<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 9, 1999
NORTHWEST AIRLINES CORPORATION
(formerly Newbridge Parent Corporation)
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-23642
(Commission File Number)
41-1905580
(IRS Employer Identification No.)
2700 Lone Oak Parkway, Eagan Minnesota 55121
(Address of Principal Executive Offices) (Zip Code)
(612) 726-2111
(Registrants' Telephone Number, Including Area Code)
<PAGE>
Item 7 Exhibits.
The documents listed below are filed as Exhibits with reference to the
Registration Statement on Form S-3 (Registration No. 333-79215) (the
"Registration Statement") of Northwest Airlines Corporation and Northwest
Airlines, Inc. The Registration Statement, the Preliminary Prospectus
Supplement, dated November 24, 1999 (filed with the Securities Exchange
Commission pursuant to Rule 424(b)(2) on November 26, 1999), filed and the
Prospectus Supplement, dated December 2, 1999 (filed with the Securities
Exchange Commission pursuant to Rule 424(b)(2) on December 6, 1999), to the
Prospectus, dated June 7, 1999, relate to the offering of Northwest Airlines,
Inc.'s Pass Through Certificates, Series 1999-3.
1(a) Underwriting Agreement, dated as of December 2, 1999, by and among
Northwest Airlines, Inc., Northwest Airlines Corporation,
Morgan Stanley & Co. Incorporated, Chase Securities Inc., Salomon
Smith Barney Inc. and U.S. Bancorp Piper Jaffray Inc.
4(a) Pass Through Trust Agreement, dated as of June 3, 1999, by and among
Northwest Airlines Corporation, as Guarantor, Northwest Airlines,
Inc. and State Street Bank and Trust Company of Connecticut,
National Association, as Pass Through Trustee
4(b)(1) Pass Through Trust Supplement No. 1999-3G, dated as of December 9,
1999, by and among Northwest Airlines Corporation, as Guarantor,
Northwest Airlines, Inc., and State Street Bank and Trust Company of
Connecticut, National Association, as Pass Through Trustee
4(b)(2) Pass Through Trust Supplement No. 1999-3B, dated as of December 9,
1999, by and among Northwest Airlines Corporation, as Guarantor,
Northwest Airlines, Inc., and State Street Bank and Trust Company of
Connecticut, National Association, as Pass Through Trustee
4(b)(3) Pass Through Trust Supplement No. 1999-3C, dated as of December 9,
1999, by and among Northwest Airlines Corporation, as Guarantor,
Northwest Airlines, Inc., and State Street Bank and Trust Company of
Connecticut, National Association, as Pass Through Trustee
<PAGE>
4(c)(1) Revolving Credit Agreement (1999-3G), dated as of December 9, 1999,
between State Street Bank and Trust Company, as Borrower,
and Morgan Stanley Capital Services, Inc., as Liquidity Provider
4(c)(2) Revolving Credit Agreement (1999-3B), dated as of December 9, 1999,
between State Street Bank and Trust Company, as Borrower,
and Morgan Stanley Capital Services, Inc., as Liquidity Provider
4(c)(3) Revolving Credit Agreement (1999-3C), dated as of December 9, 1999,
between State Street Bank and Trust Company, as Borrower, and
Morgan Stanley Capital Services, Inc., as Liquidity Provider
4(d)(1) Guarantee by Morgan Stanley Dean Witter & Co. of the Class G
Liquidity Facility, dated December 9, 1999
4(d)(2) Guarantee by Morgan Stanley Dean Witter & Co. of the Class B
Liquidity Facility, dated December 9, 1999
4(d)(3) Guarantee by Morgan Stanley Dean Witter & Co. of the Class C
Liquidity Facility, dated December 9, 1999
4(e) Financial Guaranty Insurance Policy issued by MBIA, dated
December 9, 1999.
4(f) Intercreditor Agreement, dated as of December 9, 1999, by and among
State Street Bank and Trust Company of Connecticut, National
Association, as Pass Through Trustee, Morgan Stanley Capital
Services, Inc., as Liquidity Provider and State Street Bank and
Trust Company, as Subordination Agent
4(g)(1) Deposit Agreement (Class G), dated as of December 9, 1999, between
First Security Bank, National Association, as Escrow Agent and ABN
AMRO Bank N.V., as Depositary
4(g)(2) Deposit Agreement (Class B), dated as of December 9, 1999, between
First Security Bank, National Association, as Escrow Agent and ABN
AMRO Bank N.V., as Depositary
4(g)(3) Deposit Agreement (Class C), dated as of December 9, 1999, between
First Security Bank, National Association, as Escrow Agent and ABN
AMRO Bank N.V., as Depositary
4(h)(1) Escrow and Paying Agent Agreement (Class G), dated as of December 9,
1999 among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Salomon Smith Barney
Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc.,
as Underwriters, State Street Bank and Trust Company of
Connecticut, National Association, as Pass Through Trustee, and
State Street Bank and Trust Company, as Paying Agent
4(h)(2) Escrow and Paying Agent Agreement (Class B), dated as of December 9,
1999 among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc.,
Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., as
Underwriters, State Street Bank and Trust Company of Connecticut,
National Association, as Pass Through Trustee, and State Street Bank
and Trust Company, as Paying Agent
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4(h)(3) Escrow and Paying Agent Agreement (Class C), dated as of December 9,
1999 among First Security Bank, National Association, as Escrow
Agent, Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc.,
Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., as
Underwriters, State Street Bank and Trust Company of Connecticut,
National Association, as Pass Through Trustee, and State Street Bank
and Trust Company, as Paying Agent
4(i) Note Purchase Agreement, dated as of December 9, 1999, among
Northwest Airlines, Inc., State Street Bank and Trust Company of
Connecticut, National Association, as Pass Through Trustee, 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
99(a) Participation Agreement [NW __], 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 of Connecticut,
National Association, as Pass Through Trustee, First Security Bank,
National Association, as Owner Trustee, and State Street Bank and
Trust Company, as Subordination Agent and Indenture Trustee
99(b) Lease Agreement [NW __], 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 __], 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 __], dated as of, [____],
between Northwest Airlines, Inc., as Assignor, and First Security
Bank, National Association, as Assignee
99(e) Trust Agreement [NW __], dated as of [____], between [____],
as Owner Participant, and First Security Bank, National Association,
as Owner Trustee
99(f) Guarantee [NW __], dated as of [____], from Northwest Airlines
Corporation
99(g) Participation Agreement [NW __], dated as of [____], among
Northwest Airlines, Inc., as Owner, Northwest Airlines Corporation,
as Guarantor, State Street Bank and Trust Company of Connecticut,
National Association, as Pass Through Trustee and State Street Bank
and Trust Company, as Subordination Agent and Indenture Trustee
99(h) Trust Indenture and Security Agreement [NW __], dated as of
[____], between Northwest Airlines, Inc., as Owner, and State
Street Bank and Trust Company, as Indenture Trustee
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99(i) Guarantee [NW __], 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: January 18, 2000 By: /s/ Douglas M. Steenland
------------------------------------
Name: Douglas M. Steenland
Senior Vice President, General
Counsel and Secretary
<PAGE>
Exhibit 1(a)
CONFORMED COPY
================================================================================
NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
PASS THROUGH CERTIFICATES
SERIES 1999-3
UNDERWRITING AGREEMENT
Dated: December 2, 1999
================================================================================
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NORTHWEST AIRLINES, INC., ISSUER
NORTHWEST AIRLINES CORPORATION, GUARANTOR
UNDERWRITING AGREEMENT
December 2, 1999
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Northwest Airlines, Inc., a Minnesota corporation (the "Company"),
proposes that State Street Bank and Trust Company of Connecticut, National
Association, as pass through trustee (the "Trustee") under the Class G 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 as of June 3, 1999, among Northwest Airlines Corporation,
a Delaware corporation and the ultimate parent company of the Company (the
"Guarantor"), the Company and the Trustee (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) (individually, a "Trust Supplement"), among the Guarantor, the Company
and the
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2
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 1999-3G (the "Class G Trust"), Northwest Airlines
Pass Through Trust, Series 1999-3B (the "Class B Trust") and Northwest Airlines
Pass Through Trust, Series 1999-3C (the "Class C Trust" and, together with the
Class G 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 Company, the Trustee of each of the Trusts
and State Street Bank and Trust Company, 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. Morgan Stanley
Capital Services, Inc. (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's obligations under the
Liquidity Facilities will be unconditionally and fully guaranteed by Morgan
Stanley Dean Witter & Co. The Liquidity Provider, MBIA Insurance Corporation, as
provider of the Policy referred to below (in such capacity, the "Policy
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
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3
Agreement") among the Trustee, State Street Bank and Trust Company, as
subordination agent thereunder (the "Subordination Agent"), the Liquidity
Provider and the Policy Provider.
Payments of interest on the Class G Certificates will be supported by a
financial guaranty insurance policy (the "Policy") issued by the Policy Provider
to the extent the Liquidity Facility for the Class G Certificates and any funds
contained in the cash collateral account funded from such Liquidity Facility are
no longer available for that purpose. The Policy will also support the payment
of the final distribution on the Class G Certificates and will take effect in
certain other circumstances described in the Intercreditor Agreement and the
Policy. The Policy will be issued pursuant to an insurance and indemnity
agreement dated as of the Closing Date (the "Policy Provider Agreement") among
the Policy Provider, the Company and the Subordination Agent. Under the Policy
Provider Agreement, the Subordination Agent will reimburse the Policy Provider
for amounts paid pursuant to claims made under the Policy.
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- 79215) 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 June 7, 1999, included in the
Registration Statement relating to offerings of pass through certificates, 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
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4
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 Policy, the Policy
Provider Agreement, the Indemnification Agreement dated the date hereof (the
"Indemnification Agreement") among the Company, the Policy Provider and the
Underwriters, the Pass Through Agreements, the Note Purchase Agreement, the
Participation Agreements, the Indentures, the Leases, the Equipment Notes, the
Trust Agreements 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:
(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.
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5
(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 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,
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6
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
Northwest Airlines Holdings Corporation 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 and/or the
Company will be a party will be duly executed and delivered by the
Guarantor 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 and/or the
Company is, or is to be, a party are or will be substantially in the
form heretofore supplied 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 or
the Company, as the case may be, will constitute valid and binding
obligations of the Guarantor or the Company, as the case may be,
enforceable against the Guarantor 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
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7
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
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 and/or the Guarantor of
the Operative Documents to which the Company and/or Guarantor is, or is
to be, a party, the issuance and delivery of the Offered Certificates,
the consummation by the Company and the Guarantor of the transactions
contemplated by this Agreement, by such Operative Documents and the
Prospectus, and compliance by the Company 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
and the Guarantor and do not and will not result in any violation of
the charter or by-laws of the Company 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 or the Guarantor under (A) any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or other instrument to
which the Company
<PAGE>
8
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 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.
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9
(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.
(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
<PAGE>
10
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 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
December 9, 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.
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11
(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.
(d) On the Closing Date, you shall have received an opinion of
Bingham Dana LLP, counsel for State Street Bank and Trust Company of
Connecticut, National Association, individually and as Trustee, and
counsel for State Street Bank and Trust Company, individually and as
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
Shearman & Sterling, special counsel for the Liquidity Provider, and an
opinion of in-house counsel for the Liquidity Provider and Morgan
Stanley Dean Witter & Co., each 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 Exhibits E-1
and E-2, respectively.
(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
Shaw Pittman, as counsel for the Policy Provider, and an opinion of
in-house counsel for the Policy Provider, 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
G- 1 and G-2, respectively.
<PAGE>
12
(i) 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.
(j) 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 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, and to the matters set forth in the
foregoing clause (i).
(k) 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.
(l) 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
<PAGE>
13
does not indicate the direction of the possible change, in the rating
accorded any of the Company's or the Guarantor's securities, including
the Offered Certificates, by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
(m) 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.
(n) On the Closing Date, each of the Operative Documents
(other than the Indentures, Leases, Participation Agreements, the
Equipment Notes, the Trust 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 to which they
are parties 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 certificate of the President or a Senior or Executive Vice President
of the Company, dated as of the Closing Date, to such effect.
(o) 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.
(p) On the Closing Date, the Offered Certificates shall be
rated "AAA", in the case of the Offered Certificates of the Class G
Trust, "BBB", in the case of the Offered Certificates of the Class B
Trust and "BBB-", in the case of the Offered Certificates of the Class
C Trust, by Standard & Poor's Ratings Service; and "Aaa", in the case
of the Offered Certificates of the Class G Trust, "Baa2", in the case
of the Offered Certificates of the Class B Trust and "Baa3", in the
case of the Offered Certificates of the Class C Trust, by Moody's
Investors Service, Inc.
<PAGE>
14
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.
(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 the 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
<PAGE>
15
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 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
<PAGE>
16
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 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.
<PAGE>
17
(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 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 Policy Provider, the Depositary, the Escrow Agent,
the Policy Provider and the Paying Agent, including the reasonable fees and
disbursements of their respective counsel, 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 their 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
<PAGE>
18
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
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
<PAGE>
19
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 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
<PAGE>
20
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
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
<PAGE>
21
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 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.
<PAGE>
22
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.
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 the Senior 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/ DANIEL B. MATTHEWS
----------------------------------
Name: Daniel B. Matthews
Title: Vice President & Assistant
Treasurer
NORTHWEST AIRLINES CORPORATION
By: /s/ DANIEL B. MATTHEWS
----------------------------------
Name: Daniel B. Matthews
Title: Vice President & Assistant
Treasurer
Accepted as of the date first
above written:
Morgan Stanley & Co., Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHRISTOPHER J. CHAPUT
-------------------------------------
Name: Christopher J. Chaput
Title: Vice President
<PAGE>
EXHIBIT A-1
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 Basic Agreement and each Pass Through Trust Agreement have
been duly authorized, executed and delivered by NWA Corp. and constitute valid
and legally binding obligations of NWA Corp., the Company and the Trustee
enforceable against NWA Corp., 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 or NWA Corp. of,
and the performance by the Company, 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. or the Company is an
"investment company" within the meaning of and subject to regulation under the
Investment Company Act.
(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
<PAGE>
A-1-2
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, the Policy
Provider Agreement, the Policy 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.
(xiii) The Registration Statement 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
<PAGE>
A-1-3
the Registration Statement 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 Policy and the Policy Provider Agreement", "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, 1998, (ii) the Quarterly Report on Form 10-Q of the Guarantor for
the fiscal quarters ended June 30, 1999 and September 30, 1999 and (iii) the
Current Reports on Form 8-K of the Guarantor, dated January 22, 1999, February
24, 1999, April 19, 1999 and August 10, 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
<PAGE>
A-1-4
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, 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 the 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, as of
its effective date, and the Prospectus (excluding the Exchange Act Documents),
as of December 2, 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 December 2, 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>
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 Northwest Airlines Holdings Corporation 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 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 and/or the Company of the
transactions contemplated therein and compliance by the Guarantor and/or
<PAGE>
B-2
the Company, as the case may be, with the terms thereof, do not and will not
result in any violation of the charter or by-laws of the Guarantor or the
Company, and do not and will not result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance (except for Permitted Liens) upon
any property or assets of the Guarantor or the Company under (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument included
or incorporated by reference as an exhibit to the 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 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 or the Company or any of their respective properties.
(vii) Under any provision of law or regulation applicable to the
Company 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 or the Company of, and
the performance by the Company 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
<PAGE>
B-3
counsel shall also state that, although such counsel is not passing upon and
does not assume any 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 national banking association; validly formed and
authorized to operate as a national banking association under the laws of the
United States of America and, in its individual capacity or as Pass Through
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 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, 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, 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.
(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
the 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, 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 Connecticut 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.
(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
<PAGE>
C-2
authority or agency pursuant to any federal or Connecticut 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 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, 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 the provisions of any
such law.
(vi) There are no taxes, fees or other governmental charges payable
under the laws of the State of Connecticut 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 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 its individual capacity).
(vii) The statements in the December 2, 1999 Prospectus Supplement to
the Northwest Airlines, Inc. Prospectus dated June 7, 1999 under the caption
"Certain Connecticut 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, 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.
(ix) State Street Bank and Trust Company ("SSB") 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 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.
(x) SSB, in its individual capacity or as 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
<PAGE>
C-3
and binding obligations of SSB, in its individual capacity or as Subordination
Agent or Paying Agent, as the case may be, enforceable against SSB, in its
individual capacity or as Subordination Agent or Paying Agent, as the case may
be, in accordance with their respective terms.
(xi) The authorization, execution, delivery and performance by SSB, in
its individual capacity or as 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
do not and will not result in the violation of the provisions of the charter
documents or by-laws of SSB 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 SSB under any indenture, mortgage
or other agreement or instrument, in each case known to us, which SSB is a party
or by which it is bound, or violates any applicable Massachusetts or federal
law, rule or regulation governing SSB'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 SSB of any court, regulatory body, administrative government or
governmental body having jurisdiction over SSB.
(xii) 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 SSB is required for
the authorization, execution, delivery and performance by SSB, in its individual
capacity or as 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 SSB, in its individual capacity or as Subordination Agent or
Paying Agent, 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.
(xiii) 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 SSB, in its
individual capacity or as 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) 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 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).
(xiv) 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 SSB in any court or
<PAGE>
C-4
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
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.
<PAGE>
EXHIBIT D
Form of Opinion of
Ray, Quinney & Nebeker
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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-1
Form of Opinion of Shearman & Sterling,
as special counsel for the Liquidity Provider
Each of the Liquidity Facilities and the Intercreditor Agreement
constitutes the legal, valid and binding obligation of the Liquidity Provider,
enforceable against such party in accordance with its terms, except as (x)
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and (y) enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
<PAGE>
EXHIBIT E-2
Form of Opinion of In-house Counsel for
the Liquidity Provider and Morgan Stanley Dean Witter & Co.
(i) Each of Morgan Stanley Capital Services, Inc. ("Morgan Stanley")
and Morgan Stanley Dean Witter & Co. ("MSDW") has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Delaware.
(ii) Each of Morgan Stanley and MSDW has the corporate power and
authority to enter into and perform its obligations under the (1) the Liquidity
Agreements and (2) the related guarantees (each, a "Guarantee"), respectively.
(iii) Payments due under the Liquidity Agreements (assuming the
Liquidity Agreements are valid and binding obligations of Morgan Stanley) and
the Guarantee rank PARI PASSU with the unsecured and unsubordinated obligations
of Morgan Stanley and MSDW, respectively.
(iv) The Liquidity Agreements have been duly authorized, executed and
delivered by Morgan Stanley, each of the Guarantees has been duly authorized,
executed and delivered by MSDW and each of the Guarantees constitutes a valid
and legally binding obligation of MSDW enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(v) Neither Morgan Stanley or MSDW is required to obtain any
authorization, consent, approval, exemption or license from or to file any
registration with, any governmental authority of the United States of America or
the State of New York as a condition to the validity of, or for the execution
and delivery of the Liquidity Agreements or the Guarantees, to the performance
by Morgan Stanley or MSDW of its obligations thereunder.
(vi) The execution, delivery and performance of the Liquidity
Agreements by Morgan Stanley and each of the Guarantees by MSDW will not
contravene or constitute a default under any statute, regulation, rule, order or
judgment or any governmental authority of the United States of America or the
State of New York, or under any provision of the Certificate of Incorporation or
By-Laws of Morgan Stanley or MSDW.
<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 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 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>
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 and the exception of
any rights of set-off or counter-claim which may be asserted against ABN AMRO
Bank N.V.).
<PAGE>
(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 enforceability 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 office 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>
EXHIBIT G-1
Form of Opinion of Shaw Pittman,
as counsel for the Policy Provider
(i) MBIA is a corporation validly existing, in good standing and
licensed to transact the business of surety and financial guaranty insurance
under the laws of the State of New York.
(ii) MBIA has the corporate power to execute and deliver, and to take
all action required of it under the Policy, the Insurance Agreement, the
Indemnification Agreement and the Intercreditor Agreement.
(iii) Except as have already been obtained, no authorization, consent,
approval, license, formal exemption, or declaration from, nor any registration
or filing with, any court or governmental agency or body of the United States of
America or the State of New York, which if not obtained would affect or impair
the validity or enforceability of the Policy, the Insurance Agreement, the
Indemnification Agreement or the Intercreditor Agreement against MBIA, is
required in connection with the execution and delivery by MBIA of the Policy,
the Insurance Agreement, the Indemnification Agreement, the Intercreditor
Agreement or in connection with MBIA's performance of its obligations
thereunder.
(iv) The Policy, the Insurance Agreement, the Indemnification Agreement
and the Intercreditor Agreement have been duly authorized, executed and
delivered by MBIA, and the Policy and, assuming due authorization, execution and
delivery of the Insurance Agreement, the Indemnification Agreement and the
Intercreditor Agreement by the parties thereto (other than MBIA), the Insurance
Agreement, the Indemnification Agreement and the Intercreditor Agreement,
constitute the legally valid and binding obligations of MBIA, enforceable
against MBIA in accordance with their respective terms subject, as to
enforcement, to (a) bankruptcy, reorganization, insolvency, moratorium and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, including, without limitation, laws relating tot fraudulent transfers
or conveyances, preferential transfers and equitable subordination, presently or
from time to time in effect and general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law), as
such laws may be applied in any such proceeding with respect to MBIA, (b) the
qualification that the remedy of specific performance may be subject to
equitable defenses and to the discretion of the court before which any
proceedings with respect thereto may be brought, and (c) the enforceability of
rights to indemnification under the Indemnification Agreement may be subject to
limitations of public policy under applicable securities laws.
(v) The Policy is not required to be registered under the Securities
Act of 1933, as amended.
<PAGE>
EXHIBIT G-2
Form of Opinion of In-house Counsel
for the Policy Provider
(i) The execution, delivery or performance by MBIA of the Insurance
Policy, the Insurance Agreement, the Indemnification Agreement and the
Intercreditor Agreement (the "Relevant Documents"), the consummation of the
transactions contemplated therein and the compliance with the Insurance Policy
will not, and the consummation of the transactions contemplated thereby and the
satisfaction of the terms or provisions thereof does not and will not (a)
violate any law of the State of New York or any federal laws of the Untied
States, statute or any order, writ, injunction, or decree of which I am aware of
any court or governmental authority or body to which MBIA or any of its
properties may be subject, (b) conflicts or will conflict with or results or
will result in any breach of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property of MBIA under, any contract,
agreement or instrument to which MBIA is a party or by which it or any of its
property or assets is bound or (c) violates or will violate the charter or
by-laws of MBIA.
(ii) There is no pending or, to the best of my knowledge, threatened,
action, suit, proceeding, inquiry or investigation to which MBIA is a party,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to materially or adversely affect
the validity or enforceability of the Insurance Policy.
(iii) The MBIA documents incorporated by reference, or any amendment or
supplement thereto made by MBIA before December 9, 1999 (the "Closing Date"), in
the Prospectus Supplement dated December 2, 1999 to the Northwest Airlines, Inc.
Prospectus dated June 7, 1999 (the "Prospectus Supplement"), complied as to form
in all material respects with the requirements of the Securities Exchange Act of
1934, as amended and the rules and regulations of the Securities and Exchange
Commission thereunder.
(iv) The information with respect to MBIA in the section of the
Prospectus Supplement entitled "Description of the Policy Provider" does not
purport to provide the scope of disclosure required to be included by the
Securities Act of 1933, as amended, with respect to a registrant in connection
with the offer and sale of securities of such registrant. However, I have no
reason to believe that as of December 2, 1999 or the Closing Date, the above
referenced section contained or contains any untrue statement of material fact
or omitted or omits to state any material fact required to be stated therein, in
light of the circumstances under which they were made, not misleading.
