the Owner's rights and
interests in and to the Purchase Agreement, as and to the extent
that the same relate to the Aircraft and the operation thereof,
including, without limitation, (a) all claims for damages in respect
of the Aircraft arising as a result of any default by the
Manufacturer under the Purchase Agreement, including, without
limitation, all warranty, service life policy, aircraft performance
guarantee and indemnity provisions in the Purchase Agreement in
respect of the Aircraft and all claims thereunder and (b) any and
all rights of the Owner to compel performance of the terms of the
Purchase Agreement in respect of the Aircraft; reserving to the
Owner, however, (i) all of the Owner's rights and interests in and
to the Purchase Agreement as and to the extent that it relates to
any matters not in respect of the Aircraft, (ii) all of the Owner's
rights and interests under the
-3-
<PAGE>
ANNEX A
Purchase Agreement (other than under Articles 8.3 and 8.4 and
Exhibit B (Product Assurance Document) thereof), (iii) all of the
Owner's rights and interests in or arising out of any payments or
deposits made or to be made by the Owner or amounts credited or to
be credited or paid or to be paid by the Manufacturer to the Owner
in respect of the Aircraft under the Purchase Agreement, (iv) all of
the Owner's rights and interests in and to any Spare Parts General
Terms Agreement and (v) with respect to the Aircraft, all rights to
demand, accept and retain all rights in and to property (other than
the Aircraft), data, documents, training and services of any kind
which the Manufacturer is obligated to provide or does provide
pursuant to the Purchase Agreement with respect to the Aircraft.
"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 the Owner, the Loan
Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any
liability for the payment of money in connection with any letter of
credit transaction, or other liabilities evidenced or to be
evidenced by bonds, debentures, notes or other similar instruments
or for the deferred purchase price of property, goods or services.
"Debt Rate" shall mean, with respect to any Series, the rate
per annum specified for such Series under the heading "Interest
Rate" in Schedule I to the Trust Indenture.
"Default" means any event which with the giving of notice or
the lapse of time or both would become an Event of Default.
"Dollars" and "$" means the lawful currency of the United
States of America.
"Engine" means (i) each of the four Pratt & Whitney Model
PW4056 engines listed by manufacturer's serial number in the initial
Trust Indenture 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 Trust
Indenture, for any of such four engines, together in each case with
any and all Parts incorporated or installed in or attached thereto.
"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>
ANNEX A
the date of the Participation Agreement and any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"Event of Default" shall have the meaning specified in Section
4.01 of the Trust Indenture.
"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 the Owner (or any Lessee) for any reason whatsoever;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total
loss, or a constructive or compromised total loss; (iii) the theft
or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of,
such property (other than a requisition for use by the United States
Government or any other government of registry of the Aircraft, or
any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) (other than a requisition
of title) shall have resulted in the loss of possession of such
property by the Owner (or any Lessee) for a period in excess of 180
consecutive days or, in the case of a requisition of title, the
requisition of title shall not have been reversed within 90 days
from the date of such requisition of title; (iv) as a result of any
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 the Owner (or any Lessee), prior to the expiration of such
180 day period, shall have undertaken and shall be diligently
carrying forward all steps which are necessary or desirable to
permit the normal use of such property by the Owner (or such
Lessee), but in any event if such use shall have been prohibited for
a period of two consecutive years, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been
applicable to the entire U.S. registered fleet of Boeing Model
747-400 aircraft of the Owner (or any Lessee) and the Owner (or a
Lessee), prior to the expiration of such two-year period, shall have
conformed at least one such aircraft in its fleet to the
requirements of any such law, rule, regulation, order or other
action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner
which does not discriminate against the Aircraft in so conforming
the Aircraft, all steps which are necessary or desirable to permit
the normal use of the Aircraft by the Owner (or such Lessee),
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; and (v) any
divestiture of title to or interest in an Engine treated as an Event
of Loss pursuant to Section 7.06(b) of the Trust Indenture. An Event
of
-5-
<PAGE>
ANNEX A
Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to the Airframe.