<PAGE>
SCHEDULE I
Pass Through Certificates, Series 1999-3
Pass Through Aggregate Final
Certificate Principal Interest Distribution
Designation Amount Rate Date
- ----------- --------- -------- ------------
1999-3G $150,203,000 7.935% April 1, 2019
1999-3B $58,013,000 9.485% April 1, 2015
1999-3C $31,947,000 9.152% April 1, 2010
<PAGE>
SCHEDULE II
Pass Through Certificates, Series 1999-3
<TABLE>
<CAPTION>
Morgan
Stanley & Co.
Incorporated, as
representative of Chase Salomon Smith U.S. Bancorp
the Underwriters Securities Inc. Barney Inc. Piper Jaffray Inc.
---------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
1999-3G $37,553,000 $37,550,000 $37,550,000 $37,550,000
1999-3B $14,504,000 $14,503,000 $14,503,000 $14,503,000
1999-3C $7,989,000 $7,986,000 $7,986,000 $7,986,000
Total $60,046,000 $60,039,000 $60,039,000 $60,039,000
</TABLE>
<PAGE>
SCHEDULE III
NORTHWEST AIRLINES, INC.
Underwriting fees,
discounts, commissions
or other compensation: $2,091,385
<PAGE>
Exhibit 4(a)
NORTHWEST AIRLINES CORPORATION
NORTHWEST AIRLINES, INC.
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of June 3, 1999
<PAGE>
Reconciliation and tie between Pass Through Trust Agreement dated as of June 3,
1999 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>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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...................................................10
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.....................................................................15
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of Certificates.........................................15
Section 3.02. Authentication of Certificates...........................................................16
Section 3.03. Temporary Certificates...................................................................16
Section 3.04. Registration of Transfer and Exchange of Certificates....................................16
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates........................................17
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 TOCERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.........................................19
Section 4.02. Distributions from Certificate Account and Special Payments Account......................20
Section 4.03. Statements to Certificateholders.........................................................21
Section 4.04. Investment of Special Payment Moneys.....................................................22
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence.......................................................22
Section 5.02. Consolidation, Merger, etc...............................................................22
-i-
<PAGE>
ARTICLE VI
DEFAULT
Section 6.01. Events of Default........................................................................23
Section 6.02. Incidents of Sale of Equipment Notes.....................................................24
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..................................................................25
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....................26
Section 6.08. Remedies Cumulative......................................................................26
Section 6.09. Undertaking for Costs....................................................................26
ARTICLE VII
THE TRUSTEE
Section 7.01. Notice of Defaults.......................................................................27
Section 7.02. Certain Rights of Trustee................................................................27
Section 7.03. Not Responsible for Recitals or Issuance of Certificates.................................28
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..................................................30
Section 7.08. Resignation and Removal; Appointment of Successor........................................30
Section 7.09. Acceptance of Appointment by Successor...................................................31
Section 7.10. Merger, Conversion, Consolidation or Succession to Business..............................32
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........................................34
Section 7.14. Representations and Warranties of Trustee................................................34
Section 7.15. Withholding Taxes; Information Reporting.................................................35
Section 7.16. Trustee's Liens..........................................................................35
Section 7.17. Preferential Collection of Claims........................................................35
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
Section 8.03. Reports by Trustee.......................................................................36
Section 8.04. Reports by the Guarantor and Company.....................................................36
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of Certificateholders............................37
Section 9.02. Supplemental Agreements with Consent of Certificateholders...............................37
-ii-
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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......................................................39
Section 9.07. Reference in Certificates to Supplemental Agreements.....................................39
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other Note Documents........................39
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...............................................41
Section 12.04. Registration of Equipment Notes in Name of Subordination Agent..........................41
Section 12.05. Notices.................................................................................41
Section 12.06. Governing Law...........................................................................42
Section 12.07. Severability of Provisions..............................................................42
Section 12.08. Trust Indenture Act Controls............................................................42
Section 12.09. Effect of Headings and Table of Contents................................................43
Section 12.10. Successors and Assigns..................................................................43
Section 12.11. Benefits of Agreement...................................................................43
Section 12.12. Legal Holidays..........................................................................43
Section 12.13. Counterparts............................................................................43
Section 12.14. Communication by Certificateholders with Other Certificateholders.......................43
</TABLE>
Exhibit A - Form of Certificate
-iii-
<PAGE>
This PASS THROUGH TRUST AGREEMENT, dated as of June 3, 1999, among
Northwest Airlines Corporation, a Delaware corporation (the "Guarantor"),
Northwest Airlines, Inc., a Minnesota corporation (the "Company"), and State
Street Bank and Trust Company of Connecticut, National Association, a national
banking association, 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:
ARTICLE I
DEFINITIONS
<PAGE>
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.
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
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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.
ESCROW ACCOUNT: With respect to the Certificates of any series, has the
meaning specified in Section 2.02(b).
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<PAGE>
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.
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.
4
<PAGE>
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
(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
5
<PAGE>
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 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
6
<PAGE>
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 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.
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<PAGE>
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.
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
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<PAGE>
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 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.
9
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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.
(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
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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.
(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);
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(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;
(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.
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(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
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
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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 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).
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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 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
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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, 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.
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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;
(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
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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 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.
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(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 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,
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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.
(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;
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(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.
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.
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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 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.
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(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.
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
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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.
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
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(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
(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.
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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:
(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;
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(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.
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
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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 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
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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.
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.
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(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 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
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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 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.
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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 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.
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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 national banking association organized
and validly existing, and in good standing under the laws of the United
States;
(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;
(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 Connecticut 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 Connecticut regulating the banking
and corporate trust activities of the Trustee; and
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(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.
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.
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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 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.
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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, 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
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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.
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.
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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 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
38
<PAGE>
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
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
39
<PAGE>
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,
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 of Connecticut, National Association
225 Asylum Street, Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate/Muni Department
Facsimile: (860) 244-1889
Telephone: (860) 244-1822
40
<PAGE>
(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 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
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<PAGE>
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.
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
-----------------------------------------
Title:
-------------------------------------
NORTHWEST AIRLINES, INC.
By
-----------------------------------------
Title:
-------------------------------------
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------------------
Title:
-------------------------------------
42
<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 of Connecticut, National
Association, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement dated as of June 3, 1999 (the "Basic Agreement"), as supplemented by
Trust Supplement No. ___________ thereto dated __________, _____ (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
- ----------
(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>
Facility (the "Trust Property"). 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
[_______], 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 [________] 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 _______________, _____, 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.
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.
2
<PAGE>
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.
3
<PAGE>
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
OF CONNECTICUT, NATIONAL ASSOCIATION,
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
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------------
Authorized Officer
<PAGE>
Exhibit 4(b)(1)
EXECUTION COPY
This Trust Supplement No. 1999-3G, dated as of December 9, 1999 (herein
called the "TRUST SUPPLEMENT"), by and among Northwest Airlines Corporation, a
Delaware corporation (the "Guarantor"), Northwest Airlines, Inc., a Minnesota
corporation (the "COMPANY"), and State Street Bank and Trust Company of
Connecticut, National Association (the "TRUSTEE"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, the Company and
the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates 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 or refinance the acquisition of
fourteen new British Aerospace Avro RJ85 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
"1999-3G Trust" or the "APPLICABLE TRUST") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-3G Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-3G Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in
<PAGE>
2
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, 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 1999-3G" (hereinafter defined as the "Series
1999-3G Certificates" or the "Applicable Certificates"). Each Series 1999-3G
Certificate represents a Fractional Undivided Interest in the 1999-3G Trust
created hereby.
The terms and conditions applicable to the Series 1999-3G Certificates
are as follows:
(a) The aggregate principal amount of the Series 1999-3G
Certificates that shall be authenticated under the Agreement (except
for Series 1999-3G Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $150,203,000.
(b) The Cut-off Date is July 31, 2000.
(c) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each April 1 and October 1, commencing on
April 1, 2000, 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).
(e) (i) The Series 1999-3G Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-3G
Certificates, by its acceptance of such
<PAGE>
3
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
1999-3G 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 1999-3G Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, the Company and the
Clearing Agency (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 1999-3G 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:
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N523XJ.................... Avro RJ85 LF507-1F
N524XJ.................... Avro RJ85 LF507-1F
N525XJ.................... Avro RJ85 LF507-1F
N526XJ.................... Avro RJ85 LF507-1F
N527XJ.................... Avro RJ85 LF507-1F
N528 XJ................... Avro RJ85 LF507-1F
N529XJ.................... Avro RJ85 LF507-1F
N530XJ.................... Avro RJ85 LF507-1F
N531XJ.................... Avro RJ85 LF507-1F
N532XJ.................... Avro RJ85 LF507-1F
<PAGE>
4
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N533XJ.................... Avro RJ85 LF507-1F
N534XJ.................... Avro RJ85 LF507-1F
N535XJ.................... Avro RJ85 LF507-1F
N536XJ.................... Avro RJ85 LF507-1F
(i) At the Escrow Agent=s request under the Escrow Agreement,
the Trustee shall affix the corresponding Escrow Receipt to each Series
1999-3G Certificate. In any event, any transfer or exchange of any
Series 1999-3G 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 1999-3G Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto
and also is so transferred or exchanged. By acceptance of any Series
1999-3G Certificate to which an Escrow Receipt is attached, each
Certificateholder of such a Series 1999-3G 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, DEPOSIT AGREEMENT AND ESCROW
AGREEMENT. The Series 1999-3G Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
Section 1.03. RANKING OF SERIES 1999-3G CERTIFICATES. The Series
1999-3G 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
1999-3G Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. POLICY. Payments of interest on the Series 1999-3G
Certificates when due and payment of the outstanding balance on the Series 1999
3-G Certificates on the Final Legal Distribution Date for such Certificates and
under certain other circumstances will be supported by a financial guaranty
insurance policy to be issued by the Policy Provider pursuant to the Policy
Provider Agreement, such policy, together with any policy issued in replacement
thereof pursuant to the Intercreditor Agreement, in each case as amended,
supplemented or otherwise modified from time to time in accordance with their
respective terms, being the "Policy".
Section 1.06. RANKING OF EQUIPMENT NOTES. The Equipment Notes will be
subject to the ranking and priority as set forth in the related Indenture.
Section 1.07. 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.
<PAGE>
5
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.
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 14 new British Aerospace Avro RJ85 which
were sold or are expected to be sold to the Owner Trustee or the
Company during the period from April 1999 through May 2000.
APPLICABLE CERTIFICATEHOLDER: Means the holder of an
Applicable Certificate.
APPLICABLE CERTIFICATES: As defined in Section 1.01.
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.
<PAGE>
6
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
December 9, 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., doing business through a
United States branch.
DEPOSITS: Has the meaning specified in the Note Purchase
Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or
Special Distribution Date.
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 December 9, 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
<PAGE>
7
therein, the Policy Provider 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. 1999-3B (the "1999-3B Trust Supplement") dated the
date hereof relating to Northwest Airlines 1999-3B Pass Through Trust
and by Trust Supplement No. 1999-3C (the "1999-3C Trust Supplement")
dated the date hereof relating to the Northwest Airlines 1999-3C 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.
PARTICIPATION AGREEMENT: Has the meaning specified in the Note
Purchase Agreement.
PAYING AGENT: Means State Street Bank and Trust Company.
POLICY: Has the meaning specified in Section 1.05.
POLICY PROVIDER: Means, initially, MBIA Insurance Corporation,
and any replacement or successor thereof appointed in accordance with
the Policy Provider Agreement.
POLICY PROVIDER AGREEMENT: Has the meaning specified in the
Intercreditor Agreement.
POLICY PROVIDER DEFAULT: Has the meaning specified in the
Intercreditor Agreement.
<PAGE>
8
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 and payments under the Policy made for
the benefit of the Series 1999-3G Certificateholders (other than in
respect of the Liquidity Facilities and interest on the Series 1999-3G
Certificates).
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.
PROSPECTUS SUPPLEMENT: Means the Prospectus Supplement dated
December 2, 1999, relating to the offering of the Class G Certificates,
the Class B Certificates and the Class C Certificates (each as defined
in the Intercreditor Agreement).
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 Applicable Trust under the Escrow
Agreement to request the Escrow Agent to withdraw from the Deposit
Accounts funds sufficient to enable the Applicable 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 Applicable Trust and the Trustee,
on behalf of the Applicable Trust, under the Intercreditor Agreement,
the Note Purchase Agreement and the Liquidity Facility, including,
without limitation, the
<PAGE>
9
rights of the Applicable Trust to acquire Equipment Notes under the
Note Purchase Agreement, all rights to receive certain payments under
such documents, and all monies paid to the Trustee on behalf of the
Trust pursuant to the Intercreditor Agreement or the Liquidity
Facility, and (v) all monies payable to the Trustee on behalf of the
Applicable Trust pursuant to the Policy.
TRUSTS: Means, collectively, the Northwest Airlines 1999-3
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 December 2, 1999 by and among the Company, the Guarantor, Morgan
Stanley & Co. Incorporated, Chase Securities Inc., Salomon Smith Barney
Inc. and U.S. Bancorp Piper Jaffray Inc.
Section 3.02. OTHER. For purposes of the Applicable Trust, "PTC Event
of Default," as used in the Basic Agreement, shall have the meaning set forth in
the Intercreditor Agreement.
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
Applicable 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
<PAGE>
10
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 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.
<PAGE>
11
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 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
<PAGE>
12
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.
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. SUPPLEMENTAL AGREEMENTS. (a) For purpose of this Trust,
Section 9.01 and 9.02 of the Basic Agreement shall be amended to read as
follows:
"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 Deposit
Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Note Purchase Agreement, any Liquidity Facility, the Policy or the
Policy Provider Agreement, 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 contained in the Note Purchase Agreement
or the Policy Provider Agreement; 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 conferred upon the
Guarantor or the Company in this Agreement, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider Agreement; or
(4) except where Certificateholder consent is
required by Sections 9.02(1) - 9.02(6) and as described below,
to correct or supplement any provision in this Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider 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, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
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 in this
Agreement, the Deposit Agreements, the Escrow Agreements,
<PAGE>
13
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
Agreement; or
(5) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or
quotation system on which the Certificates are listed, or any
regulatory body; or
(6) to modify, eliminate or add to the provisions of
this Agreement, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility 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, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility such other provisions as may be expressly permitted
by the Trust Indenture Act, 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
(7) to evidence and provide for the acceptance of
appointment under this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility by a successor Trustee with respect to
one or more Trusts and to add to or change any of the
provisions of this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility 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
(8) 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, the Deposit Agreements, the Escrow
Agreements,
<PAGE>
14
the Intercreditor Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the
rights and obligations of such Certificateholders under this Agreement,
the Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity Facility, the
Policy or the Policy Provider 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 or other Trust Property 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; or
(6) terminate the Policy or modify the Policy other
than amendments already contemplated or required by Section
3.06 of the Policy Provider Agreement and/or Section 2.6(c) or
3.7(c) of the Intercreditor Agreement.
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."
<PAGE>
15
(b) If Class D Certificates are issued, the Company, the Guarantor 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 similar to those set forth
in Section 7.01 hereof.
(c) Any supplemental agreement may not adversely affect the status of
the Applicable 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) a partnership.
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 Applicable Trust:
(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
<PAGE>
16
(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 VI.2. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS; FEDERAL
INCOME TAX REPORTING. (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 (including any portion
thereof paid by the Liquidity Provider and the Policy Provider);
(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.
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,
<PAGE>
17
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-42 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) Unless and until required otherwise by applicable authority, the
Trustee shall treat the Applicable Trust as a "grantor trust" under Subpart E,
Part I, Subchapter J of Chapter 1 of the Code, and shall file annually with the
Internal Revenue Service Form 1041, indicating the name and address of the
Applicable Trust and otherwise completed in blank, with attached statements
identifying each Certificateholder and its pro rata share of the income and
expenses of the Applicable Trust for the applicable portion of the preceding
calendar year, on the cash or accrual method, as the case may be, and shall
furnish each Certificateholder with a copy of its statement at the time and in
the manner required by the Code.
(e) This Section 6.02 supersedes and replaces Section 4.03 of the Basic
Agreement.
ARTICLE VII
DEFAULT
Section 7.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. By acceptance of
its Applicable Certificate, each Applicable Certificateholder agrees that, 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
<PAGE>
18
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); and
(c) whether or not any Class B Certificateholder or Class C
Certificateholder has exercised its rights pursuant to paragraph (a) or
(b) above, the Policy Provider (except in the event of a Policy
Provider Default), if it is then the Controlling Party, 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 the
holders of the Applicable Certificates.
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>
19
(which deducted amounts shall remain distributable to, and may be retained by,
the Applicable Certificateholder as of such Record Date); PROVIDED FURTHER that
no purchase of Applicable Certificates pursuant to paragraph (a) or (b) of this
Section 7.01 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 (if the Class B
Certificates 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 of this paragraph 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), Class C
Certificateholder(s) or the Policy Provider, 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 Policy, 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 Policy, 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.
(d) This Section 7.01 supersedes and replaces Section 6.01(b) of the
Basic Agreement.
<PAGE>
20
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
1999-3G 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>
21
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee
have caused this Trust Supplement to be duly executed by their respective
officers thereto duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By:
-------------------------------------
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By:
-------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or its
interest herein, will be deemed to represent and warrant to and for the benefit
of each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the "CODE") or of entities
which may be deemed to hold such plans, have not been used to purchase this
Certificate or (ii) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold this Certificate will not constitute a non-exempt prohibited
transaction under ERISA or Section 4975 of the Code.
NORTHWEST AIRLINES 1999-3G PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-3G
Issuance Date: December 9, 1999
Final Legal Distribution Date: October 1, 2020
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-3G 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 1999-3G Pass
Through Trust (the "TRUST") created by State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the "TRUSTEE"), pursuant to a
Pass Through Trust Agreement, dated as of June 3, 1999 (as amended or
<PAGE>
2
supplemented, the "BASIC AGREEMENT"), by and among the Trustee, Northwest
Airlines Corporation, a Delaware corporation (the "GUARANTOR"), and Northwest
Airlines, Inc., a Minnesota corporation (the "COMPANY"), as supplemented by
Trust Supplement No. 1999-3G thereto, dated as of December 9, 1999
(collectively, the "AGREEMENT"), by and among the Trustee, the Guarantor and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "Pass Through
Certificates, Series 1999-3G" (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 April 1 and October 1 (a "REGULAR DISTRIBUTION DATE"),
commencing April 1, 2000 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
<PAGE>
3
the name of a Clearing Agency (or its nominee), such distribution shall be made
by wire transfer. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after notice mailed by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificate- holder 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 1999-3G
PASS THROUGH TRUST
By: STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, 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 OF CONNECTICUT,
NATIONAL ASSOCIATION,
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
------------------------- -----------------
April 1, 2000 .................. $ 1,877,080
October 1, 2000 ................ 670,672
April 1, 2001 .................. 3,834,855
October 1, 2001 ................ 110,888
April 1, 2002 .................. 4,395,129
October 1, 2002 ................ 0
April 1, 2003 .................. 4,506,107
October 1, 2003 ................ 0
April 1, 2004 .................. 4,506,107
October 1, 2004 ................ 0
April 1, 2005 .................. 4,506,107
October 1, 2005 ................ 1,667,306
April 1, 2006 .................. 2,838,801
October 1, 2006 ................ 2,593,787
April 1, 2007 .................. 1,912,320
October 1, 2007 ................ 4,930,689
April 1, 2008 .................. 918,291
October 1, 2008 ................ 5,565,945
April 1, 2009 .................. 94,275
October 1, 2009 ................ 6,930,313
April 1, 2010 .................. 0
October 1, 2010 ................ 6,484,234
April 1, 2011 .................. 0
October 1, 2011 ................ 7,024,588
April 1, 2012 .................. 0
October 1, 2012 ................ 6,484,236
April 1, 2013 .................. 0
October 1, 2013 ................ 7,024,589
April 1, 2014 .................. 0
October 1, 2014 ................ 6,484,235
April 1, 2015 .................. 0
October 1, 2015 ................ 7,024,588
April 1, 2016 .................. 0
October 1, 2016 ................ 10,274,207
April 1, 2017 .................. 2,411,812
October 1, 2017 ................ 16,880,017
April 1, 2018 .................. 0
October 1, 2018 ................ 26,140,607
April 1, 2019 .................. 2,111,121
<PAGE>
Exhibit 4(b)(2)
EXECUTION COPY
This Trust Supplement No. 1999-3B, dated as of December 9, 1999 (herein
called the "TRUST SUPPLEMENT"), by and among Northwest Airlines Corporation, a
Delaware corporation (the "GUARANTOR"), Northwest Airlines, Inc., a Minnesota
corporation (the "COMPANY"), and State Street Bank and Trust Company of
Connecticut, National Association (the "TRUSTEE"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, the Company and
the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates 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 or refinance the acquisition of
fourteen new British Aerospace Avro RJ85 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
"1999-3B TRUST" or the "APPLICABLE TRUST") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-3B Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-3B Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in
<PAGE>
2
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, 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
APass Through Certificates, Series 1999-3B" (hereinafter defined as the ASERIES
1999-3B CERTIFICATES" or the "APPLICABLE CERTIFICATES"). Each Series 1999-3B
Certificate represents a Fractional Undivided Interest in the 1999-3B Trust
created hereby.
The terms and conditions applicable to the Series 1999-3B Certificates
are as follows:
(a) The aggregate principal amount of the Series 1999-3B
Certificates that shall be authenticated under the Agreement (except
for Series 1999-3B Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $58,013,000.
(b) The Cut-off Date is July 31, 2000.
(c) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each April 1 and October 1, commencing on
April 1, 2000, 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).
(e) (i) The Series 1999-3B Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-3B
Certificates, by its acceptance of such
<PAGE>
3
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 (AERISA"), or of a plan subject to Section 4975 of the Internal
Revenue Code of 1986, as amended (the ACODE") or of entities which may
be deemed to hold such plans, have not been used to purchase Series
1999-3B 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 1999-3B Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, the Company and the
Clearing Agency (the ACLEARING 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 1999-3B 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:
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N523XJ.................. Avro RJ85 LF507-1F
N524XJ.................. Avro RJ85 LF507-1F
N525XJ.................. Avro RJ85 LF507-1F
N526XJ.................. Avro RJ85 LF507-1F
N527XJ.................. Avro RJ85 LF507-1F
N528 XJ................. Avro RJ85 LF507-1F
N529XJ.................. Avro RJ85 LF507-1F
N530XJ.................. Avro RJ85 LF507-1F
N531XJ.................. Avro RJ85 LF507-1F
N532XJ.................. Avro RJ85 LF507-1F
<PAGE>
4
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N533XJ.................. Avro RJ85 LF507-1F
N534XJ.................. Avro RJ85 LF507-1F
N535XJ.................. Avro RJ85 LF507-1F
N536XJ.................. Avro RJ85 LF507-1F
(i) At the Escrow Agent's request under the Escrow Agreement,
the Trustee shall affix the corresponding Escrow Receipt to each Series
1999-3B Certificate. In any event, any transfer or exchange of any
Series 1999-3B 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 1999-3B Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto
and also is so transferred or exchanged. By acceptance of any Series
1999-3B Certificate to which an Escrow Receipt is attached, each
Certificateholder of such a Series 1999-3B 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, DEPOSIT AGREEMENT AND ESCROW
AGREEMENT. The Series 1999-3B Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
Section 1.03. RANKING OF SERIES 1999-3B CERTIFICATES. The Series
1999-3B 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
1999-3B Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. [Reserved]
Section 1.06. RANKING OF EQUIPMENT NOTES. The Equipment Notes will be
subject to the ranking and priority as set forth in the related Indenture.
Section 1.07. 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.
<PAGE>
5
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.
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 14 new British Aerospace Avro RJ85 which
were sold or are expected to be sold to the Owner Trustee or the
Company during the period from April 1999 through May 2000.
APPLICABLE CERTIFICATEHOLDER: Means the holder of an
Applicable Certificate.
APPLICABLE CERTIFICATES: As defined in Section 1.01.
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.
<PAGE>
6
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
December 9, 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., doing business through a
United States branch.
DEPOSITS: Has the meaning specified in the Note Purchase
Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or
Special Distribution Date.
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 December 9, 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
<PAGE>
7
therein, the Policy Provider 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. 1999-3G (the A1999-3G TRUST SUPPLEMENT") dated the
date hereof relating to Northwest Airlines 1999-3G Pass Through Trust
and by Trust Supplement No. 1999-3C (the A1999-3C TRUST SUPPLEMENT")
dated the date hereof relating to the Northwest Airlines 1999-3C 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.
PARTICIPATION AGREEMENT: Has the meaning specified in the Note
Purchase Agreement.
PAYING AGENT: Means State Street Bank and Trust Company.
POLICY: Has the meaning specified in the Intercreditor
Agreement.
POLICY PROVIDER: Means, initially, MBIA Insurance Corporation,
and any replacement or successor thereof appointed in accordance with
the Policy Provider Agreement.
POLICY PROVIDER AGREEMENT: Has the meaning specified in the
Intercreditor Agreement.
POLICY PROVIDER DEFAULT: Has the meaning specified in the
Intercreditor Agreement.
<PAGE>
8
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.
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.
PROSPECTUS SUPPLEMENT: Means the Prospectus Supplement dated
December 2, 1999, relating to the offering of the Class G Certificates,
the Class B Certificates and the Class C Certificates (each as defined
in the Intercreditor Agreement).
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 Applicable Trust under the Escrow
Agreement to request the Escrow Agent to withdraw from the Deposit
Accounts funds sufficient to enable the Applicable 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 Applicable Trust and the Trustee,
on behalf of the Applicable Trust, under the Intercreditor Agreement,
the Note Purchase Agreement and the Liquidity Facility, including,
without limitation, the
<PAGE>
9
rights of the Applicable Trust to acquire Equipment Notes under the
Note Purchase Agreement, all rights to receive certain payments under
such documents, 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 1999-3
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 December 2, 1999 by and among the Company, the Guarantor, Morgan
Stanley & Co. Incorporated, Chase Securities Inc., Salomon Smith Barney
Inc. and U.S. Bancorp Piper Jaffray Inc.
Section 3.02. OTHER. For purposes of the Applicable Trust, APTC Event
of Default," as used in the Basic Agreement, shall have the meaning set forth in
the Intercreditor Agreement.
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
Applicable 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
<PAGE>
10
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 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.
<PAGE>
11
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 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
<PAGE>
12
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.
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. SUPPLEMENTAL AGREEMENTS. (a) For purpose of this Trust,
Section 9.01 and 9.02 of the Basic Agreement shall be amended to read as
follows:
"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 Deposit
Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Note Purchase Agreement, any Liquidity Facility, the Policy or the
Policy Provider Agreement, 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 contained in the Note Purchase Agreement
or the Policy Provider Agreement; 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 conferred upon the
Guarantor or the Company in this Agreement, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider Agreement; or
(4) except where Certificateholder consent is
required by Sections 9.02(1) - 9.02(6) and as described below,
to correct or supplement any provision in this Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider 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, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
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 in this
Agreement, the Deposit Agreements, the Escrow Agreements,
<PAGE>
13
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
Agreement; or
(5) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or
quotation system on which the Certificates are listed, or any
regulatory body; or
(6) to modify, eliminate or add to the provisions of
this Agreement, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility 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, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility such other provisions as may be expressly permitted
by the Trust Indenture Act, 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
(7) to evidence and provide for the acceptance of
appointment under this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility by a successor Trustee with respect to
one or more Trusts and to add to or change any of the
provisions of this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility 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
(8) 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, the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement,
any Liquidity Facility, the Policy or the Policy Provider Agreement to
the extent applicable to such Certificateholders or of modifying in any
manner the rights and obligations of such Certificateholders under this
Agreement, the Deposit Agreements, the Escrow Agreements,
<PAGE>
14
the Intercreditor Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider 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 or other Trust Property 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; or
(6) terminate the Policy or modify the Policy other
than amendments already contemplated or required by Section
3.06 of the Policy Provider Agreement and/or Section 2.6(c) or
3.7(c) of the Intercreditor Agreement.
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."
<PAGE>
15
(b) If Class D Certificates are issued, the Company, the Guarantor 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 similar to those set forth
in Section 7.01 hereof.
(c) Any supplemental agreement may not adversely affect the status of
the Applicable 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) a partnership.
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 Applicable Trust:
(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
<PAGE>
16
(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; FEDERAL
INCOME TAX REPORTING. (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 (including any portion
thereof paid by the Liquidity Provider);
(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.
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,
<PAGE>
17
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-42 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) Unless and until required otherwise by applicable authority, the
Trustee shall treat the Applicable Trust as a Agrantor trust" under Subpart E,
Part I, Subchapter J of Chapter 1 of the Code, and shall file annually with the
Internal Revenue Service Form 1041, indicating the name and address of the
Applicable Trust and otherwise completed in blank, with attached statements
identifying each Certificateholder and its pro rata share of the income and
expenses of the Applicable Trust for the applicable portion of the preceding
calendar year, on the cash or accrual method, as the case may be, and shall
furnish each Certificateholder with a copy of its statement at the time and in
the manner required by the Code.
(e) This Section 6.02 supersedes and replaces Section 4.03 of the Basic
Agreement.
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 G
Certificates, all, but not less than all, of the Class G Certificates upon ten
days' written notice to the Class G Trustee and each other Applicable
Certificateholder, provided that (i) if prior to the end of such ten-day period
any other Applicable
<PAGE>
18
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 G 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 G 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 G Certificates
and the Applicable Certificates upon ten days' written notice to the Class G
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 G 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).
(c) Whether or not any Applicable Certificateholder or Class C
Certificateholder has exercised its rights pursuant to paragraph (a) or (b)
above, the Policy Provider (except in the event of a Policy Provider Default),
if it is then the Controlling Party, shall have the right to purchase all, but
not less than all, of the Class G Certificates upon ten days' written notice to
the Trustee and the holders of the Applicable Certificates.
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 (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
<PAGE>
19
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 G 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.
(d) As used in this Section 7.01, the terms "Class G
Certificateholder", "Class G Certificate", "Class G 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.
(e) 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 ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
<PAGE>
20
Section 8.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1999-3G 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>
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have
caused this Trust Supplement to be duly executed by their respective officers
thereto duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By:
-------------------------------------
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By:
-------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation (ADTC"), 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 1999-3B PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-3B
Issuance Date: December 9, 1999
Final Legal Distribution Date: October 1, 2016
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-3B 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 AREFERENCE PRINCIPAL AMOUNT") in the Northwest Airlines 1999-3B Pass
Through Trust (the ATRUST") created by State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the ATRUSTEE"), pursuant to a
Pass Through Trust Agreement, dated as of June 3, 1999 (as amended or
<PAGE>
2
supplemented, the ABASIC AGREEMENT"), by and among the Trustee, Northwest
Airlines Corporation, a Delaware corporation (the AGuarantor"), and Northwest
Airlines, Inc., a Minnesota corporation (the ACOMPANY"), as supplemented by
Trust Supplement No. 1999-3B thereto, dated as of December 9, 1999
(collectively, the AAGREEMENT"), by and among the Trustee, the Guarantor and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as APass Through
Certificates, Series 1999-3B" (herein called the ACERTIFICATES"). 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 ATRUST
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 April 1 and October 1 (a AREGULAR DISTRIBUTION DATE"),
commencing April 1, 2000 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
<PAGE>
3
the name of a Clearing Agency (or its nominee), such distribution shall be made
by wire transfer. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after notice mailed by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificate- holder 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 1999-3B
PASS THROUGH TRUST
By: STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as Trustee
By:
-------------------------------------
Name:
Title:
<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 OF CONNECTICUT,
NATIONAL ASSOCIATION,
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
------------------------- -----------------
April 1, 2000 ................. $ 0
October 1, 2000 ............... 25,297
April 1, 2001 ................. 0
October 1, 2001 ............... 1,346,446
April 1, 2002 ................. 0
October 1, 2002 ............... 4,130,347
April 1, 2003 ................. 0
October 1, 2003 ............... 4,729,928
April 1, 2004 ................. 0
October 1, 2004 ............... 4,019,460
April 1, 2005 ................. 0
October 1, 2005 ............... 3,062,620
April 1, 2006 ................. 0
October 1, 2006 ............... 3,092,979
April 1, 2007 ................. 0
October 1, 2007 ............... 2,393,023
April 1, 2008 ................. 0
October 1, 2008 ............... 2,041,333
April 1, 2009 ................. 0
October 1, 2009 ............... 2,211,444
April 1, 2010 ................. 2,286,960
October 1, 2010 ............... 1,190,988
April 1, 2011 ................. 4,947,981
October 1, 2011 ............... 1,290,238
April 1, 2012 ................. 7,061,669
October 1, 2012 ............... 444,619
April 1, 2013 ................. 5,004,836
October 1, 2013 ............... 158,557
April 1, 2014 ................. 2,374,855
October 1, 2014 ............... 6,033,714
April 1, 2015 ................. 165,805
October 1, 2015 ............... 0
April 1, 2016 ................. 0
October 1, 2016 ............... 0
April 1, 2017 ................. 0
October 1, 2017 ............... 0
April 1, 2018 ................. 0
October 1, 2018 ............... 0
April 1, 2019 ................. 0
<PAGE>
Exhibit 4(b)(3)
EXECUTION COPY
This Trust Supplement No. 1999-3C, dated as of December 9, 1999 (herein
called the "TRUST SUPPLEMENT"), by and among Northwest Airlines Corporation, a
Delaware corporation (the "GUARANTOR"), Northwest Airlines, Inc., a Minnesota
corporation (the "COMPANY"), and State Street Bank and Trust Company of
Connecticut, National Association (the "TRUSTEE"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, the Company and
the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates 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 or refinance the acquisition of
fourteen new British Aerospace Avro RJ85 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
A1999-3C TRUST" or the "APPLICABLE TRUST") for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
1999-3C Trust, by their respective acceptances of the Certificates, join in the
creation of this 1999-3C Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in
<PAGE>
2
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, 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
APass Through Certificates, Series 1999-3C" (hereinafter defined as the "SERIES
1999-3C CERTIFICATES" or the "APPLICABLE CERTIFICATES"). Each Series 1999-3C
Certificate represents a Fractional Undivided Interest in the 1999-3C Trust
created hereby.
The terms and conditions applicable to the Series 1999-3C Certificates
are as follows:
(a) The aggregate principal amount of the Series 1999-3C
Certificates that shall be authenticated under the Agreement (except
for Series 1999-3C Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $31,947,000.
(b) The Cut-off Date is July 31, 2000.
(c) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each April 1 and October 1, commencing on
April 1, 2000, 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).
(e) (i) The Series 1999-3C Certificates shall be in the form
attached hereto as Exhibit A. Each purchaser of Series 1999-3C
Certificates, by its acceptance of such
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3
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
1999-3C 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 1999-3C Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the
Letter of Representations among the Guarantor, the Company and the
Clearing Agency (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 1999-3C 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:
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N523XJ................. Avro RJ85 LF507-1F
N524XJ................. Avro RJ85 LF507-1F
N525XJ................. Avro RJ85 LF507-1F
N526XJ................. Avro RJ85 LF507-1F
N527XJ................. Avro RJ85 LF507-1F
N528 XJ................ Avro RJ85 LF507-1F
N529XJ................. Avro RJ85 LF507-1F
N530XJ................. Avro RJ85 LF507-1F
N531XJ................. Avro RJ85 LF507-1F
N532XJ................. Avro RJ85 LF507-1F
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4
Registration Number Aircraft Type Engine Type
------------------- ------------- -----------
N533XJ................. Avro RJ85 LF507-1F
N534XJ................. Avro RJ85 LF507-1F
N535XJ................. Avro RJ85 LF507-1F
N536XJ................. Avro RJ85 LF507-1F
(i) At the Escrow Agent's request under the Escrow Agreement,
the Trustee shall affix the corresponding Escrow Receipt to each Series
1999-3C Certificate. In any event, any transfer or exchange of any
Series 1999-3C 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 1999-3C Certificate shall be
permitted unless the corresponding Escrow Receipt is attached thereto
and also is so transferred or exchanged. By acceptance of any Series
1999-3C Certificate to which an Escrow Receipt is attached, each
Certificateholder of such a Series 1999-3C 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, DEPOSIT AGREEMENT AND ESCROW
AGREEMENT. The Series 1999-3C Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
Section 1.03. RANKING OF SERIES 1999-3C CERTIFICATES. The Series
1999-3C 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
1999-3C Certificates will be supported by a Liquidity Facility to be provided by
the Liquidity Provider for the benefit of the Certificateholders.
Section 1.05. [Reserved]
Section 1.06 RANKING OF EQUIPMENT NOTES. The Equipment Notes will be
subject to the ranking and priority as set forth in the related Indenture.
Section 1.07 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.
<PAGE>
5
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.
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 14 new British Aerospace Avro RJ85 which
were sold or are expected to be sold to the Owner Trustee or the
Company during the period from April 1999 through May 2000.
APPLICABLE CERTIFICATEHOLDER: Means the holder of an
Applicable Certificate.
APPLICABLE CERTIFICATES: As defined in Section 1.01.
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.
<PAGE>
6
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
December 9, 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., doing business through a
United States branch.
DEPOSITS: Has the meaning specified in the Note Purchase
Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or
Special Distribution Date.
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 December 9, 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
<PAGE>
7
therein, the Policy Provider 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. 1999-3G (the "1999-3G TRUST SUPPLEMENT") dated the
date hereof relating to Northwest Airlines 1999-3G Pass Through Trust
and by Trust Supplement No. 1999-3B (the "1999-3B TRUST SUPPLEMENT")
dated the date hereof relating to the Northwest Airlines 1999-3B 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.
PARTICIPATION AGREEMENT: Has the meaning specified in the Note
Purchase Agreement.
PAYING AGENT: Means State Street Bank and Trust Company.
POLICY: Has the meaning specified in the Intercreditor
Agreement.
POLICY PROVIDER: Means, initially, MBIA Insurance Corporation,
and any replacement or successor thereof appointed in accordance with
the Policy Provider Agreement.
POLICY PROVIDER AGREEMENT: Has the meaning specified in the
Intercreditor Agreement.
POLICY PROVIDER DEFAULT: Has the meaning specified in the
Intercreditor Agreement.
<PAGE>
8
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.
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.
PROSPECTUS SUPPLEMENT: Means the Prospectus Supplement dated
December 2, 1999, relating to the offering of the Class G Certificates,
the Class B Certificates and the Class C Certificates (each as defined
in the Intercreditor Agreement).
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 Applicable Trust under the Escrow
Agreement to request the Escrow Agent to withdraw from the Deposit
Accounts funds sufficient to enable the Applicable 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 Applicable Trust and the Trustee,
on behalf of the Applicable Trust, under the Intercreditor Agreement,
the Note Purchase Agreement and the Liquidity Facility, including,
without limitation, the
<PAGE>
9
rights of the Applicable Trust to acquire Equipment Notes under the
Note Purchase Agreement, all rights to receive certain payments under
such documents, 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 1999-3
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 December 2, 1999 by and among the Company, the Guarantor, Morgan
Stanley & Co. Incorporated, Chase Securities Inc., Salomon Smith Barney
Inc. and U.S. Bancorp Piper Jaffray Inc.
Section 3.02. OTHER. For purposes of the Applicable Trust, APTC Event
of Default," as used in the Basic Agreement, shall have the meaning set forth in
the Intercreditor Agreement.
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
Applicable 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
<PAGE>
10
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 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
AFINAL 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.
<PAGE>
11
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 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
<PAGE>
12
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.
ARTICLE V
SUPPLEMENTAL AGREEMENT
Section 5.01. SUPPLEMENTAL AGREEMENTS. (a) For purpose of this Trust,
Section 9.01 and 9.02 of the Basic Agreement shall be amended to read as
follows:
"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 Deposit
Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Note Purchase Agreement, any Liquidity Facility, the Policy or the
Policy Provider Agreement, 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 contained in the Note Purchase Agreement
or the Policy Provider Agreement; 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 conferred upon the
Guarantor or the Company in this Agreement, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider Agreement; or
(4) except where Certificateholder consent is
required by Sections 9.02(1) - 9.02(6) and as described below,
to correct or supplement any provision in this Agreement, the
Deposit Agreements, the Escrow Agreements, the Intercreditor
Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider 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, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
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 in this
Agreement, the Deposit Agreements, the Escrow Agreements,
<PAGE>
13
the Intercreditor Agreement, the Note Purchase Agreement, any
Liquidity Facility, the Policy or the Policy Provider
Agreement; or
(5) to comply with any requirement of the SEC, any
applicable law, rules or regulations of any exchange or
quotation system on which the Certificates are listed, or any
regulatory body; or
(6) to modify, eliminate or add to the provisions of
this Agreement, the Deposit Agreements, the Escrow Agreements,
the Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility 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, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Policy, the Policy Provider
Agreement, the Note Purchase Agreement or any Liquidity
Facility such other provisions as may be expressly permitted
by the Trust Indenture Act, 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
(7) to evidence and provide for the acceptance of
appointment under this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility by a successor Trustee with respect to
one or more Trusts and to add to or change any of the
provisions of this Agreement, the Deposit Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Policy,
the Policy Provider Agreement, the Note Purchase Agreement or
any Liquidity Facility 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
(8) 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, the Deposit Agreements, the Escrow
Agreements, the Intercreditor Agreement, the Note Purchase Agreement,
any Liquidity Facility, the Policy or the Policy Provider Agreement to
the extent applicable to such Certificateholders or of modifying in any
manner the rights and obligations of such Certificateholders under this
Agreement, the Deposit Agreements, the Escrow Agreements,
<PAGE>
14
the Intercreditor Agreement, the Note Purchase Agreement, any Liquidity
Facility, the Policy or the Policy Provider 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 or other Trust Property 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; or
(6) terminate the Policy or modify the Policy other
than amendments already contemplated or required by Section
3.06 of the Policy Provider Agreement and/or Section 2.6(c) or
3.7(c) of the Intercreditor Agreement.
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."
<PAGE>
15
(b) If Class D Certificates are issued, the Company, the Guarantor 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 similar to those set forth
in Section 7.01 hereof.
(c) Any supplemental agreement may not adversely affect the status of
the Applicable 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) a partnership.
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 Applicable Trust:
(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
<PAGE>
16
(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; FEDERAL
INCOME TAX REPORTING. (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 (including any portion
thereof paid by the Liquidity Provider);
(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.
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,
<PAGE>
17
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-42 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) Unless and until required otherwise by applicable authority, the
Trustee shall treat the Applicable Trust as a Agrantor trust" under Subpart E,
Part I, Subchapter J of Chapter 1 of the Code, and shall file annually with the
Internal Revenue Service Form 1041, indicating the name and address of the
Applicable Trust and otherwise completed in blank, with attached statements
identifying each Certificateholder and its pro rata share of the income and
expenses of the Applicable Trust for the applicable portion of the preceding
calendar year, on the cash or accrual method, as the case may be, and shall
furnish each Certificateholder with a copy of its statement at the time and in
the manner required by the Code.
(e) This Section 6.02 supersedes and replaces Section 4.03 of the Basic
Agreement.
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 G 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 G Certificates, all, but not less than all, of
the Class G Certificates and the Class B Certificates upon ten days' written
notice to the Class G Trustee, the
<PAGE>
18
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 G 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 G Certificates and the Class B
Certificates pursuant to this Section 7.01(a).
(b) Whether or not any Applicable Certifcateholder has exercised its
rights pursuant to paragraph (a) above, the Policy Provider (except in the event
of a Policy Provider Default), if it is then the Controlling Party, shall have
the right to purchase all, but not less than all, of the Class G Certificates
upon ten days' written notice to the Trustee and the holders of the Applicable
Certificates.
(c) As used in this Section 7.01, the terms "Class G Certificate",
"Class G 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
1999-3G 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>
19
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have
caused this Trust Supplement to be duly executed by their respective officers
thereto duly authorized, as of the day and year first written above.
NORTHWEST AIRLINES, INC.
By:
-------------------------------------------
Name:
Title:
NORTHWEST AIRLINES CORPORATION,
as Guarantor
By:
-------------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, as Trustee
By:
-------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
Any person acquiring this Certificate by its acceptance hereof or its
interest herein, will be deemed to represent and warrant to and for the benefit
of each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended (AERISA"), or of a plan subject to Section 4975
of the Internal Revenue Code of 1986, as amended (the ACODE") 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 1999-3C PASS THROUGH TRUST
Pass Through
Certificate, Series 1999-3C
Issuance Date: December 9, 1999
Final Legal Distribution Date: October 1, 2011
Evidencing A Fractional undivided interest In the Northwest Airlines
1999-3C 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 1999-3C Pass
Through Trust (the "TRUST") created by State Street Bank and Trust Company of
Connecticut, National Association, as trustee (the "TRUSTEE"), pursuant to a
Pass Through Trust Agreement, dated as of June 3, 1999 (as amended or
<PAGE>
2
supplemented, the "BASIC AGREEMENT"), by and among the Trustee, Northwest
Airlines Corporation, a Delaware corporation (the AGuarantor"), and Northwest
Airlines, Inc., a Minnesota corporation (the "COMPANY"), as supplemented by
Trust Supplement No. 1999-3C thereto, dated as of December 9, 1999
(collectively, the "AGREEMENT"), by and among the Trustee, the Guarantor and the
Company, a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate is
one of the duly authorized Certificates designated as "Pass Through
Certificates, Series 1999-3C" (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 April 1 and October 1 (a AREGULAR DISTRIBUTION DATE"),
commencing April 1, 2000 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
<PAGE>
3
the name of a Clearing Agency (or its nominee), such distribution shall be made
by wire transfer. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after notice mailed by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Guarantor, the Company or the Trustee or
any affiliate thereof. The Certificates are limited in right or payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Guarantor or the Company and the rights of the Certificateholders under the
Agreement at any time by the Guarantor, the Company and the Trustee with the
consent of the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust. Any such consent by the Certificateholder of this Certificate shall be
conclusive and binding on such Certificateholder and upon all future
Certificateholders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth, the transfer of this Certificate is registrable in the Register upon
surrender of this Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar duly executed by
the Certificate- holder 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 1999-3C
PASS THROUGH TRUST
By: STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, 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 OF CONNECTICUT,
NATIONAL ASSOCIATION,
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
------------------------- -----------------
April 1, 2000 .............. $ 2,811,252
October 1, 2000 ............ 3,394,963
April 1, 2001 .............. 3,139,199
October 1, 2001 ............ 0
April 1, 2002 .............. 164,065
October 1, 2002 ............ 0
April 1, 2003 .............. 998,406
October 1, 2003 ............ 79,280
April 1, 2004 .............. 1,970,004
October 1, 2004 ............ 0
April 1, 2005 .............. 2,970,293
October 1, 2005 ............ 0
April 1, 2006 .............. 4,855,816
October 1, 2006 ............ 0
April 1, 2007 .............. 5,258,194
October 1, 2007 ............ 0
April 1, 2008 .............. 4,660,226
October 1, 2008 ............ 0
April 1, 2009 .............. 590,014
October 1, 2009 ............ 920,250
April 1, 2010 .............. 135,039
October 1, 2010 ............ 0
April 1, 2011 .............. 0
October 1, 2011 ............ 0
April 1, 2012 .............. 0
October 1, 2012 ............ 0
April 1, 2013 .............. 0
October 1, 2013 ............ 0
April 1, 2014 .............. 0
October 1, 2014 ............ 0
April 1, 2015 .............. 0
October 1, 2015 ............ 0
April 1, 2016 .............. 0
October 1, 2016 ............ 0
April 1, 2017 .............. 0
October 1, 2017 ............ 0
April 1, 2018 .............. 0
October 1, 2018 ............ 0
April 1, 2019 .............. 0
<PAGE>
Exhibit 4(c)(1)
EXECUTION COPY
================================================================================
REVOLVING CREDIT AGREEMENT
(1999-3G)
Dated as of December 9, 1999
between
STATE STREET BANK AND TRUST COMPANY
as Subordination Agent,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.
as Liquidity Provider
================================================================================
Relating to
Northwest Airlines Pass Through Trust 1999-3G
7.935% Northwest Airlines Pass Through Certificates,
Series 1999-3G
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
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.........................................................11
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................................................................13
Section 3.04 Payments 14
Section 3.05 Computations 14
Section 3.06 Payment on Non-Business Days...............................................................14
Section 3.07 Interest 15
Section 3.08 Replacement of Borrower....................................................................16
Section 3.09 Funding Loss Indemnification...............................................................16
Section 3.10 Illegality 16
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01......................................17
Section 4.02 Conditions Precedent to Borrowing..........................................................18
ARTICLE V COVENANTS
Section 5.01 Affirmative Covenants of the Borrower......................................................18
Section 5.02 Negative Covenants of the Borrower.........................................................19
<PAGE>
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default................................................................19
ARTICLE VII MISCELLANEOUS
Section 7.01 Amendments, Etc............................................................................20
Section 7.02 Notices, Etc. 20
Section 7.03 No Waiver; Remedies........................................................................20
Section 7.04 Further Assurances.........................................................................21
Section 7.05 Indemnification; Survival of Certain Provisions............................................21
Section 7.06 Liability of the Liquidity Provider........................................................21
Section 7.07 Costs, Expenses and Taxes..................................................................22
Section 7.08 Binding Effect; Participations.............................................................22
Section 7.09 Severability 23
Section 7.10 GOVERNING LAW 24
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity.......................24
Section 7.12 Execution in Counterparts..................................................................24
Section 7.13 Entirety 25
Section 7.14 Headings 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES...........................................25
</TABLE>
-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
EXHIBITS
EXHIBIT I Form of Guarantee Agreement
-iii-
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of December 9, 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), (the "BORROWER"), and MORGAN STANLEY CAPITAL
SERVICES, INC., a Delaware corporation (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
WHEREAS, pursuant to the Class G 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 G Trust is issuing the Class G
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class G 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.
WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean
Witter & Co. (the "Guarantor") to enter into a Guarantee Agreement, providing
for the full and unconditional guarantee of the Liquidity Provider=s obligations
under this Agreement (the "GUARANTEE AGREEMENT").
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% and with respect to any Unapplied
Provider Advance, .35%.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such
term in Section 2.06(a).
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2
"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 G Certificate is outstanding, the city and state in which the
Class G 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 July 31, 2000.
"DEPOSIT AGREEMENT" means the Deposit Agreement, dated
December 9, 1999, between First Security Bank, National Association, as
Escrow Agent and ABN AMRO Bank N.V., acting through a United States
branch, as Depositary, pertaining to the Class G 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.
"DEPOSITS" has the meaning assigned to such terms in the
Deposit Agreement.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section
2.02(c).
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3
"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 December 7, 2000, initially, or any date
to which the Expiry Date is extended pursuant to Section 2.10.
"FEE LETTER" means the Fee Letter dated as of the date hereof
among the Liquidity Provider, the Borrower and Northwest with respect
to the Liquidity Facilities.
"FINAL ADVANCE" means an Advance made pursuant to Section
2.02(d).
"GUARANTEE AGREEMENT" has the meaning assigned to such term in
the preliminary statements of this Agreement.
"GUARANTEE EVENT" has the meaning specified in
Section 2.02(c).
"GUARANTOR" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"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), the Policy Provider and the Subordination Agent, as the
same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
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4
"INTEREST ADVANCE" means an Advance made pursuant to Section
2.02(a).
"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 G Cash Collateral Account for
the purpose of paying interest on the Class G
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 (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period
then applicable to such Unapplied Provider Advance shall be applicable
to such Applied Provider Advance and (II) 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 third Business Day
following the Liquidity Provider=s receipt of the Notice of Borrowing
for such Final Advance (in the case of clause (x) above) or the last
day of the Interest Period then applicable to such outstanding Advances
(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
AssociationCLIBOR) 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.
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5
"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 occur only if the aggregate principal amount of the
Equipment Notes exceeds $110 million, or (ii) a Northwest Bankruptcy
Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii)
the Guarantor, (iii) the directors, officers, employees and agents of
the Liquidity Provider and the Guarantor, and (iv) the successors and
permitted assigns of the persons described in clauses (i) and (iii),
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 (i) in the case of any day
occurring before the first Regular Distribution Date, $17,574,666 and
(ii) in the case of any day occurring on or after the first Regular
Distribution Date, 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
December 2, 1999, relating to the Class G 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).
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6
"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 G Certificates, that would be
payable on the Class G Certificates on each of the three successive
semiannual Regular Distribution Dates immediately following such day
or, if such day is a Regular Distribution Date, on such day and the
succeeding two semiannual Regular Distribution Dates, in each case
calculated on the basis of the Pool Balance of the Class G Certificates
on such day and without regard to expected future payments of principal
on the Class G Certificates. Notwithstanding the above, in the event of
a Policy Provider Election, the Pool Balance, for purposes of this
definition, shall be deemed to be reduced by an amount (if positive) by
which (a) the then outstanding principal balance of the Series G
Equipment Note in respect of which the Policy Provider Election has
been made shall exceed (b) the amount of any policy drawings previously
paid by the Policy Provider in respect of principal on such Series G
Equipment Note.
"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 G
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 B CERTIFICATES", "CLASS C
CERTIFICATES", "CLASS G CASH COLLATERAL ACCOUNT", "CLASS G
CERTIFICATES", "CLASS G CERTIFICATEHOLDERS", "CLASS G
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7
TRUST", "CLASS G TRUST Agreement", "CLASS G 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", "NORTHWEST", "NORTHWEST BANKRUPTCY EVENT", "NOTE PURCHASE
AGREEMENT", "OPERATIVE AGREEMENTS", "PERFORMING EQUIPMENT NOTE",
"PERSON", "POLICY", "POLICY PROVIDER", "POLICY PROVIDER ELECTION",
"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 G 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
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8
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 used to fund the Class G 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, (i) upon a
downgrading of either the Liquidity Provider=s or the Guarantor=s short-term
unsecured debt rating issued by either Rating Agency below the applicable
Threshold Rating or (ii) if the Guarantee Agreement ceases to be in full force
and effect or becomes invalid or unenforceable or the Guarantor denies its
liability thereunder (any such occurrence, a "GUARANTEE EVENT"), in each case 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 the time of such borrowing, and shall be used to fund the Class G
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 G 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 10:00 a.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 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 10:00 a.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.
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9
(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. If the Liquidity Provider
makes an Advance requested pursuant to a Notice of Borrowing before 12:00 Noon
(New York City time) on the second Business Day after the date of payment
specified in said Section 2.02(e), the Liquidity Provider shall have fully
discharged its obligations hereunder with respect to such Advance and an event
of default shall not have occurred hereunder. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class G Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class G Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class G 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. The Borrower agrees to pay to the Liquidity Provider
the fees set forth in the Fee Letter.
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 G Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
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
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10
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 G
Cash Collateral Account, invested and withdrawn from the Class G 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 G Cash Collateral Account
for the purpose of paying interest on the Class G 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 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 G 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 G 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.
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(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 G 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 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 G 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. The
Expiry Date shall be automatically extended, effective on the 25th day prior to
each 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 G Certificates), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25th day that it does not agree to such extension
<PAGE>
12
of such Expiry Date, in which event (and 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
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
<PAGE>
13
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 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 materially 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 W-8BEN or W-8ECI, 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.
<PAGE>
14
(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
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 Name: Morgan Stanley Capital Services, Inc., Account No.
4072-4601, Reference: Northwest Airlines, Inc. 1999-3G.
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 G Cash Collateral Account
to pay interest on the Class G 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 G 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
<PAGE>
15
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 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 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 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.
<PAGE>
16
(f) 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:
(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:
<PAGE>
17
(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 G Certificates;
(v) An executed copy of each document, instrument,
certificate and opinion delivered on or before the Closing
Date pursuant to the Class G 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
(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.
<PAGE>
18
(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 G 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 (i) the Guarantee
Agreement, substantially in the form of Exhibit I hereto, duly executed
on behalf of each of the parties thereto and (ii) 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 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.
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19
(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.
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):
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20
Borrower: STATE STREET BANK AND TRUST COMPANY
Two International Place
4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Administration
Telecopy: (617) 664-5151
Liquidity Provider: MORGAN STANLEY CAPITAL SERVICES, INC
1585 Broadway
New York, New York 10036
Attention: Keith Amburgey
Telecopy: (212) 761-0580
WITH A COPY OF ANY NOTICE OF BORROWING TO BE
DELIVERED TO:
MORGAN STANLEY DEAN WITTER & CO.
1585 Broadway
New York, New York 10036
Attention: Aaron Lubowitz and Mark Esparrago
Telecopy: (212) 761-0406
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03 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
<PAGE>
21
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, 3.09, 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 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
<PAGE>
22
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 G 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 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 (but excluding Northwest and any of its affiliates),
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
<PAGE>
23
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 W-8BEN or Form W-8ECI, 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 W-8BEN or Form W-8ECI, 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 W-8BEN or Form W-8ECI 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.
(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;
<PAGE>
24
(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.
(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
<PAGE>
25
PAID OR PERFORMED, IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.
(End of Page)
<PAGE>
26
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 Borrower
By:
------------------------------------------
Name:
Title:
MORGAN STANLEY CAPITAL SERVICES, INC., as
Liquidity Provider
By:
------------------------------------------
Name:
Title:
<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 MORGAN STANLEY CAPITAL SERVICES,
INC. (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (1999-3G) dated as of December 9, 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 G Certificates which was payable on ____________, ____ (the
"DISTRIBUTION DATE") in accordance with the terms and provisions of the
Class G Trust Agreement and the Class G 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 G Certificates on the
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class G 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 G 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 G
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 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
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest
Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL
SERVICES, INC. (the "LIQUIDITY PROVIDER"), with reference to the Revolving
Credit Agreement (1999-3G) dated as of December 9, 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 G 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 G 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 G 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 G Certificates,
the Class G 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 G 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 Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Non-Extension
Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL
SERVICES, INC. (the "LIQUIDITY PROVIDER"), with reference to the Revolving
Credit Agreement (1999-3G) dated as of December 9, 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 G Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason
of (i) the downgrading of the short-term unsecured debt rating of
either the Liquidity Provider or the Guarantor issued by either Rating
Agency below the Threshold Rating, or (ii) the occurrence of a
Guarantee Event, 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 G 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 G
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 G Certificates, the Class G
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 G 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 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.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance
Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL SERVICES,
INC. (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (1999-3G) dated as of December 9, 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 G 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 G 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 G
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 G Certificates, the Class G
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 G 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.
(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)
- ----------
(1) Bracketed language may be included at Borrower's option.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Final
Advance Notice of Borrowing]
<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 (1999-3G) dated as of December 9, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
Borrower, and MORGAN STANLEY CAPITAL SERVICES, INC. (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.
<PAGE>
2
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,
MORGAN STANLEY CAPITAL SERVICES INC., as
Liquidity Provider
By:
------------------------------------
Name:
Title:
cc: State Street Bank and Trust Company of
Connecticut, National Association,
as Class G Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-3G) dated as of December 9, 1999,
between State Street Bank and Trust Company, as Subordination Agent, as
Borrower, and MORGAN STANLEY CAPITAL SERVICES, INC. (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.
<PAGE>
2
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:
<PAGE>
Exhibit I
[Form of Guarantee Agreement]
<PAGE>
Exhibit 4(c)(2)
EXECUTION COPY
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1999-3B)
Dated as of December 9, 1999
between
STATE STREET BANK AND TRUST COMPANY
as Subordination Agent,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Northwest Airlines Pass Through Trust 1999-3B
9.485% Northwest Airlines Pass Through Certificates,
Series 1999-3B
<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......................11
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.............................13
Section 3.04 Payments................................................14
Section 3.05 Computations............................................14
Section 3.06 Payment on Non-Business Days............................14
Section 3.07 Interest................................................15
Section 3.08 Replacement of Borrower.................................16
Section 3.09 Funding Loss Indemnification............................16
Section 3.10 Illegality..............................................16
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01...17
Section 4.02 Conditions Precedent to Borrowing.......................18
ARTICLE V COVENANTS
Section 5.01 Affirmative Covenants of the Borrower...................18
Section 5.02 Negative Covenants of the Borrower......................19
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default.............................19
<PAGE>
ARTICLE VII MISCELLANEOUS
Section 7.01 Amendments, Etc.........................................20
Section 7.02 Notices, Etc............................................20
Section 7.03 No Waiver; Remedies.....................................21
Section 7.04 Further Assurances......................................21
Section 7.05 Indemnification; Survival of Certain Provisions.........21
Section 7.06 Liability of the Liquidity Provider.....................21
Section 7.07 Costs, Expenses and Taxes...............................22
Section 7.08 Binding Effect; Participations..........................22
Section 7.09 Severability............................................23
Section 7.10 GOVERNING LAW...........................................24
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity .....................................24
Section 7.12 Execution in Counterparts...............................24
Section 7.13 Entirety................................................25
Section 7.14 Headings................................................25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........25
-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
EXHIBITS
EXHIBIT I Form of Guarantee Agreement
-iii-
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of December 9, 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), (the "Borrower"), and MORGAN
STANLEY CAPITAL SERVICES, INC., a Delaware corporation (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.
WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean
Witter & Co. (the "Guarantor") to enter into a Guarantee Agreement, providing
for the full and unconditional guarantee of the Liquidity Provider's obligations
under this Agreement (the "Guarantee Agreement").
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% and with respect to any Unapplied Provider
Advance, .35%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
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2
"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 July
31, 2000.
"Deposit Agreement" means the Deposit Agreement, dated December __,
1999, between First Security Bank, National Association, as Escrow Agent
and ABN AMRO Bank N.V., acting through a United States 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.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
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3
"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 December 7, 2000, initially, or any date to
which the Expiry Date is extended pursuant to Section 2.10.
"Fee Letter" means the Fee Letter dated as of the date hereof among
the Liquidity Provider, the Borrower and Northwest with respect to the
Liquidity Facilities.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Guarantee Agreement" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Guarantee Event" has the meaning specified in Section 2.02(c).
"Guarantor" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"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), the
Policy Provider and the Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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4
"Interest Advance" means an Advance made pursuant to Section
2.02(a).
"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 (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period
then applicable to such Unapplied Provider Advance shall be applicable to
such Applied Provider Advance and (II) 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 third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Final
Advance (in the case of clause (x) above) or the last day of the Interest
Period then applicable to such outstanding Advances (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.
<PAGE>
5
"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 occur only
if the aggregate principal amount of the Equipment Notes exceeds $110
million, or (ii) a Northwest Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
Guarantor, (iii) the directors, officers, employees and agents of the
Liquidity Provider and the Guarantor, and (iv) the successors and
permitted assigns of the persons described in clauses (i) and (iii),
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 (i) in the case of any day occurring
before the first Regular Distribution Date, $8,250,215 and (ii) in the
case of any day occurring on or after the first Regular Distribution Date,
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
December 2, 1999, relating to the Class G 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).
<PAGE>
6
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates, that would be payable on the
Class B Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class B Certificates on such day and without regard to
expected future payments of principal on the Class B Certificates.
"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 B Certificates", "Class C
Certificates", "Class G Cash Collateral Account", "Class G Certificates",
"Class G Certificateholders", "Class G Trust", "Class G Trust Agreement",
"Class G 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",
<PAGE>
7
"Northwest", "Northwest Bankruptcy Event", "Note Purchase Agreement",
"Operative Agreements", "Performing Equipment Note", "Person", "Policy",
"Policy Provider", "Policy Provider Election", "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 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.
<PAGE>
8
(c) A Downgrade Advance shall be made in a single Borrowing, (i)
upon a downgrading of either the Liquidity provider's or the Guarantor's
short-term unsecured debt rating issued by either Rating Agency below the
applicable Threshold Rating or (ii) if the Guarantee Agreement ceases to be in
full force and effect or becomes invalid or unenforceable or the Guarantor
denies its liability thereunder (any such occurrence, a "Guarantee Event"), in
each case 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 the time of such borrowing, 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 10:00 a.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 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 10:00 a.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.
(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
<PAGE>
9
respect of such Notice of Borrowing to the Borrower or to any other Person. If
the Liquidity Provider makes an Advance requested pursuant to a Notice of
Borrowing before 12:00 Noon (New York City time) on the second Business Day
after the date of payment specified in said Section 2.02(e), the Liquidity
Provider shall have fully discharged its obligations hereunder with respect to
such Advance and an event of default shall not have occurred hereunder.
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. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
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 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
<PAGE>
10
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 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,
<PAGE>
11
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 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.
The Expiry Date shall be automatically extended, effective on the 25th day prior
to each 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), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25th day that it does not agree to such extension of such Expiry Date, in which
event (and 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
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12
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
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
<PAGE>
13
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 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 materially 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 W-8BEN or W-8ECI, 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
<PAGE>
14
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 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 Name: Morgan Stanley Capital Services, Inc., Account No.
4072-4601, Reference: Northwest Airlines, Inc. 1999-3B.
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
<PAGE>
15
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 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 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 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.
(f) 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
<PAGE>
16
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:
(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;
<PAGE>
17
(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
(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.
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18
(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 G 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 (i) the Guarantee Agreement,
substantially in the form of Exhibit I hereto, duly executed on behalf of
each of the parties thereto and (ii) 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 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.
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19
Section 5.2 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.
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, Massachusetts 02110
Attention: Corporate Trust Administration
Telecopy: (617) 664-5151
<PAGE>
20
Liquidity Provider: MORGAN STANLEY CAPITAL SERVICES, INC
1585 Broadway
New York, New York 10036
Attention: Keith Amburgey
Telecopy: (212) 761-0580
With a copy of any Notice of Borrowing to be delivered
to:
MORGAN STANLEY DEAN WITTER & CO.
1585 Broadway
New York, New York 10036
Attention: Aaron Lubowitz and Mark Esparrago
Telecopy: (212) 761-0406
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03 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
<PAGE>
21
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, 3.09, 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 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
<PAGE>
22
(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 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 (but excluding Northwest and any of its affiliates),
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 W-8BEN or Form W-8ECI, 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
<PAGE>
23
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form W-8BEN or Form W-8ECI, 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 W-8BEN or Form W-8ECI 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.
(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
<PAGE>
24
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.
(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)
<PAGE>
25
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 Borrower
By:_____________________________________
Name:
Title:
MORGAN STANLEY CAPITAL SERVICES, INC.,
as Liquidity Provider
By:_____________________________________
Name:
Title:
<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 MORGAN STANLEY CAPITAL SERVICES,
INC. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1999-3B) dated as of December 9, 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 G 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 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 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
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL
SERVICES, INC. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-3B) dated as of December 9, 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 G 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 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
Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL
SERVICES, INC. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-3B) dated as of December 9, 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 (i) the
downgrading of the short-term unsecured debt rating of either the
Liquidity provider or the Guarantor issued by either Rating Agency below
the Threshold Rating, or (ii) the occurrence of a Guarantee Event, 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 G 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 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
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITAL SERVICES,
INC. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1999-3B) dated as of December 9, 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 G 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 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.
(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).
- --------
(1) Bracketed language may be included at Borrower's option.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<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 (1999-3B) dated as of December 9, 1999, between
State Street Bank and Trust Company, as Subordination Agent, as Borrower,
and MORGAN STANLEY CAPITAL SERVICES, INC. (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.
<PAGE>
2
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,
MORGAN STANLEY CAPITAL SERVICES INC.,
as Liquidity Provider
By:_____________________________________
Name:
Title:
cc: State Street Bank and Trust Company of
Connecticut, National Association,
as Class B Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-3B) dated as of December 9, 1999, between
State Street Bank and Trust Company, as Subordination Agent, as Borrower,
and MORGAN STANLEY CAPITAL SERVICES, INC. (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.
<PAGE>
2
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:
<PAGE>
Exhibit I
[Form of Guarantee Agreement]
<PAGE>
Exhibit 4(c)(3)
EXECUTION COPY
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
(1999-3C)
Dated as of December 9, 1999
between
STATE STREET BANK AND TRUST COMPANY
as Subordination Agent,
as Borrower
and
MORGAN STANLEY CAPITAL SERVICES, INC.
as Liquidity Provider
- --------------------------------------------------------------------------------
Relating to
Northwest Airlines Pass Through Trust 1999-3C
9.152 % Northwest Airlines Pass Through Certificates,
Series 1999-3C
<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......................11
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.............................13
Section 3.04 Payments................................................14
Section 3.05 Computations............................................14
Section 3.06 Payment on Non-Business Days............................14
Section 3.07 Interest................................................15
Section 3.08 Replacement of Borrower.................................16
Section 3.09 Funding Loss Indemnification............................16
Section 3.10 Illegality..............................................16
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01...17
Section 4.02 Conditions Precedent to Borrowing.......................18
ARTICLE V COVENANTS
Section 5.01 Affirmative Covenants of the Borrower...................18
Section 5.02 Negative Covenants of the Borrower......................19
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01 Liquidity Events of Default.............................19
<PAGE>
ARTICLE VII MISCELLANEOUS
Section 7.01 Amendments, Etc.........................................20
Section 7.02 Notices, Etc............................................20
Section 7.03 No Waiver; Remedies.....................................21
Section 7.04 Further Assurances......................................21
Section 7.05 Indemnification; Survival of Certain Provisions.........21
Section 7.06 Liability of the Liquidity Provider.....................21
Section 7.07 Costs, Expenses and Taxes...............................22
Section 7.08 Binding Effect; Participations..........................22
Section 7.09 Severability............................................23
Section 7.10 GOVERNING LAW...........................................24
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity .....................................24
Section 7.12 Execution in Counterparts...............................24
Section 7.13 Entirety................................................25
Section 7.14 Headings................................................25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........25
-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
EXHIBITS
EXHIBIT I Form of Guarantee Agreement
-iii-
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of December __, 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), (the "Borrower"), and MORGAN
STANLEY CAPITAL SERVICES, INC., a Delaware corporation (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.
WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean
Witter & Co. (the "Guarantor") to enter into a Guarantee Agreement, providing
for the full and unconditional guarantee of the Liquidity Provider=s obligations
under this Agreement (the "Guarantee Agreement").
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% and with respect to any Unapplied Provider
Advance, .35%.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.06(a).
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2
"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 G
Certificate is outstanding, the city and state in which the Class G
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 July
31, 2000.
"Deposit Agreement" means the Deposit Agreement, dated December __,
1999, between First Security Bank, National Association, as Escrow Agent
and "BN AMRO Bank N.V., acting through a United States branch, as
Depositary, pertaining to the Class G 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.
"Deposits" has the meaning assigned to such terms in the Deposit
Agreement.
"Downgrade Advance" means an Advance made pursuant to Section
2.02(c).
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3
"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 Achange 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 December 7, 2000, initially, or any date to
which the Expiry Date is extended pursuant to Section 2.10.
"Fee Letter" means the Fee Letter dated as of the date hereof among
the Liquidity provider, the Borrower and Northwest with respect to the
Liquidity Facilities.
"Final Advance" means an Advance made pursuant to Section 2.02(d).
"Guarantee Agreement" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Guarantee Event" has the meaning specified in Section 2.02(c).
"Guarantor" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"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), the
Policy Provider and the Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
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4
"Interest Advance" means an Advance made pursuant to Section
2.02(a).
"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 (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period
then applicable to such Unapplied Provider Advance shall be applicable to
such Applied Provider Advance and (II) 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 third Business Day following the
Liquidity Provider=s receipt of the Notice of Borrowing for such Final
Advance (in the case of clause (x) above) or the last day of the Interest
Period then applicable to such outstanding Advances (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
AssociationCLIBOR) 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.