"Expenses" shall have the meaning attributed thereto in
Section 7(c) of the Participation Agreement.
"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
Rijksluchtvaartdienst 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" mean (a) any federal, state, provincial or
similar government, and any body, board, department, commission,
court, tribunal, authority, agency or other instrumentality of any
such government or otherwise exercising any executive, legislative,
judicial, administrative or regulatory functions of such government
or (b) any other government entity having jurisdiction over any
matter contemplated by the Operative Agreements or relating to the
observance or performance of the obligations of any of the parties
to the Operative Agreements.
"Guarantee" means that certain Guarantee [NW 1999 _], dated as
of [ ], 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 Indenture Trustee, (ii) the Loan
Participants and each other Certificate Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) the Pass
Through Trustees, (vi) each Affiliate of the
-6-
<PAGE>
ANNEX A
Person described in clause (i), (vii) each Affiliate of the Persons
described in clauses (iii), (iv) and (v) inclusive, (viii) the
respective directors, officers, employees, agents and servants of
each of the Persons described in clauses (i) through (v), inclusive,
(ix) the successors and permitted assigns of the Person described in
clause (i), and (x) the successors and permitted assigns of the
Persons described in clauses (ii), (iii), (iv) and (v) inclusive.
"Indenture Agreements" means the Participation Agreement, the
Purchase Agreement, the Guarantee, and any other contract, agreement
or instrument from time to time assigned or pledged under the Trust
Indenture.
"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, (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 Collateral or
the Operative Documents other than a transfer of the Aircraft
pursuant to Article IV of the Trust Indenture while an event of
default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
and the Subordination Agent, as such Intercreditor Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Issuance Date" means February 16, 1999.
"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.
-7-
<PAGE>
ANNEX A
"Lease" means any lease permitted by the terms of Section 7.02
of the Trust Indenture.
"Lessee" 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 Lease which is then in effect pursuant to
Section 7.02(b)(x) of the Trust Indenture.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, 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 Citibank, N.A., 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.
"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 or its affiliates (unless all Secured
Certificates then outstanding shall be held by the Owner or its
affiliates)).
"Make-Whole Amount" means, with respect to any Secured
Certificate, the amount (as determined by an independent investment
banker selected by the Owner and reasonably acceptable to the
Indenture Trustee) 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
-8-
<PAGE>
ANNEX A
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.
"Manufacturer" means The Boeing Company, a Delaware
corporation.
"Manufacturer Documents" means the Purchase Agreement and the
Consent and Agreement.
"Mortgaged Property" shall have the meaning specified in
Section 3.03 of the Trust Indenture.
"Note Purchase Agreement" shall mean the Note Purchase
Agreement, dated as of the Issuance Date, among Northwest Airlines,
Inc., the Subordination Agent, First Security Bank, National
Association, as Escrow Agent, State Street Bank and Trust Company,
as Paying Agent and the Pass Through Trustee under each Pass Through
Trust Agreement providing for, among other things, the issuance and
sale of certain secured certificates.
"Operative Documents" and "Operative Document" means each of
the Participation Agreement, the Trust Indenture, the Trust
Indenture Supplement covering the Aircraft, the Secured
Certificates, the Purchase Agreement (insofar as it relates to the
Aircraft), the Consent and Agreement and the Guarantee.
"Overall Transaction" means all the transactions contemplated
by the Operative Documents.
"Owner Documents" means the Participation Agreement, the Trust
Indenture and the Purchase Agreement (insofar as it relates to the
Aircraft).
-9-
<PAGE>
ANNEX A
"Participants" means and includes the Loan Participants.
"Participation Agreement" shall mean that certain
Participation Agreement [NW 1999 _], dated as of [_______________],
among the Owner, the Subordination Agent, the Indenture Trustee, the
Guarantor, and the Purchasers as the same may from time to time be
supplemented or further amended, or the terms thereof waived or
modified, to the extent permitted by, and in accordance with, the
terms thereof.