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5
"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 occur only
if the aggregate principal amount of the Equipment Notes exceeds $110
million, or (ii) a Northwest Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
Guarantor, (iii) the directors, officers, employees and agents of the
Liquidity Provider and the Guarantor, and (iv) the successors and
permitted assigns of the persons described in clauses (i) and (iii),
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 (i) in the case of any day occurring
before the first Regular Distribution Date, $3,533,695 and (ii) in the
case of any day occurring on or after the first Regular Distribution Date,
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
December 2, 1999, relating to the Class G 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).
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6
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates, that would be payable on the
Class C Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class C Certificates on such day and without regard to
expected future payments of principal on the Class C Certificates.
"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 B Certificates", "Class C
Certificates", "Class G Cash Collateral Account", "Class G Certificates",
"Class G Certificateholders", "Class G Trust", "Class G Trust Agreement",
"Class G 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",
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7
"Northwest", "Northwest Bankruptcy Event", "Note Purchase Agreement",
"Operative Agreements", "Performing Equipment Note", "Person", "Policy",
"Policy Provider", "Policy Provider Election", "Pool Balance", "Rating
Agency", "Ratings Confirmation", "Regular Distribution Date", "Replacement
Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate", ASubordination
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 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.
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8
(c) A Downgrade Advance shall be made in a single Borrowing, (i)
upon a downgrading of either the Liquidity Provider=s or the Guarantor=s
short-term unsecured debt rating issued by either Rating Agency below the
applicable Threshold Rating or (ii) if the Guarantee Agreement ceases to be in
full force and effect or becomes invalid or unenforceable or the Guarantor
denies its liability thereunder (any such occurrence, a "Guarantee Event"), in
each case 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 the time of such borrowing, 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 [10:00 a.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 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 [10:00 a.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.
(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
<PAGE>
9
respect of such Notice of Borrowing to the Borrower or to any other Person. [If
the Liquidity Provider makes an Advance requested pursuant to a Notice of
Borrowing before 12:00 Noon (New York City time) on the second Business Day
after the date of payment specified in said Section 2.02(e), the Liquidity
Provider shall have fully discharged its obligations hereunder with respect to
such Advance and an event of default shall not have occurred hereunder.]
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. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
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 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
<PAGE>
10
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 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 Athird" of Section 2.4(b) of the Intercreditor
Agreement, clause Athird" of Section 3.2 of the Intercreditor Agreement or
clause Afourth" 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,
<PAGE>
11
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 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.
The Expiry Date shall be automatically extended, effective on the 25th day prior
to each 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), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25th day that it does not agree to such extension of such Expiry Date, in which
event (and 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
<PAGE>
12
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
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
<PAGE>
13
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 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 materially 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 W-8BEN or W-8ECI, 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
<PAGE>
14
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 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.,
"BA #021000089, Account Name: Morgan Stanley Capital Services, Inc., Account No.
4072-4601, Reference: Northwest Airlines, Inc. 1999-3C.
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
<PAGE>
15
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 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 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 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.
(f) 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
<PAGE>
16
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:
(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;
<PAGE>
17
(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
(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.
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18
(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 G 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 (i) the Guarantee
Agreement, substantially in the form of Exhibit I hereto, duly
executed on behalf of each of the parties thereto and (ii) 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 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.
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19
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.
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, Massachusetts 02110
Attention: Corporate Trust Administration
Telecopy: (617) 664-5151
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20
Liquidity Provider: MORGAN STANLEY CAPITOL SERVICES, INC
1585 Broadway
New York, New York 10036
Attention: Keith Amburgey
Telecopy: (212) 761-0580
With a copy of any Notice of Borrowing to be delivered
to:
MORGAN STANLEY DEAN WITTER & CO.
1585 Broadway
New York, New York 10036
Attention: Aaron Lubowitz and Mark Esparrago
Telecopy: (212) 761-0406
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03 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
<PAGE>
21
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, 3.09, 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 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
<PAGE>
22
(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 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 (but excluding Northwest and any of its affiliates),
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 W-8BEN or Form W-8ECI, 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
<PAGE>
23
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form W-8BEN or Form W-8ECI, 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 W-8BEN or Form W-8ECI 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.
(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
<PAGE>
24
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.
(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
RELUTING 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)
<PAGE>
25
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 Borrower
By:_____________________________________
Name:
Title:
MORGAN STANLEY CAPITOL SERVICES, INC.,
as Liquidity Provider
By:_____________________________________
Name:
Title:
<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 MORGAN STANLEY CAPITOL SERVICES,
INC. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1999-3C) dated as of December 9, 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 G 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 G 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 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
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITOL
SERVICES, INC. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-3C) dated as of December 9, 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 G Certificates,
or principal of, or interest or premium on, the Class B Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by
this Notice of Borrowing shall automatically and irrevocably terminate the
obligation of the Liquidity Provider to make further Advances under the
Liquidity Agreement; and (B) following the making by the Liquidity
Provider of the Non-Extension Advance requested by this Notice of
Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITOL
SERVICES, INC. (the "Liquidity Provider"), with reference to the Revolving
Credit Agreement (1999-3C) dated as of December 9, 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 (i) the
downgrading of the short-term unsecured debt rating of the Guarantor
issued by either Rating Agency below the Threshold Rating, or (ii) the
occurrence of a Guarantee Event, 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 G Certificates,
or principal of, or interest or premium on, the Class B Certificates or
the Class C Certificates, (iii) was computed in accordance with the
provisions of the Class C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), and (iv) has not been and is not the subject of a
prior or contemporaneous Notice of Borrowing under the Liquidity
Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class C
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(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 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.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<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 MORGAN STANLEY CAPITOL SERVICES,
INC. (the "Liquidity Provider"), with reference to the Revolving Credit
Agreement (1999-3C) dated as of December 9, 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 G Certificates, or
principal of, or interest or premium on, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class C Certificates, the Class C Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(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.
(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).
- --------
(1) Bracketed language may be included at Borrower's option.
<PAGE>
2
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:
<PAGE>
3
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
<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 (1999-3C) dated as of December 9, 1999, between
State Street Bank and Trust Company, as Subordination Agent, as Borrower,
and MORGAN STANLEY CAPITOL SERVICES, INC. (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.
<PAGE>
2
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,
MORGAN STANLEY CAPITOL SERVICES INC.,
as Liquidity Provider
By:_____________________________________
Name:
Title:
cc: State Street Bank and Trust Company of
Connecticut, National Association,
as Class C Trustee
<PAGE>
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement (1999-3C) dated as of December 9, 1999, between
State Street Bank and Trust Company, as Subordination Agent, as Borrower,
and MORGAN STANLEY CAPITOL SERVICES, INC. (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.
<PAGE>
2
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:
<PAGE>
Exhibit I
[Form of Guarantee Agreement]
<PAGE>
Exhibit 4(d)(1)
December 9, 1999
Northwest Airlines Pass Through Trust 1999-3G
Ladies and Gentlemen:
In consideration of the Revolving Credit Agreement (the "Agreement") dated
as of December 9, 1999 between Morgan Stanley Capital Services Inc., a Delaware
corporation (hereinafter "MSCS") and State Street Bank and Trust Company, as
Subordination Agent, as agent and trustee for the Northwest Airlines Pass
Through Trust 1999-3G ("Counterparty"), Morgan Stanley Dean Witter & Co., a
Delaware corporation (hereinafter "MSDW"), hereby irrevocably and
unconditionally guarantees to Counterparty, with effect from the date of the
Agreement, the due and punctual payment of all amounts payable by MSCS under the
Agreement when the same shall become due and payable, whether on scheduled
payment dates, upon demand, upon declaration of termination or otherwise, in
accordance with the terms of the Agreement and giving effect to any applicable
grace period. Upon failure of MSCS punctually to pay any such amounts, and upon
written demand by Counterparty to MSDW at its address set forth in the signature
block of this Guarantee (or to such other address as MSDW may specify in
writing), MSDW agrees to pay or cause to be paid such amounts; provided that
delay by Counterparty in giving such demand shall in no event affect MSDW's
obligations under this Guarantee.
MSDW hereby agrees that its obligations hereunder shall be unconditional
and will not be discharged except by complete payment of the amounts payable
under the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MSDW hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MSDW or otherwise, MSDW's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been
and remain duly authorized by all necessary corporate action and do not
contravene any provision of its certificate of incorporation or by-laws or any
law, regulation or contractual restriction binding on it or its assets;
<PAGE>
Northwest Airlines Pass Through Trust 1999-3G
December 9 1999
Page 2
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MSDW shall be subrogated to all rights of Counterparty against MSCS
in respect of any amounts paid by MSDW pursuant to this Guarantee, provided that
MSDW shall be entitled to enforce or to receive any payment arising out of or
based upon such right of subrogation only to the extent that it has paid all
amounts payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
MORGAN STANLEY DEAN WITTER & CO.
By:_____________________________________
Name: Eileen S. Wallace
Title: Assistant Treasurer
Address: 1585 Broadway
3rd Floor
New York, NY 10036
Attention: Swap Group
Fax No.: (212) 761-0162
<PAGE>
Exhibit 4(d)(2)
December 9, 1999
Northwest Airlines Pass Through Trust 1999-3B
Ladies and Gentlemen:
In consideration of the Revolving Credit Agreement (the "Agreement") dated
as of December 9, 1999 between Morgan Stanley Capital Services Inc., a Delaware
corporation (hereinafter "MSCS") and State Street Bank and Trust Company, as
Subordination Agent, as agent and trustee for the Northwest Airlines Pass
Through Trust 1999-3B ("Counterparty"), Morgan Stanley Dean Witter & Co., a
Delaware corporation (hereinafter "MSDW"), hereby irrevocably and
unconditionally guarantees to Counterparty, with effect from the date of the
Agreement, the due and punctual payment of all amounts payable by MSCS under the
Agreement when the same shall become due and payable, whether on scheduled
payment dates, upon demand, upon declaration of termination or otherwise, in
accordance with the terms of the Agreement and giving effect to any applicable
grace period. Upon failure of MSCS punctually to pay any such amounts, and upon
written demand by Counterparty to MSDW at its address set forth in the signature
block of this Guarantee (or to such other address as MSDW may specify in
writing), MSDW agrees to pay or cause to be paid such amounts; provided that
delay by Counterparty in giving such demand shall in no event affect MSDW's
obligations under this Guarantee.
MSDW hereby agrees that its obligations hereunder shall be unconditional
and will not be discharged except by complete payment of the amounts payable
under the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MSDW hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MSDW or otherwise, MSDW's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been
and remain duly authorized by all necessary corporate action and do not
contravene any provision of its certificate of incorporation or by-laws or any
law, regulation or contractual restriction binding on it or its assets;
<PAGE>
Northwest Airlines Pass Through Trust 1999-3B
December 9, 1999
Page 2
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MSDW shall be subrogated to all rights of Counterparty against MSCS
in respect of any amounts paid by MSDW pursuant to this Guarantee, provided that
MSDW shall be entitled to enforce or to receive any payment arising out of or
based upon such right of subrogation only to the extent that it has paid all
amounts payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
MORGAN STANLEY DEAN WITTER & CO.
By:_____________________________________
Name: Eileen S. Wallace
Title: Assistant Treasurer
Address: 1585 Broadway
3rd Floor
New York, NY 10036
Attention: Swap Group
Fax No.: (212) 761-0162
<PAGE>
Exhibit 4(d)(3)
December 9 1999
Northwest Airlines Pass Through Trust 1999-3C
Ladies and Gentlemen:
In consideration of the Revolving Credit Agreement (the "Agreement") dated
as of December 9, 1999 between Morgan Stanley Capital Services Inc., a Delaware
corporation (hereinafter "MSCS") and State Street Bank and Trust Company, as
Subordination Agent, as agent and trustee for the Northwest Airlines Pass
Through Trust 1999-3C ("Counterparty"), Morgan Stanley Dean Witter & Co., a
Delaware corporation (hereinafter "MSDW"), hereby irrevocably and
unconditionally guarantees to Counterparty, with effect from the date of the
Agreement, the due and punctual payment of all amounts payable by MSCS under the
Agreement when the same shall become due and payable, whether on scheduled
payment dates, upon demand, upon declaration of termination or otherwise, in
accordance with the terms of the Agreement and giving effect to any applicable
grace period. Upon failure of MSCS punctually to pay any such amounts, and upon
written demand by Counterparty to MSDW at its address set forth in the signature
block of this Guarantee (or to such other address as MSDW may specify in
writing), MSDW agrees to pay or cause to be paid such amounts; provided that
delay by Counterparty in giving such demand shall in no event affect MSDW's
obligations under this Guarantee.
MSDW hereby agrees that its obligations hereunder shall be unconditional
and will not be discharged except by complete payment of the amounts payable
under the Agreement, irrespective of any claim as to the Agreement's validity,
regularity or enforceability or the lack of authority of MSCS to execute or
deliver the Agreement; or any change in or amendment to the Agreement; or any
waiver or consent by Counterparty with respect to any provisions thereof; or the
absence of any action to enforce the Agreement or the recovery of any judgment
against MSCS or of any action to enforce a judgment against MSCS under the
Agreement; or any similar circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor generally. MSDW hereby waives
diligence, presentment, demand on MSCS for payment or otherwise (except as
provided hereinabove), filing of claims, requirement of a prior proceeding
against MSCS and protest or notice, except as provided for in the Agreement with
respect to amounts payable by MSCS. If at any time payment under the Agreement
is rescinded or must be otherwise restored or returned by Counterparty upon the
insolvency, bankruptcy or reorganization of MSCS or MSDW or otherwise, MSDW's
obligations hereunder with respect to such payment shall be reinstated upon such
restoration or return being made by Counterparty.
MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:
(1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;
(2) its execution, delivery and performance of this Guarantee have been
and remain duly authorized by all necessary corporate action and do not
contravene any provision of its certificate of incorporation or by-laws or any
law, regulation or contractual restriction binding on it or its assets;
<PAGE>
Northwest Airlines Pass Through Trust 1999-3C
December 9, 1999
Page 2
(3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and
(4) this Guarantee is its legal, valid and binding obligation enforceable
against it in accordance with its terms except as enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights or by general equity
principles.
By accepting this Guarantee and entering into the Agreement, Counterparty
agrees that MSDW shall be subrogated to all rights of Counterparty against MSCS
in respect of any amounts paid by MSDW pursuant to this Guarantee, provided that
MSDW shall be entitled to enforce or to receive any payment arising out of or
based upon such right of subrogation only to the extent that it has paid all
amounts payable by MSCS under the Agreement.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
MORGAN STANLEY DEAN WITTER & CO.
By:___________________________
Name: Eileen S. Wallace
Title: Assistant Treasurer
Address: 1585 Broadway
3rd Floor
New York, NY 10036
Attention: Swap Group
Fax No.: (212) 761-0162
<PAGE>
Exhibit 4(e)
MBIA INSURANCE CORPORATION
FINANCIAL GUARANTY INSURANCE POLICY
December 9, 1999
Policy No. 30951
Re: Northwest Airlines 1999-3G (the "Class G Trust")
$150,203,000 7.935 % Pass Through Trust Certificates (the
"Class G Certificates")
Insured Payment of interest at the Stated Interest Rate (without
Obligation: premium) and principal on the Class G Certificates.
Beneficiary: State Street Bank and Trust Company as subordination agent
(together with any successor the subordination agent duly
appointed and qualified under the Agreement (as defined
below) the "Subordination Agent")
MBIA INSURANCE CORPORATION ("MBIA"), for consideration received, hereby
unconditionally and irrevocably guarantees to the Subordination Agent, subject
only to the terms of this Policy (the "Policy"), payment of the Insured
Obligation. MBIA agrees to pay to the Subordination Agent, in respect of each
Distribution Date, an amount equal to (each a "Deficiency Amount"):
(i) with respect to any Regular Distribution Date other than the Final
Legal Distribution Date, any shortfall in amounts available to the Subordination
Agent, after giving effect to the subordination provisions of the Agreement and
to the application of any amounts available to the Escrow Agent in the Class G
Paying Agent Account in respect of accrued interest at the Stated Interest Rate
on the Class G Deposits, any drawing paid under the Class G Liquidity Facility
in respect of interest due on the Class G Certificates on such Distribution Date
and any withdrawal from the Class G Cash Collateral Account in respect of
interest due on the Class G Certificates on such Distribution Date in accordance
with the Agreement, for the payment of accrued and unpaid interest at the Stated
Interest Rate on the Pool Balance of the Class G Certificates on such
Distribution Date;
(ii) with respect to any Special Distribution Date (other than an Election
Distribution Date) established by reason of receipt of a Special Payment
constituting the proceeds of any Series G Equipment Notes (as to which there has
been a default in the payment of principal thereof or that has been accelerated)
or the related Trust Indenture Estate or Collateral, as the case may be, after
giving effect to the subordination provisions of the Agreement and to the
<PAGE>
application of any amounts available to the Escrow Agent in the Class G Paying
Agent Account in respect of accrued interest on the Class G Deposits, any
drawing paid under the Class G Liquidity Facility in respect of interest due on
the Class G Certificates on such Distribution Date and any withdrawal from the
Class G Cash Collateral Account in respect of interest due on such Distribution
Date in accordance with the Agreement, the amount, if any, required to reduce
the Pool Balance of the Class G Certificates to the level equal to the Pool
Balance of the Class G Certificates outstanding immediately prior to the date of
such payment minus the outstanding principal amount of such Series G Equipment
Note (determined immediately prior to the receipt of such proceeds) plus accrued
and unpaid interest on the amount of such reduction at the Stated Interest Rate;
(iii) with respect to the Special Distribution Date established by reason
of the failure of the Subordination Agent to have received a Special Payment
constituting the proceeds of any Series G Equipment Note or the related Trust
Indenture Estate or Collateral, as the case may be, eighteen (18) months after
the last date on which full payment was made on such Series G Equipment Note as
to which there has subsequently been a failure to pay principal or that has
subsequently been accelerated, provided the Subordination Agent has not received
a Special Payment constituting the proceeds of any Series G Equipment Note or
the related Trust Indenture Estate or Collateral, as the case may be, the amount
equal to the outstanding principal amount of such Series G Equipment Note plus
accrued and unpaid interest thereon at the Stated Interest Rate for the Class G
Certificates; provided, however, if MBIA shall have duly given a Policy Provider
Election (as defined below) at the end of such 18 month period, the Deficiency
Amount shall be an amount equal to (A) with respect to such Special Distribution
Date the scheduled principal and interest payable but not paid on such Series G
Equipment Note (without regard to the acceleration thereof) during such eighteen
(18) month period (after giving effect to the application of any drawing paid
under the Class G Liquidity Facility and any withdrawal from the Class G Cash
Collateral Account attributable to such interest on such Series G Equipment
Note) and (B) thereafter on each Regular Distribution Date following such
Special Distribution Date as to which any Policy Provider Election has been
given in respect of any Series G Equipment Note, and prior to the establishment
of an Election Distribution Date or a Special Distribution Date pursuant to the
immediately succeeding clause (iv) with respect to such Series G Equipment Note,
an amount equal to the scheduled principal (without regard to the acceleration
thereof) and interest payable on such Series G Equipment Note on the related
payment date;
(iv) following the giving of any Policy Provider Election, with respect to
any Business Day elected by MBIA upon 20 days prior notice (which shall be a
Special Distribution Date) and upon request by MBIA to the Subordination Agent
to make a drawing under this Policy, an amount equal to the then outstanding
principal balance of the Series G Equipment Note as to which the Policy Provider
Election was given (less any drawings previously paid by MBIA in respect of
principal on such Equipment Note) and accrued interest thereon at the Stated
Interest Rate for the Class G Certificates from the immediately preceding
Regular Distribution Date to such Special Distribution Date;
(v) with respect to any Special Distribution Date which is an Election
Distribution Date, an amount equal to the then outstanding principal balance of
the Series G Equipment Note as to which such Election Distribution Date relates
(less any drawing previously paid by MBIA
2
<PAGE>
in respect of principal of such Equipment Note) and accrued interest thereon at
the Stated Interest Rate for the Class G Certificates from the immediately
preceding Regular Distribution Date to such Election Distribution Date; and
(vi) with respect to the Final Legal Distribution Date, any shortfall in
amounts available to the Subordination Agent after giving effect to the
subordination provisions of the Agreement and to the application of any amounts
available to the Escrow Agent in the Class G Paying Agent Account in respect of
accrued interest on the Class G Deposits, any drawing paid under the Class G
Liquidity Facility in respect of interest included in the Final Distribution and
any withdrawal from the Class G Cash Collateral Account in respect of interest
included in the Final Distribution in accordance with the Agreement, for the
payment in full of the Final Distribution (calculated as of such date but
excluding any accrued and unpaid premium) on the Class G Certificates.
If any amount paid or required to be paid in respect of the Insured
Obligation is voided (a "Preference Event") under any applicable bankruptcy,
insolvency, receivership or similar law in an Insolvency Proceeding, and, as a
result of such a Preference Event, the Beneficiary or the Class G
Certificateholders are required to return such voided payment, or any portion of
such voided payment made or to be made in respect of the Class G Certificates
(an "Avoided Payment"), MBIA will pay an amount equal to each such Avoided
Payment, irrevocably, absolutely and unconditionally and without the assertion
of any defenses to payment, including fraud in inducement or fact or any other
circumstances that would have the effect of discharging a surety in law or in
equity, upon receipt by MBIA from the Beneficiary or Class G Certificateholders
of (x) a certified copy of a final order of a court exercising jurisdiction in
such Insolvency Proceeding to the effect that the Beneficiary or Class G
Certificateholders are required to return any such payment or portion thereof
prior to the Termination Date (as defined below) of this Policy because such
payment was voided under applicable law, with respect to which order the appeal
period has expired without an appeal having been filed (the "Final Order"), (y)
an assignment, in the form of Exhibit D hereto, irrevocably assigning to MBIA
all rights and claims of such Beneficiary or Class G Certificateholders relating
to or arising under such Avoided Payment and (z) a Notice of Avoided Payment in
the form of Exhibit B hereto appropriately completed and executed by the
Beneficiary or Class G Certificateholders. Such payment shall be disbursed to
the receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in the Final Order and not to the Beneficiary or Class G Certificateholders
directly unless such Class G Certificateholder has returned principal and
interest paid on the Class G Certificates to such receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case such payment shall
be disbursed to such Class G Certificateholder.
Notwithstanding the foregoing, in no event shall MBIA be obligated to make
any payment in respect of any Avoided Payment, which payment represents a
payment of the principal amount of the Class G Certificates, prior to the time
MBIA would have been required to make a payment in respect of such principal
pursuant to sub-paragraphs (ii-vi) of this Policy, provided, further, that no
payment of principal under this Policy on any Distribution Date, other than with
respect to an Avoided Payment, shall exceed the Net Principal Policy Amount (as
defined below) for such Distribution Date. This Policy does not cover (i) any
premium prepayment penalty or other accelerated payment, which at any time may
become due on or with respect to any Class G Certificate, (ii) shortfalls, if
any, attributable to the liability of the
3
<PAGE>
Subordination Agent, the Class G Trust or the Class G Trustee for withholding
taxes, if any (including interest and penalties in respect of any such
liability) or (iii) any failure of the Escrow Agent, the Subordination Agent or
the Class G Trustee to make any payment due to the Class G Certificateholders
from funds received.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Intercreditor Agreement (the "Agreement")
dated as of December 9, 1999, by and among MBIA, as Policy Provider, Morgan
Stanley Capital Services, Inc., as Liquidity Provider, the Class G Trustee, the
Class B Trustee, the Class C Trustee and the Subordination Agent, without regard
to any amendment or supplement thereto unless such amendment or supplement has
been executed, or otherwise approved in writing, by MBIA.
"Business Day" shall mean any day other than a Saturday, a Sunday or other
day on which insurance companies in New York, New York or commercial banking
institutions in the cities in which the corporate trust office of the
Subordination Agent, the Fiscal Agent (as defined herein) or the office of MBIA
specified in this Policy are located are authorized or obligated by law or
executive order to close.
"Class G Certificateholders" shall mean any person who is the registered
owner or beneficial owner of any of the Class G Certificates and who, on the
applicable Distribution Date, is entitled under the terms of the Class G
Certificates to payment thereunder.
"Election Distribution Date" shall mean any Special Distribution Date
established by the Subordination Agent upon 20 days notice to the Class G
Certificateholders by reason of (i) the occurrence and continuation of a Policy
Provider Default occurring after a Policy Provider Election or (ii) the receipt
of a Special Payment constituting the proceeds of a Series G Equipment Note as
to which a Policy Provider Election has been given or of the related Trust
Indenture Estate or Collateral.
"Final Legal Distribution Date" shall mean October 1, 2020.
"Insolvency Proceeding" means the commencement, after the date hereof, of
any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of
assets and liabilities or similar proceedings by or against Northwest Airlines,
Inc. or any Owner Trustee and the commencement, after the date hereof, of any
proceedings by Northwest Airlines, Inc., any Liquidity Provider, or any Owner
Trustee for the winding up or liquidation of its affairs or the consent, after
the date hereof, to the appointment of a trustee, conservator, receiver, or
liquidator in any bankruptcy, insolvency, readjustment of debt, reorganization,
marshalling of assets and liabilities or similar proceedings of or relating to
Northwest Airlines, Inc., any Liquidity Provider, or any Owner Trustee.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement (as
may be amended, modified or supplemented from time to time), dated as of
December 9, 1999, by and among MBIA, Northwest Airlines, Inc., the Class G
Trustee and the Subordination Agent.
"Insured Amounts" shall mean, with respect to any Distribution Date, the
Deficiency Amount for such Distribution Date.
4
<PAGE>
"Net Principal Policy Amount" shall mean the Pool Balance of the Class G
Certificates as of the Closing Date minus all amounts previously drawn on the
Policy with respect to principal.
"Nonpayment" shall mean, with respect to any Distribution Date, a
Deficiency Amount owing to the Subordination Agent for distribution to the Class
G Certificateholders in respect of such Distribution Date.
"Notice of Avoided Payment" shall mean the notice, substantially in the
form of Exhibit B hereto, delivered pursuant to the Policy and sent to the
contact person at the address and/or fax number set forth in the Policy, and
specifying the Preference Amount which shall be due and owing on the applicable
Distribution Date.
"Notice of Nonpayment" shall mean the notice, substantially in the form of
Exhibit A hereto, delivered pursuant to this Policy and sent to the contact
person at the address and/or fax numbers set forth in the Policy specifying the
Insured Amount which shall be due and owing to the Class G Trustee for
distribution to the Class G Certificateholders on the applicable Distribution
Date.
"Policy Provider Election" shall mean a notice given by MBIA when no
Policy Provider Default shall have occurred and be continuing, stating that MBIA
elects to make payments of Deficiency Amounts as defined under the proviso to
clause (iii) of the definition of Deficiency Amounts in respect of any Series G
Equipment Note in lieu of applying clause (iii) (without the proviso) of the
definition of Deficiency Amount, which notice shall be given to the
Subordination Agent not less than five (5) days prior to the Special
Distribution Date established for payment of a Deficiency Amount under clause
(iii) of the definition thereof.
"Preference Amount" means any payment of principal or interest at the
Stated Interest Rate of the Class G Certificates on the Series G Equipment Notes
made to the Class G Trustee or the Subordination Agent or (without duplication)
any payment of the Pool Balance of or interest at the Stated Interest Rate on
the Class G Certificates or any payment of the proceeds of any drawing under the
Class G Liquidity Facility made to a Class G Certificateholder which has become
recoverable or been recovered from the Class G Trustee, the Subordination Agent
or the Class G Certificateholders (as the case may be) as a result of such
payment being determined or deemed a preferential transfer pursuant to the
United States Bankruptcy Code or otherwise rescinded or required to be returned
in accordance with a Final Order.
"Trust Agreement" shall mean the Pass Through Trust Agreement, dated as of
June 3, 1999 among NWA Corp, Northwest Airlines, Inc. and State Street Bank and
Trust Company of Connecticut, National Association, as Trustee, as supplemented
by Trust Supplement No. 1999-3G dated as of December 9, 1999 among the same
parties, pursuant to which the Class G Certificates have been issued.
Payment of amounts hereunder shall be made in immediately available funds
(x) with respect to Deficiency Amounts no later than 3:00 p.m., New York City
time, on the later of (a) the relevant Distribution Date and (b) the Business
Day of presentation to State Street Bank and Trust Company, N.A., as Fiscal
Agent for MBIA or any successor fiscal agent appointed by MBIA (the "Fiscal
Agent") of a Notice of Nonpayment, appropriately completed and executed
5
<PAGE>
by the Beneficiary (if such Notice of Nonpayment is received by 1:00 p.m. on
such day), and (y) with respect to Avoided Payments, prior to 3:00 p.m. New York
City time, on the second Business Day following MBIA's receipt of the documents
required under clauses (x) through (z) of the second paragraph of this Policy.
Any such documents received by MBIA after 1:00 p.m. New York City time on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by MBIA prior to 1:00 p.m. on the next succeeding Business Day.
All payments made by MBIA hereunder in respect of Avoided Payments will be made
with MBIA's own funds. A Notice of Nonpayment or Notice of Avoided Payment under
this Policy may be presented to the Fiscal Agent on any Business Day by (a)
delivery of the original Notice of Nonpayment or Notice of Avoided Payment to
the Fiscal Agent at its address set forth below, or (b) facsimile transmission
of the original Notice of Nonpayment or Notice of Avoided Payment to the Fiscal
Agent at its facsimile number set forth below. If presentation is made by
facsimile transmission, the Beneficiary shall (i) simultaneously confirm
transmission by telephone to the Fiscal Agent at its telephone number set forth
below, and (ii) as soon as reasonably practicable, deliver the original Notice
of Nonpayment or Notice of Avoided Payment to the Fiscal Agent at its address
set forth below. Each Notice of Nonpayment or Notice of Avoided Payment shall be
delivered by facsimile and mail to MBIA simultaneously with its delivery to the
Fiscal Agent.
If any Notice of Nonpayment received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim hereunder,
it shall be deemed not to have been received by the Fiscal Agent, and MBIA or
the Fiscal Agent, as the case may be, shall promptly so advise the Beneficiary,
and the Beneficiary may submit an amended Notice of Nonpayment.
Payments due hereunder unless otherwise stated herein will be disbursed by
the Fiscal Agent to the Subordination Agent for the benefit of the Class G
Certificateholders by wire transfer of immediately available funds in the amount
of such payment. MBIA's obligations under this Policy shall be discharged to the
extent funds equal to the amount due hereunder are received by the Subordination
Agent whether or not such funds are properly applied by the Subordination Agent.
The Fiscal Agent is the agent of MBIA only, and the Fiscal Agent shall in
no event be liable to Class G Certificateholders for any acts of the Fiscal
Agent or any failure of MBIA to deposit or cause to be deposited sufficient
funds to make payments due under this Policy.
Any notice hereunder delivered to the Fiscal Agent of MBIA may be made at
the address listed below for the Fiscal Agent of MBIA or such other address as
MBIA shall specify in writing to the Subordination Agent.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency,
Facsimile: (212) 612-3201, Telephone: (212) 612-3458.
6
<PAGE>
All notices, presentations, transmissions, deliveries and communications
made by the Beneficiary to MBIA with respect to this Policy shall specifically
refer to the number of this Policy and shall be made to MBIA at:
MBIA Insurance Corporation
113 King Street
Armonk, N.Y. 10504
Attention: Insured Portfolio Management,
Structured Finance
Telephone: (914) 273-4949
Facsimile: (914) 765-3163
or such other address, telephone number or facsimile number as MBIA may
designate to the Beneficiary in writing from time to time. Each such notice,
presentation, transmission, delivery and communication shall be effective only
upon actual receipt by MBIA.
MBIA shall be subrogated to the rights of each Class G Certificateholder
to receive payments under the Class G Certificates to the extent of any payment
by MBIA for the benefit of the Class G Certificateholders hereunder as set forth
in the Agreement.
This Policy is neither transferable nor assignable, in whole or in part,
except to a successor Subordination Agent duly appointed and qualified under the
Agreement. Such transfer and assignment shall be effective upon receipt by MBIA
of a copy of the instrument effecting such transfer and assignment signed by the
transferor and by the transferee, and a certificate, properly completed and
signed by the transferor and the transferee, in the form of Exhibit C hereto
(which shall be conclusive evidence of such transfer and assignment), and, in
such case, the transferee instead of the transferor shall, without the necessity
of further action, be entitled to all the benefits of and rights under this
Policy in the transferor's place, provided that, in such case, the Notice of
Nonpayment presented hereunder shall be a certificate of the transferee and
shall be signed by one who states therein that he is a duly authorized officer
of the transferee.
There shall be no acceleration payment due under this Policy unless such
acceleration is at the sole option of MBIA.
This Policy and the obligations of MBIA hereunder shall terminate on the
day (the "Termination Date") which is one year and one day following the
Distribution Date upon which the Final Distribution on the Class G Certificates
is made.
The foregoing notwithstanding, if an Insolvency Proceeding is existing
during the one year and one day period set forth above, then this Policy and
MBIA's obligations hereunder shall terminate on the later of (i) the date of the
conclusion or dismissal of such Insolvency Proceeding without continuing
jurisdiction by the court in such Insolvency Proceeding, and (ii) the date on
which MBIA has made all payments required to be made under the terms of this
Policy in respect of Avoided Payments.
This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-Six of the New York State insurance law.
7
<PAGE>
This Policy sets forth in full the undertaking of MBIA, and, except as
expressly provided in the Insurance Agreement and the Agreement and shall not be
modified, altered or affected by any other agreement or instrument, including
any modification or amendment to any other agreement or instrument, or by the
merger, consolidation or dissolution of Northwest Airlines, Inc. or any other
Person and may not be canceled or revoked by MBIA prior to the time it is
terminated in accordance with the express terms hereof. The Premium on this
Policy is not refundable for any reason.
This Policy shall be returned to MBIA upon termination.
THIS POLICY SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OR THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
8
<PAGE>
IN WITNESS WHEREOF, MBIA has caused this Policy to be duly executed on the
date first written above.
MBIA INSURANCE CORPORATION
By: ______________________________
Name: Gary Dunton
Title: President
By: ______________________________
Name: Ann D. McKenna
Title: Assistant Secretary
9
<PAGE>
Exhibit A to Policy Number 30951
NOTICE OF NONPAYMENT AND DEMAND
FOR PAYMENT OF INSURED AMOUNTS
Date: [ ]
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
State Street Bank and Trust Company, N.A.
61 Broadway, 15th Floor
New York, New York 10006
Attention: Municipal Registrar and Paying Agency
Reference is made to Policy No. 30951 dated December 9, 1999 (the
"Policy") issued by MBIA Insurance Corporation ("MBIA"). Terms capitalized
herein and not otherwise defined shall have the meanings ascribed to such terms
in or pursuant to the Policy unless the context otherwise requires.
The Subordination Agent hereby certifies as follows:
1. The Subordination Agent is the trustee for the Class G Trustee
under the Class G Trust Agreement.
2. The relevant Distribution Date is __________. Such
Distribution Date is a [Regular Distribution Date, a Special
Distribution Date, an Election Distribution Date or the Final
Legal Distribution Date].
[3. Payment of interest at the Stated Interest Rate on the Class G
Certificates accrued to the Distribution Date which is a Regular
Distribution Date as determined pursuant to paragraph (i) of the
definition of "Deficiency Amount" in the Policy is an amount equal
to $_________________.]
[3. The amount determined for payment to the Class G Certificateholders
pursuant to paragraph (ii) of the definition of "Deficiency Amount"
in the Policy on the Distribution Date which is a Special
Distribution Date (other than an Election Distribution Date) in
respect of a reduction in the outstanding Pool Balance of such Class
G Certificates and accrued and unpaid interest on the amount of such
reduction at the Stated Interest Rate is $___________.]
<PAGE>
[3. The Subordination Agent has not received a timely Policy Provider
Election pursuant to the Policy and the amount determined for
payment to the Class G Certificateholders pursuant to paragraph
(iii) of the definition of "Deficiency Amount" in the Policy on the
Distribution Date which is a Special Distribution Date in respect of
the outstanding principal amount of the relevant Series G Equipment
Note(s) and accrued and unpaid interest accrued thereon at the
Stated Interest Rate for the Class G Certificates is $_______.]
[3. The Subordination Agent has received a timely Policy Provider
Election pursuant to the Policy and the amount determined for
payment to the Class G Certificateholders pursuant to the provision
in paragraph (iii)(A) of the definition of "Deficiency Amount" in
the Policy on the Distribution Date which is a Special Distribution
Date in respect of scheduled principal (without regard to
acceleration thereof) and interest at the Stated Interest Rate for
the Class G Certificates payable but not paid on the relevant Series
G Equipment Note during the eighteen (18) month period referred to
in such paragraph (iii) is $_________.]
[3. The Subordination Agent has received a timely Policy Provider
Election pursuant to the Policy, no Election Distribution Date has
been established pursuant to the Policy or Special Distribution Date
established pursuant to clause (iv) of the definition of "Deficiency
Amount" and the amount determined for payment to the Class G
Certificateholders pursuant to paragraph (iii)(B) of the definition
of "Deficiency Amount" in the Policy on the Distribution Date which
is a Regular Distribution Date in respect of scheduled principal
(without regard to acceleration thereof) and interest payable at the
Stated Interest Rate for the Class G Certificates due on the Regular
Distribution Date on the relevant Series G Equipment Note is
$____________.]
[3. The Subordination Agent has received a timely Policy Provider
Election pursuant to the Policy, the Special Distribution Date
related hereto is a Business Day elected by MBIA upon 20 days prior
notice and the amount determined for payment to the Class G
Certificateholders pursuant to paragraph (iv) of the definition of
"Deficiency Amount" in the Policy in respect of outstanding
principal on such Equipment Note (less any drawings previously paid
by MBIA in respect of principal on such Equipment Note) and accrued
interest thereon at the Stated Interest Rate for the Class G
Certificates from the immediately preceding Regular Distribution
Date to such Special Distribution Date is $__________.]
[3. The amount determined for payment to the Class G Certificateholders
pursuant to paragraph (v) of the definition of "Deficiency Amount"
in the Policy on the Distribution Date which is an Election
Distribution Date in respect of the outstanding principal balance of
the relevant Series G Equipment Note(less any drawings previously
paid by MBIA in respect of principal on such Equipment Note) and
accrued interest thereon at the Stated Interest Rate for the Class G
Certificates from the immediately preceding Regular Distribution
Date to such Election Distribution Date is $__________.]
2
<PAGE>
[3. The amount determined for payment to the Class G Certificateholders
pursuant to paragraph (vi) of the definition of "Deficiency Amount"
in the Policy on the Distribution Date which is the Final Legal
Distribution Date in respect of payment in full of the Final
Distribution (other than premium) on the Class G Certificates is
$__________.]
4. There is a Deficiency Amount in respect of such Distribution
Date of $__________________ in respect of the Class G
Certificates, which amount is an Insured Amount pursuant to
the terms of the Policy.
5. The sum of $__________________ is the Insured Amount that is
due.
6. The Subordination Agent has not heretofore made a demand for
the Insured Amount in respect of such Distribution Date.
7. The Subordination Agent hereby requests payment of such
Insured Amount that is due for payment be made by MBIA under
the Policy and directs that payment under the Policy be made
to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms
of the Policy to:
[ ]
ABA #[ ]
Acct # [ ]
FBO: [ ]
[Policy Account number.]
3
<PAGE>
8. The Subordination Agent hereby agrees that, following receipt
of the Insured Amount from MBIA, it shall (a) cause such funds
to be deposited in the Policy Account and not permit such
funds to be held in any other account, (b) cause such funds to
be paid to the Class G Trustee for distribution to the Class G
Certificateholders in payment of the Pool Balance of, or
interest on, the Class G Certificates (as applicable) and not
apply such funds for any other purpose and (c) maintain an
accurate record of such payments with respect to the Class G
Certificates and the corresponding claim on the Policy and
proceeds thereof.
State Street Bank and Trust Company,
as Subordination Agent
By:_________________________________
Title:______________________________
(Officer)
4
<PAGE>
Exhibit B to Policy Number 30951
NOTICE OF AVOIDED PAYMENT AND DEMAND
FOR PAYMENT OF PREFERENCE AMOUNTS
Date: [ ]
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
State Street Bank and Trust Company, N.A.
61 Broadway, 15th Floor
New York, New York 10006
Attention: Municipal Registrar and Paying Agency
Reference is made to Policy No. 30951 dated December 9, 1999 (the
"Policy") issued by MBIA Insurance Corporation ("MBIA"). Terms capitalized
herein and not otherwise defined shall have the meanings ascribed to such terms
in or pursuant to the Policy unless the context otherwise requires.
The Subordination Agent hereby certifies as follows:
1. The Subordination Agent is the trustee for the Class G Trustee under
the Trust Agreement.
2. The Subordination Agent has established ______________ as a Special
Distribution Date pursuant to the Agreement for amounts claimed
hereunder.
3. A Final Order providing for the recovery of a Preference Amount of
$___________________ has been issued.
4. $__________________ of the amount set forth in item No. 3 above has
been paid by the Class G Certificateholders and $________________ is
required to be paid to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final
Order.
5. The Subordination Agent has not heretofore made a demand for such
Preference Amount.
1
<PAGE>
6. The Subordination Agent has delivered to MBIA or has attached hereto
all documents required by the Policy to be delivered in connection
with such Preference Amount.
7. The Subordination Agent hereby requests that payment of
$______________ of such Preference Amount be made to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in
the Final Order and $________________ of such Preference Amount be
paid to the Subordination Agent for payment over to the Class G
Trustee for distribution to theClass G Certificateholders, in each
case, by MBIA under the Policy and directs that payment under the
Policy be made to the following account by bank wire transfer of
federal or other immediately available funds in accordance with the
terms of the Policy to:
8. For the portion to be paid to the receiver, conservator,
debtor-in-possession or trustee, to ______________________:
ABA #[ ]
Acct # [ ]
FBO: [ ]
[relevant account number]
For the portion to be paid to the Subordination Agent:
ABA #[ ]
Acct # [ ]
FBO: [ ]
[Policy Account Number]
[Name of Subordination Agent]
By:
Title:
(Officer)
2
<PAGE>
Exhibit C to Policy Number 30951
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
Dear Sirs:
Reference is made to that certain Policy, Number 30951 dated December 9,
1999 (the "Policy") which has been issued by MBIA Insurance Corporation in favor
of the Subordination Agent.
The undersigned [Name of Transferor] has transferred and assigned (and
hereby confirms to you said transfer and assignment) all of its rights in and
under said Policy to [Name of Transferee] and confirms that [Name of Transferor]
no longer has any rights under or interest in said Policy.
Transferor and Transferee have indicated on the face of said Policy that
it has been transferred and assigned to Transferee.
Transferee hereby certifies that it is a duly authorized transferee under
the terms of said Policy and is accordingly entitled, upon presentation of the
document(s) called for therein, to receive payment thereunder.
_________________________
[Name of Transferor]
By:______________________
[Name and Title of
Authorized Officer of
Transferor
1
<PAGE>
Exhibit D to Policy Number 30951
Form of Assignment
Reference is made to that certain Policy No. 30951, dated December 9, 1999
(the "Policy") issued by MBIA Insurance Corporation ("MBIA") relating to the
Northwest Airlines 1999-3G Pass Through Trust Certificates. Unless otherwise
defined herein, capitalized terms used in this Assignment shall have the
meanings assigned thereto in the Policy as incorporated by reference therein. In
connection with the Avoided Payment of [$ ] paid by the undersigned (the "Class
G Certificateholder") on [ ] and the payment by MBIA in respect of such Avoided
Payment pursuant to the Policy, the Class G Certificateholder hereby irrevocably
and unconditionally, without recourse, representation or warranty (except as
provided below), sells, assigns, transfers, conveys and delivers all of such
Class G Certificateholder's rights, title and interest in and to any rights or
claims, whether accrued, contingent or otherwise, which the Class G
Certificateholder now has or may hereafter acquire, against any person relating
to, arising out of or in connection with such Avoided Payment. The Class G
Certificateholder represents and warrants that such claims and rights are free
and clear of any lien or encumbrance created or incurred by such Class G
Certificateholder.(1)
____________________________
Class G Certificateholder
- ----------
(1) In the event that the terms of this form of assignment are reasonably
determined to be insufficient solely as a result of a change of law or
applicable rules after the date of the Policy to fully vest all of the Class G
Certificateholder's right, title and interest in such rights and claims, the
Class G Certificateholder and MBIA shall agree on such other form as is
reasonably necessary to effect such assignment, which assignment shall be
without recourse, representation or warranty except as provided above.
1
<PAGE>
2
<PAGE>
Exhibit 4(f)
[EXECUTION COPY]
INTERCREDITOR AGREEMENT
Dated as of
December 9, 1999
BY AND AMONG
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Trustee under the
Northwest Airlines Pass Through Trust 1999-3G,
Northwest Airlines Pass Through Trust 1999-3B
and
Northwest Airlines Pass Through Trust 1999-3C
MORGAN STANLEY CAPITAL SERVICES, INC.
as Class G Liquidity Provider
Class B Liquidity Provider
and
Class C Liquidity Provider,
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
AND
MBIA INSURANCE CORPORATION
as Policy Provider
<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.............................................25
SECTION 2.2 Trust Accounts...............................................25
SECTION 2.3 Deposits to the Collection Account and Special Payments
Account...................................................26
SECTION 2.4 Distributions of Special Payments............................27
SECTION 2.5 Designated Representatives...................................30
SECTION 2.6 Controlling Party............................................30
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1 Written Notice of Distribution...............................32
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account...................................................35
SECTION 3.3 Distribution of Amounts on Deposit Following a Triggering
Event.....................................................37
SECTION 3.4 Other Payments...............................................39
SECTION 3.5 Payments to the Trustees, the Liquidity Providers and the
Policy Provider...........................................40
SECTION 3.6 Liquidity Facilities.........................................40
SECTION 3.7 The Policy...................................................46
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party........................50
SECTION 4.2 Remedies Cumulative..........................................51
SECTION 4.3 Discontinuance of Proceedings................................51
SECTION 4.4 Right of Certificateholders to Receive Payments Not to Be
Impaired..................................................51
SECTION 4.5 Undertaking for Costs........................................51
ARTICLE V
-ii-
<PAGE>
Page
----
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event..............52
SECTION 5.2 Indemnification..............................................52
SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement.....53
SECTION 5.4 Notice from the Liquidity Providers and Trustees.............53
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties...............53
SECTION 6.2 Absence of Duties............................................54
SECTION 6.3 No Representations or Warranties as to Documents.............54
SECTION 6.4 No Segregation of Monies; No Interest........................54
SECTION 6.5 Reliance; Agents; Advice of Counsel..........................54
SECTION 6.6 Capacity in Which Acting.....................................55
SECTION 6.7 Compensation.................................................55
SECTION 6.8 May Become Certificateholder.................................55
SECTION 6.9 Subordination Agent Required; Eligibility....................55
SECTION 6.10 Money to Be Held in Trust....................................56
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification.....................................56
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor.................................................56
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc.....................................57
SECTION 9.2 Subordination Agent Protected................................59
SECTION 9.3 Effect of Supplemental Agreements............................59
SECTION 9.4 Notice to Rating Agencies....................................59
SECTION 9.5 Addition of Class D Trustee..................................59
-iii-
<PAGE>
Page
----
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement.......................60
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity
Providers, the Policy Provider and Subordination Agent....60
SECTION 10.3 Notices......................................................60
SECTION 10.4 Severability.................................................61
SECTION 10.5 No Oral Modifications or Continuing Waivers..................62
SECTION 10.6 Successors and Assigns.......................................62
SECTION 10.7 Headings.....................................................62
SECTION 10.8 Counterpart Form.............................................62
SECTION 10.9 Subordination................................................62
SECTION 10.10 Governing Law................................................63
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial; Waiver of
Immunity..................................................64
-iv-
<PAGE>
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of December 9, 1999, by and among
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association ("State Street of Connecticut"), not in its
individual capacity but solely as Trustee of each Trust (each as defined below),
MORGAN STANLEY CAPITAL SERVICES, INC., a Delaware corporation, ("MSCS"), as
Class G Liquidity Provider, MSCS, as Class B Liquidity Provider, MSCS, as Class
C Liquidity Provider, STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, 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"), and MBIA INSURANCE CORPORATION, a New York stock
insurance company, ("MBIA"), as the Policy Provider.