"Parties" means 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 the Owner 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.
"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" means each of the [three] separate pass
through trusts created under the Pass Through Trust Agreements.
"Pass Through Trust Agreement" means the pass through trust
agreement and each of the [three] separate pass through trust
supplements referred to on Schedule III 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" shall mean, with respect to the Secured
Certificates, the rate per annum equal to 2% over the Debt Rate as
in effect from time to time.
"Payment Date" shall mean each February 1 and August 1,
commencing on [February/August _, ____] (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 7.01 of the Trust Indenture.
"Permitted Lessee" means any entity domiciled in a country
listed in Schedule III to the Trust Indenture.
-10-
<PAGE>
ANNEX A
"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.
"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 Purchase Agreement No.
1630, dated December 1, 1989, between the Manufacturer and the Owner
relating to the purchase by the Owner of the Aircraft, as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"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.
"Related Indemnitee Group" means, with respect to any
Indemnitee, any officer, director, servant, employee, agent or
Affiliate thereof.
"Replacement Airframe" shall mean any airframe substituted for
the Airframe pursuant to Section 7.06 of the Trust Indenture.
"Replacement Engine" shall mean any engine substituted for an
Engine pursuant to Section 7.06 of the Trust Indenture.
"Responsible Officer" means a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
"Secured Certificates" shall mean and include any Secured
Certificates issued hereunder, and issued in exchange therefor or
replacement thereof.
"Secured Obligations" shall have the meaning specified in
Section 2.06 of the Trust Indenture.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
-11-
<PAGE>
ANNEX A
"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" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series C."
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture
Trustee under the Trust Indenture, but in its individual capacity.
"Subordination Agent" means State Street Bank and Trust
Company, a Massachusetts trust company, as subordination agent under
the Intercreditor Agreement, or any successor thereto.
"Tax Indemnitee" means (i) the Indenture Trustee, its
successors and permitted assigns and (ii) the Trust Indenture
Estate.
"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").
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"Trust Indenture", "this Indenture"," the Trust Indenture",
"Indenture", and "the Indenture" shall mean the Trust Indenture and
Security Agreement [NW 1999 _], dated as of [ ] between the Owner
and the Indenture Trustee, as it may from time to time be
supplemented or amended as herein provided, including supplementing
by a Trust Indenture Supplement pursuant thereto.
-12-
<PAGE>
ANNEX A
"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.
"Trust Indenture Supplement" shall mean a supplement to the
Trust Indenture, in substantially the form of Exhibit A thereto,
which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of February 4, 1999, among the Owner, 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 Owner (or any
Lessee) 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 the Owner (or any Lessee) 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 the Owner (or any Lessee)) and (ii)
shall be maintained by the Owner (or any Lessee) in accordance with
its normal maintenance practices.
-13-
<PAGE>
--------------------------------
EXHIBIT A
TO
TRUST INDENTURE
AND SECURITY AGREEMENT
--------------------------------
TRUST INDENTURE SUPPLEMENT
[NW 1999 _]
This TRUST INDENTURE SUPPLEMENT [NW 1999 _], dated [_____________]
(herein called this "Trust Indenture Supplement") of NORTHWEST AIRLINES, INC.
(the "Owner").
W I T N E S S E T H:
WHEREAS, the TRUST INDENTURE AND SECURITY AGREEMENT [NW 1999 _],
dated as of [_______________] (as amended and supplemented to the date hereof,
the "Trust Indenture") between the Owner 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 hereby confirms that the Lien of the Trust Indenture on the Collateral
covers all of the Owner's right, title and interest in and to the following
described property:
EXHIBIT A-1
<PAGE>
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
- ------------------------ ----------- ------------------- ------------------
together with all of the Owner'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 the Owner'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 the Owner'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).
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.