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;
<PAGE>
WHEREAS, Morgan Stanley Dean Witter & Co. will guarantee in full,
pursuant to separate guarantee agreements dated as of the date hereof (each, a
"Liquidity Guarantee Agreement"), the obligations of MSCS under the Liquidity
Facilities;
WHEREAS, the Policy Provider proposes to enter into the Policy
Provider Agreement providing for the issuance by the Policy Provider of the
Policy for the benefit of the Class G Trustee and Class G Certificateholders;
and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees, the Liquidity Providers and the Policy Provider agree to the terms of
subordination set forth in this Agreement in respect of each Class of
Certificates, and the Subordination Agent, the Trustees, the Liquidity Providers
and the Policy Provider, by entering into this Agreement, hereby acknowledge and
agree to such terms of subordination and the other provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Agreement;
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(4) the term "including" shall mean "including without limitation".
"Acceleration" means, with respect to the amounts payable in respect
of the Equipment Notes issued under any Indenture, the declaration or
deemed declaration of
2
<PAGE>
such amounts to be immediately due and payable. "Accelerate" and
"Accelerated" have meanings correlative to the foregoing.
"Accrued Class G Interest" has the meaning assigned to such term in
Section 3.7(a).
"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 NonPerforming 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 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 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.
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"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 (i) 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 with respect to such senior Class or Classes.
"Aircraft" means, with respect to any Indenture, the "Aircraft"
referred to therein.
"Appraised Current Market Value" of any Leased Aircraft or Owned
Aircraft means the lower of the average and the median of the most recent
three LTV Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Systems, Inc., AvSOLUTIONS,
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 provided in
Section 3.6(g) hereof 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, for purposes the Policy and the Policy Provider, insurance
companies in New York, New York and, for all such and all other purposes
hereunder, 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. Solely with
respect to draws under any Liquidity Facility, Business Day shall also
include a "Business Day" as defined in such Liquidity Facility.
"Cash Collateral Account" means the Class G Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral
Account, as applicable.
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"Certificate" means a Class G 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 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 December 9, 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 MSCS, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class B Liquidity Facility pursuant to Section
3.6(e).
"Class B Trust" means Northwest Airlines 1999-3B 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. 1999-3B thereto dated as of December
9, 1999, by and among Northwest, the Guarantor 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.
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<PAGE>
"Class B Trustee" means State Street of Connecticut, 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 December 9, 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 MSCS, 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 1999-3C 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. 1999-3C thereto dated as of December
9, 1999, by and among Northwest, the Guarantor and the Trustee, governing
the creation and administration of the Class C Trust and the issuance of
the Class C Certificates, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Class C Trustee" means State Street of Connecticut, not in its
individual capacity except as expressly set forth in the Class C Trust
Agreement, but solely as trustee under
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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 1999-3D, 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.
"Class G 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 G Liquidity Facility
pursuant to Section 3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class G Certificateholder" means, at any time, any holder of one or
more Class G Certificates.
"Class G Certificates" means the certificates issued by the Class G
Trust, substantially in the form of Exhibit A to the Class G Trust
Agreement, and authenticated by the Class G Trustee, representing
fractional undivided interests in the Class G Trust, and any certificates
issued in exchange therefor or replacement thereof pursuant to the terms
of the Class G Trust Agreement.
"Class G Deposits" means the Deposits with respect to the Class G
Certificates.
"Class G Liquidity Facility" means, initially, the Revolving Credit
Agreement dated as of December 9, 1999, by and between the Subordination
Agent, as agent and trustee of the Class G Trustee, and the Class G
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 G Liquidity Provider" means MSCS, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity
Facility to replace the Class G Liquidity Facility pursuant to Section
3.6(e).
"Class G Paying Agent Account" means the Paying Agent Account as
defined in the Escrow and Paying Agent Agreement relating to the Class G
Certificates.
"Class G Trust" means Northwest Airlines 1999-3G Pass Through Trust
created and administered pursuant to the Class G Trust Agreement.
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"Class G Trust Agreement" means the Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 1999-3G thereto dated as of December
9, 1999, by and among Northwest, the Guarantor and the Trustee, governing
the creation and administration of the Class G Trust and the issuance of
the Class G Certificates, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Class G Trustee" means State Street of Connecticut, not in its
individual capacity except as expressly set forth in the Class G Trust
Agreement, but solely as trustee under the Class G Trust Agreement,
together with any successor trustee appointed pursuant thereto.
"Closing Date" means December 9, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning assigned to such term in the Owned
Aircraft Indentures.
"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.
"Defaulted Series G Equipment Note" has the meaning assigned to such
term in Section 3.7(c).
"Delivery Period Expiry Date" means July 31, 2000.
"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
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the Depositary, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof.
"Depositary" means ABN AMRO Bank N.V. as depositary under the
Deposit Agreement relating to Class G, 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 Provider Representatives
identified under Section 2.5.
"Disposition Payment" has the meaning assigned to such term in
Section 3.7(b).
"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.
"Election Distribution Date" has the meaning assigned to such term
in Section 3.7(c).
"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,
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<PAGE>
or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Eligible Investments" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later
than 90 days following the date of such investment, (b) investments in
open market commercial paper of any corporation incorporated under the
laws of the United States of America or any state thereof with a
short-term unsecured debt rating issued by Moody's and Standard & Poor's
of at least A-1 and P-1, respectively, and, if rated by Fitch, F-1, having
maturities no later than 90 days following the date of such investment or
(c) investments in negotiable certificates of deposit, time deposits,
banker's acceptances, commercial paper or other direct obligations of, or
obligations guaranteed by, 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.
"Eligible Provider" has the meaning assigned to such term in Section
2.6(c).
"Equipment Notes" means, at any time, the Series G 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.
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"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.
"Excess Reimbursement Obligations" means, (a) in the event of any
Policy Provider Election, the portion of the Policy Provider Obligations
that represents interest on the Series G Equipment Note in respect of
which the Policy Provider Election has been made in excess of 18 months of
interest at the interest rate applicable to such Series G Equipment Note
and (b) any interest on the Liquidity Obligations in respect of the
Liquidity Facilities paid by the Policy Provider to the Liquidity
Providers from and after the end of the 18-month period referred to in
Section 3.7(c) hereof.
"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, 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.
"Fee Letter" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
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<PAGE>
"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 G Certificates,
October 1, 2020, for the Class B Certificates, October 1, 2016, and, for
the Class C Certificates, October 1, 2011.
"Final Order" has the meaning assigned to such term in the Policy.
"Financing Agreement" means each of the Participation Agreements and
the Note Purchase Agreement.
"Fitch" means Fitch Investors Service, L.P.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation and its successors and assigns.
"Indemnification Agreement" means the Indemnification Agreement
dated as of December 2, 1999 among Northwest, the Underwriters and the
Policy Provider, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms
"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.
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"Indenture Default" means, with respect to any Indenture, any Event
of Default (as such term is defined in such Indenture) thereunder.
"Interest Drawing" has the meaning assigned to such term in Section
3.6(a).
"Investment Earnings" means investment earnings on funds on deposit
in the Trust Accounts net of losses and investment expenses of the
Subordination Agent in making such investments.
"Lease" means, with respect to any Indenture 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 G Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility, as applicable.
"Liquidity Guarantee Agreement" has the meaning assigned to such
term in the preliminary statements to this Agreement.
"Liquidity Guarantee Event" has the meaning assigned to such term in
Section 3.6(c).
"Liquidity Guarantor" means the guarantor, if any, of a Liquidity
Provider's obligations under its Liquidity Facility if the short-term
unsecured debt rating of such Liquidity Provider is based upon the rating
of such guarantor. Initially, Morgan Stanley Dean Witter & Co. will be a
Liquidity Guarantor in respect of the obligations of MSCS under the
Liquidity Facilities.
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"Liquidity Obligations" means all principal, interest, fees and
other amounts owing to the Liquidity Providers under the Liquidity
Facilities, the Fee Letter and Section 7 of the Participation Agreements.
"Liquidity Provider" means, at any time, the Class G 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.
"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 held by the Subordination Agent
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 G Certificates, 44.3%, for the
Class B Certificates, 64.1%, and, for the Class C Certificates, 72.2%.
"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.
"MSCS" means Morgan Stanley Capital Services, Inc.
"New Aircraft" has the meaning assigned to such term in the Note
Purchase Agreement.
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"Non-Controlling Parties" means, collectively, at any time, the
Policy Provider, the Trustees and the Liquidity Providers which are not
the Controlling Party at such time.
"Non-Extended Facility" has the meaning assigned to such term in
Section 3.6(d).
"Non-Extension Drawing" has the meaning assigned to such term 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).
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"Note Purchase Agreement" means the Note Purchase Agreement dated as
of December 9, 1999 among Northwest, each Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent.
"Notice of Avoided Payment" has the meaning assigned to such term in
the Policy.
"Notice of Nonpayment" has the meaning assigned to such term in the
Policy.
"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 Policy, the Policy Provider Agreement, the Policy Fee
Letter, the Fee Letter, 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;
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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 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.
"Owned Aircraft Indenture" means, with respect to each Owned
Aircraft, the Indenture pertaining to such Aircraft.
"Owner Participant" means, with respect to any Indenture pertaining
to a Leased Aircraft, the Owner Participant (as defined therein) and any
permitted successor or assign of such Owner Participant.
"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,
the Participation Agreement referred to therein, 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, 1999 by and among the Guarantor, Northwest
and the State Street Bank and Trust Company of Connecticut, National
Association, 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").
"Payee" has the meaning assigned to such term in Section 2.4(e).
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"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 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.
"Policy" means the MBIA Financial Guaranty Insurance Policy No.
30951 issued as of the Closing Date, by the Policy Provider in favor of
the Subordination Agent, for the benefit of the Class G
Certificateholders, as amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Policy Account" means the Eligible Deposit Account established by
the Subordination Agent pursuant to Section 2.2(a)(iii).
"Policy Drawing" means any payment of a claim under the Policy.
"Policy Expenses" means all amounts (including amounts in respect of
expenses) owing to the Policy Provider under the Policy Provider
Agreement, the Participation Agreements or the Note Purchase Agreement
other than (i) the amount of any Policy Drawing and any interest accrued
thereon, (ii) reimbursement of and interest on the Liquidity Obligations
paid to the Liquidity Provider by the Policy Provider, (iii) any
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indemnity payments owed to the Policy Provider and (iv) any Excess
Reimbursement Obligations.
"Policy Fee Letter" means the fee letter, dated as of December 9,
1999 from the Policy Provider to Northwest setting forth the Premium and
certain other amounts payable in respect of the Policy.
"Policy Provider" means MBIA Insurance Corporation, or any successor
thereto, as issuer of the Policy.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement, dated as of the date of issuance of the Certificates, between
the Subordination Agent, as agent and trustee for the Class G Trustee,
Northwest and the Policy Provider pursuant to which, among other things,
the Subordination Agent agrees to reimburse the Policy Provider for
amounts paid pursuant to claims made under the Policy.
"Policy Provider Default" means the occurrence of any of the
following events (a) the Policy Provider fails to make a payment required
under the Policy in accordance with its terms and such failure remains
unremedied for two Business Days following the delivery of Written Notice
of such failure to the Policy Provider or (b) the Policy Provider (i)
files any petition or commences any case or proceeding under any
provisions of any federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (ii) makes a general
assignment for the benefit of its creditors or (iii) has an order for
relief entered against it under any federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization that
is final and nonappealable, or (c) a court of competent jurisdiction, the
New York Insurance Department or another competent regulatory authority
enters a final and nonappealable order, judgment or decree (i) appointing
a custodian, trustee, agent or receiver for the Policy Provider or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Policy
Provider (or taking of possession of all or any material portion of the
Policy Provider's property).
"Policy Provider Election" has the meaning assigned to such term in
Section 3.7(c).
"Policy Provider Obligations" means all reimbursement and other
amounts, including fees and indemnities, due to the Policy Provider under
the Policy Provider Agreement, but shall not include any interest on
Policy Drawings except, if the Class G Liquidity Provider has failed to
honor its obligation to make a payment on any Interest Drawing in respect
of the Class G Certificates, interest on the portion of any Policy Drawing
made to cover the shortfall attributable to such failure by the Liquidity
Provider in an amount equal to the amount of interest that would have
accrued on such Interest Drawing if such Interest Drawing had been made at
the interest rate applicable to such Interest Drawing until such Policy
Drawing has been repaid in full, up to a maximum of
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three such Policy Drawings. For the avoidance of doubt, and subject to the
effect of payment priorities with respect to Excess Reimbursement
Obligations, Policy Provider Obligations include reimbursement of and
interest on the Liquidity Obligations in respect of the Liquidity
Facilities paid by the Policy Provider to the Liquidity Provider.
"Policy Provider Rating" shall mean the respective ratings by each
of the Ratings Agencies of the Policy Provider's financial strength and/or
claims paying ability in respect of the Policy.
"Policy Provider Threshold Rating" shall mean a Policy Provider
Rating of Aaa by Moody's and AAA by Standard & Poor's.
"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 and, with respect to the Class G Trust, payments
under the Policy for the benefit of the Class G Certificateholders (other
than in respect of the Liquidity Facilities and interest on the Class G
Certificates).
"Post-Disposition Balance" has the meaning assigned to such term in
Section 3.7(b).
"Preference Amount" has the meaning assigned to such term in the
Policy.
"Premium" means the sum of (a) the premium payable in respect of the
Policy on the Closing Date and on each Distribution Date thereafter in an
amount equal to 1/2 of the product of (i) the Premium Percentage and (ii)
with respect to the payment to be made on the Closing Date, the Pool
Balance of the Class G Certificates on the Closing Date, or with respect
to the payments to be made on each Distribution Date, the Pool Balance of
the Class G Certificates on such Distribution Date after giving effect to
any distributions to be made on such Distribution Date and (b) any
additional amounts in connection with the prepayment of the Class G
Certificates as due and when due in accordance with the Policy Fee Letter;
provided, however, the Premium payable on the Closing Date shall be pro
rated from the Closing Date to the first Distribution Date (based upon a
360 day year of twelve 30 day months).
"Premium Percentage" shall have the meaning set forth in the Policy
Fee Letter.
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"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Provider Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(c).
"Provider Representatives" has the meaning assigned to such term in
Section 2.5(c).
"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 (unless, in the case of
the Class G Certificates, the Subordination Agent shall have made a
drawing under the Policy in an aggregate amount sufficient to pay such
outstanding Pool Balance and shall have distributed such amount to the
Class G Trustee) or (ii) interest due on such Certificates on any
Distribution Date (unless, in the case of the Class G, Class B or Class C
Certificates, the Subordination Agent shall have made an Interest Drawing
or a withdrawal from the Cash Collateral Account or a drawing under the
Policy with respect thereto in an amount sufficient to pay such interest
and shall have distributed such amount to the Trustee 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.
"Regular Distribution Dates" means each April 1 and October 1,
commencing on April 1, 2000; 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 Liquidity Facility,
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 related Certificates (before downgrading of
such ratings, if any, as a result of the circumstances identified in
clauses (i) and (ii) of Section
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3.6(c), in each case, without regard to the Policy), and, in the case of
the Class G Liquidity Facility only, be consented to by the Policy
Provider, which consent shall not be unreasonably withheld or delayed, in
a face amount (or an aggregate 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. The
Pool Balance for purposes of the definition of Required Amount with
respect to the Class G Liquidity Facility shall, in the event of any
Policy Provider Election, be deemed to be reduced by an amount (if
positive) by which (a) the outstanding principal balance of the Series G
Equipment Note in respect of which such Policy Provider Election has been
made shall exceed (b) the amount of any Policy Drawings previously paid by
the Policy Provider in respect of principal on such Series G Equipment
Note.
"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 (or under the Policy in the case of any
Series G Equipment Note), which payment represents the installment of
principal at the stated maturity of such installment of principal on such
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Equipment Note, the payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both; provided that any
payment of principal of, premium, if any, or interest resulting from the
redemption or purchase of any Equipment Note shall not constitute a
Scheduled Payment.
"Scheduled Payment Date" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"Section 2.4(b) Fraction" has the meaning assigned to such term in
Section 2.4(b)(i).
"Series B Equipment Notes" means the 9.485% 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 9.152% 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.
"Series D Equipment Notes" means the equipment notes, if any, issued
pursuant to any Indenture by the related Owner Trustee or Northwest, as
the case may be, and authenticated by the Loan Trustee thereunder, and
designated as "Series D" thereunder, and any such equipment notes issued
in exchange therefor or replacement thereof pursuant to the terms of such
Indenture.
"Series G Equipment Notes" means the 7.935% Series G 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) or Section 3.7 for the distribution of such Special Payment in
accordance with this Agreement or the Election Distribution Date;
provided, however, that, if any such day shall not be a Business Day, the
related distribution shall be made on the next succeeding Business Day
without additional interest.
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"Special Payment" means any payment (other than a Scheduled Payment)
in respect of, or any proceeds of, any Equipment Note, Trust Indenture
Estate or Collateral, 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.
"State Street of Connecticut" has the meaning assigned to it in the
preamble to this Agreement.
"Stated Amount" with respect to any Liquidity Facility, means the
Maximum Commitment (as defined in such Liquidity Facility) of the
applicable Liquidity Provider thereunder.
"Stated Expiration Date" has the meaning specified in Section
3.6(d).
"Stated Interest Rate" means (i) with respect to the Class G
Certificates, 7.935% per annum; (ii) with respect to the Class B
Certificates, 9.485% per annum, and (iii) with respect to the Class C
Certificates, 9.152% per annum.
"Subordination Agent" has the meaning assigned to it in the preamble
to this Agreement.
"Subordination Agent Incumbency Certificate" has the meaning
assigned to such term in Section 2.5(a).
"Subordination Agent Representatives" has the meaning assigned to
such term in Section 2.5(a).
"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
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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 Liquidity
Provider or Liquidity Guarantor as applicable for each Trust.
"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 $110
million) or (z) the occurrence of a Northwest Bankruptcy Event.
"Trust" means any of the Class G Trust, the Class B Trust or the
Class C Trust.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a).
"Trust Agreement" means any of the Class G Trust Agreement, Class B
Trust Agreement or Class C Trust Agreement.
"Trust Indenture Estate" has the meaning assigned to such term in
each Indenture.
"Trustee" means any of the Class G Trustee, the Class B Trustee or
the Class C Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to such
term in Section 2.5(b).
"Trustee Representatives" has the meaning assigned to such term in
Section 2.5(b).
"Underwriters" means Morgan Stanley & Co. Incorporated, Chase
Securities, Inc., Salomon Smith Barney Inc. and U.S. Bancorp Piper Jaffray
Inc.
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"Underwriting Agreement" means the Underwriting Agreement dated as
of December 2, 1999, by and among the Underwriters, Northwest and the
Guarantor, 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, Liquidity Provider or
the Policy 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 and distribution 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, the Liquidity Facilities and the
Policy 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 or its
nominee, 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) 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, each Liquidity Provider, by entering into the
Liquidity Facility to which it is a party, and the Policy Provider, by entering
into the Policy Provider Agreement has agreed 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 , the Policy
Provider Agreement 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, the Liquidity
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Providers and the Policy Provider (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, the Liquidity
Providers and the Policy Provider and (iii) the Policy 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 Class G Trustee and
the Class G Certificateholders. 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 under any Liquidity Facility, the Subordination Agent
shall invest and reinvest such amounts in Eligible Investments 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, any Investment Earnings shall be deposited in the Collection
Account when received by the Subordination Agent and shall be applied by the
Subordination Agent in the same manner as the principal amount of such
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, the
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Liquidity Providers and the Policy Provider, 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 the Policy Provider and each Rating Agency may
consent) establish a new Collection Account, Special Payments Account, Policy
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, Policy 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 (other than any
Scheduled Payment which by the express terms hereof is to be deposited to the
Policy Account or a Cash Collateral Account).
(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, the Liquidity Providers and the
Policy Provider. 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, subject to Section 3.7,
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 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:
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first, such amount as shall be required to pay (A) the aggregate
amount of all accrued and unpaid Liquidity Expenses and Policy Expenses
then in arrears ("past due amounts") plus (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses and Policy
Expenses not in arrears to such Special Distribution 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 Distribution Date and the denominator of which is the
aggregate outstanding principal amount of all Equipment Notes (the
"Section 2.4(b) Fraction") ("accrued amounts"), shall be distributed to
the relevant Liquidity Providers and the Policy Provider first in
satisfaction of any past due amounts then in satisfaction of the accrued
amounts, in each case, pari passu on the basis of the amount of Liquidity
Expenses and Policy Expenses, owed to each Liquidity Provider and the
Policy Provider;
second, such amount as shall be required to pay (i) (A) all accrued
and unpaid interest then in arrears on all Liquidity Obligations (at the
rate provided in the applicable Liquidity Facility, determined after
giving effect to payments made by the Policy Provider to each Liquidity
Provider, if any, in respect of interest on drawings under the Liquidity
Facilities) 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 Distribution Date (at the rate provided in the applicable
Liquidity Facility and determined after giving effect to payments made by
the Policy Provider to each Liquidity Provider, if any, in respect of
interest on drawings under the Liquidity Facilities) multiplied by (y) the
Section 2.4(b) Fraction, to the Liquidity Providers pari passu on the
basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider, (ii) if the Class G Liquidity Provider has defaulted
in its obligation to make any Interest Drawing in respect of the Class G
Certificates, (A) the aggregate amount of interest accrued on the portion
of any Policy Drawing made to cover the shortfall attributable to such
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" which are then
in arrears plus (B) the product of (x) the aggregate amount of all accrued
and unpaid interest on such Policy Drawings not in arrears to such Special
Distribution Date multiplied by (y) the Section 2.4(b) Fraction, to the
Policy Provider and (iii) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the amount of such payment made to the Liquidity
Providers attributable to such interest accrued on such drawings, shall be
distributed to the Liquidity Providers and the Policy Provider pari passu;
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
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Account an amount equal to such Account's Required Amount shall be
deposited in such Account, and (C) after application of amounts required
pursuant to subclause (A) or subclause (B) of this clause "third", (x) 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 to such
Liquidity Provider (other than amounts payable pursuant to clauses first
or second of this Section 2.4(b) and as determined after giving effect to
payments made by the Policy Provider to the Liquidity Provider in respect
of principal of drawings under the Liquidity Facilities) and (y) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, to reimburse
the Policy Provider for the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such Liquidity Providers and
the Policy Provider pari passu on the basis of the amounts of all such
unreimbursed Liquidity Obligations and such payments under the Policy;
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 G Certificates on such Special
Distribution Date shall be distributed to the Class G Trustee;
sixth, such amount as shall be required to pay Policy Provider
Obligations then due (other than amounts payable pursuant to the preceding
clauses of this Section 2.4(b) and other than any Excess Reimbursement
Obligations) to the Policy Provider;
seventh, 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;
eighth, 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
ninth, such amount as shall be required to pay Excess Reimbursement
Obligations to the Policy Provider;
tenth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
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For the purposes of this Section 2.4(b)(i), clause (x) of the definition
of "Expected Distributions" shall be deemed to read as follows: "(x)
accrued, due and unpaid interest on such Certificates excluding interest,
if any, payable with respect to the Deposits related to such Trust".