EXHIBIT A-2
<PAGE>
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 hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement has been delivered to the Owner
and is included in the property of the Owner subject to the pledge and mortgage
thereof under the Trust Indenture.
EXHIBIT A-3
<PAGE>
IN WITNESS WHEREOF, the Owner 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.
NORTHWEST AIRLINES, INC.,
By: _____________________________________
Name:
Title:
EXHIBIT A-4
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------------------- ----------------------
Series A . . . . . . $[_________] [_________]%
Series B . . . . . . $[_________] [_________]%
Series C . . . . . . $[_________] [_________]%
SCHEDULE I-1
<PAGE>
Secured Certificates Amortization
SERIES A
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
-------------------------- ----------------------------
SCHEDULE I-2
<PAGE>
SERIES B
Aircraft: N[_____]
Percentage of Principal
Payment Date Amount to be Paid
-------------------------- ----------------------------
SCHEDULE I-3
<PAGE>
SERIES C
Aircraft: N[_____]
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 Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1A, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1B, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among Northwest
Airlines Holdings Corporation (formerly known as Northwest Airlines
Corporation, "Holdings"), Northwest Airlines, Inc., and State Street Bank
and Trust Company, as amended by the Supplemental Agreement, dated as of
November 20, 1998, among Northwest Airlines, Inc., Northwest Airlines
Corporation, Holdings and State Street Bank and Trust Company, as
supplemented by Trust Supplement No. 1999-1C, dated as of February 16,
1999 among Northwest Airlines, Inc., Northwest Airlines Corporation,
Holdings and State Street Bank and Trust Company.
SCHEDULE II-1
<PAGE>
SCHEDULE III
SCHEDULE OF DOMICILES OF PERMITTED LESSEES
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)(1)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
- ----------
(1) So long as on the date of entering into the proposed lease such country and
the United States have diplomatic relations at least as good as those in effect
on the Closing Date.
================================================================================
GUARANTEE
[NW 1999 _]
Dated as of [______________]
from
NORTHWEST AIRLINES CORPORATION
One Boeing 747-451 Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee................................................................1
2. No Implied Third Party Beneficiaries.....................................4
3. Waiver; No Set-off; Reinstatement; Subrogation...........................4
4. Amendments, Etc..........................................................4
5. Payments.................................................................4
6. Jurisdictional Matters...................................................4
7. Integration; Counterparts; Successors and Assigns; Headings..............5
8. Notices..................................................................5
9. No Waivers...............................................................5
10. Survival.................................................................6
11. Severability.............................................................6
12. Governing Law............................................................6
13. Enforcement Expenses.....................................................6
14. Termination..............................................................6
<PAGE>
GUARANTEE
[NW 1999 _]
This GUARANTEE [NW 1999 _], dated as of [______________] (as
amended, modified or supplemented from time to time, this "Guarantee"), from
NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its
permitted successors and assigns, the "Guarantor"), to the parties listed in
Schedule I hereto (collectively, together with their successors and permitted
assigns (including any subsequent Certificate Holder), the "Parties", and,
individually, a "Party").
WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the
"Owner"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter
into a Trust Indenture and Security Agreement [NW 1999 _], dated as of the date
hereof (as amended, modified or supplemented from time to time, the "Trust
Indenture"), between the Owner and State Street Bank and Trust Company, not in
its individual capacity, except as expressly stated therein, but solely as
Indenture Trustee, initially relating to one (1) Boeing 747-451 aircraft,
together with four (4) Pratt & Whitney Model PW4056 engines (such aircraft and
engines, and any substitute Airframe and Engines under the Trust Indenture,
being collectively referred to herein as the "Aircraft"), pursuant to a
Participation Agreement [NW 1999 _], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "Participation Agreement"),
among the Owner, the Parties and certain other entities; and
WHEREAS, it is a condition precedent to the obligations of the
Parties to consummate the transactions contemplated by the Participation
Agreement that the Guarantor execute and deliver this Guarantee; and
WHEREAS, the capitalized terms used herein that are not defined
herein are used herein as defined in Annex A to the Trust Indenture;
NOW, THEREFORE, in order to induce the Parties to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Guarantee.
(a) The Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Trust Indenture, the Participation Agreement,
the Secured Certificates 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 Owner of all payment obligations when due under the Trust Indenture, the
Participation Agreement, the Secured Certificates and the other Operative
Documents to which the Owner is a party (such obligations of the Owner
guaranteed hereby being hereafter referred to, individually, as a
<PAGE>
"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 Owner 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 Owner 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 Owner, or the disaffirmance with respect to the Owner of the Trust Indenture
or any other Operative Document to which the Owner 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 the Indenture Trustee (such notice to be sent to the Owner (to the extent
the Indenture Trustee 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
Owner 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 Owner, or the
disaffirmance with respect to the Owner of the Trust Indenture or any other
Operative Document to which the Owner is a party in any such proceeding) within
10 Business Days after the date on which such Nonfinancial Obligation is
required to be performed (for avoidance of doubt, to include any applicable
grace period), the Guarantor shall cause such Nonfinancial Obligation to be
performed within 10 Business Days following the receipt of notice from the
Indenture Trustee (such notice to be sent to the Owner (to the extent the
Indenture Trustee 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 Owner's obligations
under the Trust Indenture or any other Operative Document to which the Owner is
a party, any amendment, waiver or other modification of the Trust Indenture 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 Owner may be
entitled over the Owner's obligations under the Trust Indenture and the other
Operative Documents to which the Owner 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
-2-
<PAGE>
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 Owner'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, lease or
other arrangement by which the Owner 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 Owner, (d) any merger or
consolidation of the Owner 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 Owner.
(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 Owner any unpaid
amounts due or otherwise to enforce performance by the Owner. 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 Owner for the Obligations, or (ii) make any effort
at collection of the Obligations from the Owner, or (iii) foreclose against or
seek to realize upon any security now or hereafter existing for the Obligations,
including the Collateral, 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 Owner 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 Indenture Trustee shall be
prevented by applicable law from exercising its remedies (or any of them) under
Article IV of the Trust Indenture, 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 Owner under the Trust Indenture 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 Owner 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.
-3-
<PAGE>
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 Owner, demand for payment from the Owner or any other
Person, notice of nonpayment or failure to perform on the part of the Owner,
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 Owner
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 Owner or any other Person relating thereto;
provided, however, that the Guarantor shall not be entitled to receive payment
from the Owner in respect of any claim against the Owner arising from a payment
by the Guarantor in the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings relating to the Owner, or in the
event of any proceedings for voluntary liquidation, dissolution or other
winding-up of the Owner, 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 Owner.
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 Trust
Indenture, the Participation Agreement or any other Operative Document in which
such Obligation is contained.
6. 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
-4-
<PAGE>
arising out of this Guarantee brought by any party, and (b) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, to the extent permitted by applicable law, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper, or that this Guarantee may not be
enforced in or by such courts. The Guarantor hereby generally consents to
service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York,
New York 10038, Attention: Managing Attorney, or such office of the Guarantor in
New York City as from time to time may be designated by the Guarantor in writing
to the Parties.
7. 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.
8. 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.
9. 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.
10. 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.
-5-
<PAGE>
11. Severability. To the fullest extent permitted by applicable law,
any provision of this Guarantee that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or any provision in any other Operative Document, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
12. 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.
13. 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.
14. 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.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:______________________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
in its individual capacity
and as Indenture Trustee
By:_____________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
not in its individual capacity
but solely as Pass Through Trustee
By:_____________________________
Name:
Title:
STATE STREET BANK AND
TRUST COMPANY
as Subordination Agent
By:_____________________________
Name:
Title:
-7-
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW 1999 _]
PARTIES
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company, as Pass Through Trustee
State Street Bank and Trust Company, as Subordination Agent