(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, the Policy Provider, the Paying Agent, the Depositary or any
Escrow Agent (collectively, the "Payees") and (ii) any compensation (including,
without limitation, any fees payable to any Liquidity Provider under Section
2.03 of any Liquidity Facility or to the Policy Provider under the Policy Fee
Letter) 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, the Policy Provider and each Trustee, and from time to time thereafter
may furnish to each Liquidity Provider, the Policy Provider and each Trustee, at
the Subordination Agent's discretion, or upon any Liquidity Provider's, the
Policy 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, the Policy Provider and each 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.
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(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 and
the Policy Provider shall furnish to the Subordination Agent, and from time to
time thereafter may furnish to the Subordination Agent, at such Liquidity
Provider's or Policy 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 (each a "Provider Incumbency Certificate") of any
authorized signatory of such Liquidity Provider or Policy Provider certifying as
to the incumbency and specimen signatures of any officer, attorney-in-fact,
agent or other designated representative of such Liquidity Provider or Policy
Provider (in each case, the "Provider Representatives" and, together with the
Subordination Agent Representatives and Trustee Representatives, the "Designated
Representatives") authorized to give Written Notices on behalf of such Liquidity
Provider or Policy Provider hereunder. Until the Subordination Agent receives a
subsequent Provider Incumbency Certificate, it shall be entitled to rely on the
last Provider Incumbency Certificate delivered to it hereunder.
SECTION 2.6 Controlling Party. (a) The Trustees, the Liquidity
Providers and the Policy Provider hereby agree that, with respect to any
Indenture at any given time, the Loan Trustee thereunder will be directed (i) in
taking, or refraining from taking, any action with respect to such Indenture or
the Equipment Notes issued thereunder, so long as no Indenture Default has
occurred and is continuing thereunder, by the holders of at least a majority of
the outstanding principal amount of such Equipment Notes (provided that, for so
long as the Subordination Agent is the registered holder of the Equipment Notes,
the Subordination Agent shall act with respect to this clause (i) in accordance
with the directions of the Trustees representing holders of Certificates
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.
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(b) Subject to subparagraph (c) below, the Person who shall be the
"Controlling Party" with respect to any Indenture shall be: (x) the Policy
Provider until payment of Final Distributions to the holders of Class G
Certificates and no obligations owing to the Policy Provider remain outstanding
or, if a Policy Provider Default has occurred and is continuing, the Class G
Trustee until payment of Final Distributions to the holders of Class G
Certificates; and thereafter, (y) upon payment of Final Distributions to the
holders of Class G Certificates and if either no Policy Provider Obligations
owing to the Policy Provider remain outstanding or a Policy Provider Default has
occurred and is continuing, the Class B Trustee until payment of Final
Distributions to the holders of Class B Certificates; and thereafter (z) 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 any amount remains
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 any amount 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 $110 million), the Liquidity Provider with the highest
outstanding amount of unreimbursed Liquidity Obligations (so long as such
Liquidity Provider has not defaulted in its obligation to make any advance under
any Liquidity Facility; the "Eligible Provider") shall have the right to elect,
by Written Notice to the Subordination Agent, the Policy Provider 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,
provided that if (A) within 15 Business Days after its receipt of any such
written notice from such Liquidity Provider (i) the Policy Provider then meets
the Policy Provider Threshold Rating, (ii) no Policy Provider Default shall have
occurred and be continuing and (iii) the Policy Provider delivers to the
Subordination Agent (with a copy to each of the Trustees and each Liquidity
Provider) (a) an amended policy (x) covering payment of all
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drawings and interest thereon owing to the Liquidity Providers (determined
without regard to the availability of funds for the payment thereof by the
Subordination Agent), (y) permitting each Liquidity Provider to demand a payment
directly from the Policy Provider under such amended Policy of such Liquidity
Obligations when and as due under the applicable Liquidity Facility and (z)
prohibiting any amendment or modification of such amended Policy without the
prior written consent of the Liquidity Providers and otherwise in form and
substance reasonable satisfactory to the Liquidity Providers, (b) a legal
opinion to the effect that the Policy as amended constitutes an enforceable
obligation of the Policy Provider and (c) Ratings Confirmations issued by each
Rating Agency with respect thereto or (B) the Policy Provider pays to each
Liquidity Provider all outstanding drawings owing to such Liquidity Provider in
respect of its Liquidity Facility, and interest accrued thereon to such date,
the Policy Provider shall remain the Controlling Party so long as no Policy
Provider Default has occurred and is continuing (in which case the Eligible
Provider, if it so elects and if Liquidity Obligations owing to it remain
outstanding, or if it does not so elect or if no Liquidity Obligations remain
outstanding, the Class G Trustee, shall become the Controlling Party). In
connection with the delivery of any such amended Policy, the parties hereto
agree to enter into an amendment to this Agreement and the Subordination Agent
agrees to enter into an amendment to the Policy Provider Agreement, in each
instance, to make such changes thereto as may be necessary to give effect to the
foregoing (any such amendment to this Agreement to be subject to delivery to
each of the Trustees and the Subordination Agent of a Ratings Confirmation
issued by each Rating Agency with respect thereto and each such amendment to be
in form and substance reasonably satisfactory to each party thereto). In
addition, each Liquidity Provider agrees to request the Policy Drawings
permitted by such amended Policy and that the proceeds thereof be applied to the
Liquidity Obligations owing to it.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(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:
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(i) With respect to the Class G Certificates, the Class G
Trustee shall separately set forth the amounts to be paid in accordance
with clause "fifth" of Section 3.2 or with clause "fifth" of 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 "seventh" of Section 3.2 or with clause "seventh" of 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 "eighth" of Section 3.2 or with clause "eighth" of 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;
(v) The Policy Provider shall set forth the amounts to be paid
to it in accordance with clauses "first", "second", "third", "sixth" and
"ninth" of Section 3.2 or 2.4(b), as the case may be, hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "tenth" 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:
(i) With respect to the Class G Certificates, the Class G
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "first" (relating to reimbursement payments made by the Class
G 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
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reimbursement payments made by the Class B Certificateholders) and "ninth"
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 "tenth" 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 "first", "second", "third", "fourth" and "fifth"
of Section 3.3 hereof;
(v) The Policy Provider shall separately set forth amounts to
be paid to it in accordance with clauses "first", "second", "third",
"fourth", "eighth" and "eleventh" of Section 3.3 hereof; and
(vi) 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, a Liquidity Provider or the Policy
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, 3.3 or 3.7 hereof, as applicable, and, in the case of a Liquidity Provider
or the Policy Provider, its commitment under the related Liquidity Facility or
the Policy 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, any Liquidity Provider or the Policy 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, a Liquidity Provider
or the Policy 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 Agent to make a distribution to such Person
pursuant to Section 3.2 or 3.3 hereof, the
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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 "ninth" of Section 3.2 and clauses "first" through "twelfth" 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 , the Policy 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 (i) all accrued and
unpaid Liquidity Expenses owed to each Liquidity Provider and (ii) all
accrued and unpaid Policy Expenses owed to the Policy Provider, shall be
distributed to the Liquidity Providers and the Policy Provider pari passu
on the basis of the amount of Liquidity Expenses and Policy Expenses owed
to each Liquidity Provider and the Policy Provider;
second, such amount as shall be required to pay in full (i) the
aggregate amount of interest accrued on all Liquidity Obligations (at the
rate provided in the applicable Liquidity Facility determined after giving
effect to payments made by the Policy Provider to each Liquidity Provider,
if any, in respect of interest on drawings under the Liquidity Facilities)
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, (ii) if the Class G Liquidity Provider has defaulted in its
obligation to make any Interest Drawing in respect of the Class G
Certificates, the aggregate amount of interest accrued on the portion of
any Policy Drawing made to cover the shortfall attributable to such
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" and (iii) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, the amount of
such payment made to the Liquidity Providers attributable to such interest
accrued on such
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drawings, shall be distributed to the Liquidity Providers and the Policy
Provider pari passu on the basis of the amounts owing to each;
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) after applications of the amounts required
pursuant to subclause (A) or subclause (B) of this clause "third", (x) to
pay or reimburse the Liquidity Provider in respect of such Liquidity
Facility in an amount equal to the amount of all Liquidity Obligations
then due under such Liquidity Facility (other than amounts payable
pursuant to clause "first" or "second" of this Section 3.2 and as
determined after giving effect to payments made by the Policy Provider to
the Liquidity Providers in respect of principal of drawings under the
Liquidity Facilities) and (y) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such Liquidity Providers and
the Policy Provider pari passu on the basis of the amounts of all such
unreimbursed Liquidity Obligations and such payments under the Policy;
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 G Certificates on such
Distribution Date shall be distributed to the Class G Trustee;
sixth, such amount as shall be required to pay the Policy Provider
all Policy Provider Obligations then due (other than amounts payable
pursuant to the preceding clauses of this Section 3.2 and other than
Excess Reimbursement Obligations) to the Policy Provider;
seventh, 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;
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eighth, 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;
ninth, such amount as shall be required to pay in full any Excess
Reimbursement Obligations shall be distributed to the Policy Provider;
tenth, 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
eleventh, the balance, if any, of any such payment remaining
thereafter shall be held in the Collection Account for later distribution
in accordance with this Article III (including the priorities set forth
therein).
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
first, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee and (iii) the Policy
Provider for any amounts of the nature described in clause (i) above
actually incurred by it (to the extent not previously reimbursed), shall
be distributed to the Policy Provider, and (iv) any Liquidity Provider,
Policy 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, Policy
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 (iv) above;
second, such amount remaining as shall be required to pay (i) all
accrued and unpaid Liquidity Expenses owed to each Liquidity Provider and
(ii) all accrued and unpaid Policy Expenses owed to the Policy Provider
shall be distributed to each Liquidity Provider and the Policy Provider
pari passu on the basis of the amount of Liquidity Expenses and Policy
Expenses owed to each Liquidity Provider, and the Policy Provider;
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third, such amount remaining as shall be required to pay (i) the
aggregate amount of interest accrued on all Liquidity Obligations (at the
rate provided in the applicable Liquidity Facility determined after giving
effect to payments made by the Policy Provider to each Liquidity Provider,
if any, in respect of interest on drawings under the Liquidity Facilities)
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, (ii) if the Class G Liquidity Provider has defaulted in its
obligation to make any Interest Drawing in respect of the Class G
Certificates, the aggregate amount of interest accrued on the portion of
any Policy Drawing made to cover the shortfall attributable to such
default by the Liquidity Provider at the rate provided in the "except"
clause of the definition of "Policy Provider Obligations" and (iii) if the
Policy Provider has elected to pay to each Liquidity Provider all
outstanding drawings and interest owing to such Liquidity Provider under
its Liquidity Facility pursuant to subsection 2.6(c) hereof, the amount of
such payment made to the Liquidity Providers attributable to such interest
accrued on such drawings, shall be distributed to the Liquidity Providers
and the Policy Provider pari passu on the basis of the amounts owing to
each;
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 Cash Collateral
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) after application of the amounts
required pursuant to subclause (A) or subclause (B) of this clause
"fourth", (x) 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 and as
determined after giving effect to payments made by the Policy Provider to
the Liquidity Providers in respect of principal of drawings under the
Liquidity Facilities) and (y) if the Policy Provider has elected to pay to
each Liquidity Provider all outstanding drawings and interest owing to
such Liquidity Provider under its Liquidity Facility pursuant to
subsection 2.6(c) hereof, the principal amount of such payment made to the
Liquidity Providers, shall be distributed to such
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Liquidity Providers and the Policy Provider pari passu on the basis of the
amounts of all such unreimbursed Liquidity Obligations and such payments
under the Policy;
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)
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 G Certificates shall be
distributed to the Class G Trustee;
eighth, such amount remaining as shall be required to pay the Policy
Provider Obligations then due to the Policy Provider under the Policy
Provider Agreement (other than amounts payable pursuant to clauses "first"
through "fourth" above and other than any Excess Reimbursement
Obligations) shall be paid to the Policy Provider;
ninth, 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;
tenth, 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;
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eleventh, such amount remaining as shall be required to pay any
Excess Reimbursement Obligations to the Policy Provider;
twelfth, 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 "eleventh" above; and
thirteenth, amount remaining shall be distributed to the
Certificateholders of the related Trust.
SECTION 3.4 Other Payments. Any payments received by the
Subordination Agent for which no provision as to the application thereof is made
in this Agreement shall be distributed by the Subordination Agent in the order
of priority specified in Section 3.3 hereof.
SECTION 3.5 Payments to the Trustees, the Liquidity Providers and
the Policy Provider. 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
G Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 10:00 a.m.
(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 (and concurrently with the
making of such request, the Subordination Agent shall give notice to the Policy
Provider of such insufficiency of funds) 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 G
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class G Cash Collateral Account, and payable in each case to the
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Class G Certificateholders, shall be promptly distributed to the Class G 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 (i) the short-term unsecured
debt rating of any Liquidity Provider (or any Liquidity Guarantor with respect
to any Liquidity Facility), issued by either Rating Agency is lower than the
applicable Threshold Rating or (ii) , if applicable, any guarantee issued by a
Liquidity Guarantor related to any Liquidity Facility ceases to be in full force
and effect or becomes invalid or unenforceable, or the Liquidity Guarantor
denies its liability thereunder (any such occurrence, a "Liquidity Guarantee
Event"), within 30 days after receiving notice of an event identified in clauses
(i) and (ii) (but no later than the expiration date of the Liquidity Facility
issued by the downgraded Liquidity Provider (the "Downgraded Facility")), such
Liquidity Provider may arrange, or the Subordination Agent (in consultation with
Northwest), may arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility to the Subordination Agent. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination Agent shall, on such 30th day (or if such 30th day
is not a Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of such Downgraded Facility), request a drawing in accordance
with and to the extent permitted by such Downgraded Facility (such drawing, a
"Downgrade Drawing") of all available and undrawn amounts thereunder. Amounts
drawn pursuant to a Downgrade Drawing shall be maintained and invested as
provided in Section 3.6(f) hereof. The Liquidity Provider may also arrange for a
Replacement Liquidity Provider to issue and deliver a Replacement Liquidity
Facility at any time after such Downgrade Drawing so long as such 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
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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. Notwithstanding the foregoing provisions of this Section
3.6(d), so long as MSCS is the Liquidity Provider for any Liquidity Facility,
the Stated Expiration Date therefor shall be automatically extended, effective
on the 25th day, prior to such Stated Expiration Date (unless such Stated
Expiration Date is on or after the date that is 15 days after the Final Legal
Distribution Date for the relevant Class of Certificates), for a period of 364
days after such Stated Expiration Date (unless the obligations of such Liquidity
Provider are earlier terminated in accordance with such Liquidity Facility)
without the necessity of any act by the Subordination Agent or such Liquidity
Provider, unless such Liquidity Provider shall advise the Subordination Agent,
prior to such 25th day, that it does not agree to such extension of the Stated
Expiration Date, in which event, 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 Non-Extended Facility, request a Non-Extension
Drawing under the Non-Extended Facility of all available and undrawn amounts
thereunder.
(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 G Certificateholders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the applicable Trustee
shall have consented, in writing, to the execution and issuance of such
Replacement Liquidity Facility.
In connection with the issuance of each Replacement Liquidity
Facility, the Subordination Agent shall (x) prior to the issuance of such
Replacement Liquidity Facility, obtain written confirmation from each Rating
Agency that such Replacement Liquidity Facility will not cause a reduction of
the rating then in effect for any Class of Certificates by such Rating
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Agency (without regard to any downgrading of the ratings of any Liquidity
Provider or the Liquidity Guarantor being replaced pursuant to Section 3.6(c)
hereof and without regard to the Policy) and, in the case of the Class G
Liquidity Facility only, the written consent of the Policy Provider (which
consent shall not be unreasonably withheld or delayed), (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 G
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 G 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 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 G Certificates (at the Stated Interest Rate for the
Class G Certificates) from any other source, withdraw from the Class G
Cash Collateral Account, and pay to the Class G 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 G Certificates) on such Class G
Certificates and (y) the amount on deposit in the Class G 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
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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 G
Trust shall have been reduced by payments made to the Class G
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 G 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 G
Cash Collateral Account on such date), the Required Amount (with respect
to the Class G Liquidity Facility) will be on deposit in the Class G Cash
Collateral Account and shall first, pay such amount to the Class G
Liquidity Provider until the Liquidity Obligations (with respect to the
Class G 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;
(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
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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 Final Drawing 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.
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(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.
SECTION 3.7 The Policy. (a) Interest Drawings. If on any Regular
Distribution Date (other than the Final Legal Distribution Date) after giving
effect to the application of available funds in accordance with the priorities
specified in Section 2.4 and Article III, and taking into account the
application of any amounts received by the Escrow Agent in the Class G Paying
Agent Account in respect of accrued interest on the Class G Deposits, any
Drawing paid under the Class G Liquidity Facility in respect of such interest
and any withdrawal of funds from the Class G Cash Collateral Account in respect
of such interest, the Subordination Agent does not then have sufficient funds
available for the payment of all amounts due and owing in respect of accrued
interest on the Class G Certificates at the Stated Interest Rate for Class G
Certificates ("Accrued Class G Interest"), then, prior to 1:00 p.m. (New York
City time) on such Distribution Date, the Subordination Agent (i) shall deliver
a Notice of Nonpayment, as provided in the Policy to the Policy Provider or its
fiscal agent, requesting a Policy Drawing under the Policy (for payment into the
Policy Account) in an amount sufficient to enable the Subordination Agent to pay
such Accrued Class G Interest and (ii) shall pay such amount from the Policy
Account to the Class G Trustee in payment of such Accrued Class G Interest on
such Distribution Date.
(b) Proceeds Deficiency Drawing. If on any Special Distribution Date
(other than an Election Distribution Date or a Special Distribution Date
established pursuant to clause
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(ii) of the third paragraph of Section 3.7(c)) established by the Subordination
Agent by reason of its receipt of a Special Payment (a "Disposition Payment")
constituting the proceeds of any Series G Equipment Note or related Trust
Indenture Estate or Collateral, as the case may be, the Subordination Agent does
not have sufficient funds (after giving effect to the application of available
funds in accordance with the priorities specified in Section 2.4 and Article
III, and taking into account the application of any amounts received by the
Escrow Agent in the Class G Paying Agent Account in respect of accrued interest
on the Class G Deposits, any Drawing paid under the Class G Liquidity Facility
in respect of such interest, any withdrawal of funds in the Class G Cash
Collateral Account in respect of such interest and the amount of such Special
Payment) (i) available for a reduction in the outstanding Pool Balance of the
Class G Certificates to an amount equal to the Post-Disposition Balance (as
defined below) and (ii) to pay interest on the amount of such reduction accrued
at the Stated Interest Rate, then, prior to 1:00 p.m. (New York City time) on
such Special Distribution Date, the Subordination Agent (x) shall deliver a
Notice of Nonpayment, as provided in the Policy (for payment into the Policy
Account) in an amount sufficient to enable the Subordination Agent to pay the
amount of such reduction plus such accrued interest and (y) shall pay such
amount from the Policy Account to the Class G Trustee in payment of such
reduction in the outstanding Pool Balance of the Class G Certificates plus such
accrued interest on such Special Distribution Date. The "Post-Disposition
Balance" of the Pool Balance of the Class G Certificates on any Special
Distribution Date shall be equal to the difference between the Pool Balance of
the Class G Certificates immediately prior to the receipt of the related
Disposition Payment and the outstanding principal amount of the Series G
Equipment Note related to such Disposition Payment.
(c) No Proceeds Drawing. On the first Business Day that is 18 months
after the last date on which full payment was made on any Series G Equipment
Note (a "Defaulted Series G Equipment Note") as to which there has subsequently
been a failure to pay principal or that has subsequently been accelerated, if
the Subordination Agent has not theretofore made a drawing under the Policy
pursuant to Section 3.7(b), the Subordination Agent shall deliver a Notice of
Nonpayment, as provided in the Policy, to the Policy Provider or its fiscal
agent, requesting a Policy Drawing under the Policy (for the payment into the
Policy Account) in an amount equal to the then outstanding principal amount of
such Defaulted Series G Equipment Note plus accrued interest thereon. The
Subordination Agent shall promptly, but not less than 25 days prior to the such
Business Day, send to the Class G Trustee, the Class B Trustee and the Class C
Trustee, the Liquidity Provider for the Class G Liquidity Facility and the
Policy Provider a Written Notice establishing such Business Day as the date for
the distribution of the proceeds of such Policy Drawing, which date shall
constitute a Special Distribution Date. No later than 1:00 p.m. (New York City
time) on the specified Special Distribution Date the Subordination Agent shall
make the specified Policy Drawing and upon its receipt of the proceeds thereof
pay the amount thereof from the Policy Account to the Class G Trustee in
reduction of the outstanding Pool Balance of the Class G Certificates together
with such accrued and unpaid interest thereon. For the avoidance of doubt, after
the payment in full of such amount under this Section 3.7(c), the Subordination
Agent shall have no right to make any further Policy Drawings
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under Section 3.7(c) in respect of such Defaulted Series G Equipment Note except
for a drawing under Section 3.7(e).
Notwithstanding the foregoing, the Policy Provider has the right at
the end of any such 18-month period, so long as no Policy Provider Default shall
have occurred and be continuing, to elect (the "Policy Provider Election")
instead to pay (a) on such Special Distribution Date an amount equal to the
scheduled principal and interest that came due on such Defaulted Series G
Equipment Note (without regard to the acceleration thereof) but was not paid
during such 18-month period (after giving effect to the application of funds
received from the Class G Liquidity Facility and the Class G Cash Collateral
Account, in each case attributable to such interest) and (b) thereafter, on each
Regular Distribution Date, an amount equal to the scheduled principal and
interest that were to become due on such Defaulted Series G Equipment Note on
the related payment date (without regard to any acceleration thereof) until the
establishment of an Election Distribution Date. Following a Policy Provider
Election with respect to a Defaulted Series G Equipment Note, on any Business
Day (which shall be a Special Distribution Date; each, an "Election Distribution
Date") elected by the Policy Provider upon 20 days' Written Notice to the
Subordination Agent and the Class G Trustee, the Policy Provider may,
notwithstanding the Policy Provider Election, request the Subordination Agent
to, and the Subordination Agent shall, make a Policy Drawing for an amount equal
to the then outstanding principal balance of such Defaulted Series G Equipment
Note (less any Policy Drawings previously paid by the Policy Provider in respect
of principal of such Defaulted Series G Equipment Note) and accrued interest on
such amounts at the Stated Interest Rate for the Class G Certificates from the
previous Regular Distribution Date to such Election Distribution Date.
Further, following a Policy Provider Election with respect to a
Defaulted Series G Equipment Note, upon either (i) the occurrence and
continuance of a Policy Provider Default or (ii) the receipt by the
Subordination Agent of a Special Payment constituting the Disposition Payment in
respect of such Defaulted Series G Equipment Note or related Trust Indenture
Estate or Collateral, as the case may be, then the Subordination Agent shall on
any Business Day (which shall be a Special Distribution Date) elected by the
Subordination Agent upon 20 days' Written Notice to the Class G Trustee and the
Policy Provider, make a Policy Drawing for an amount equal to the then
outstanding principal balance of such Defaulted Series G Equipment Note (less
any Policy Drawings previously paid by the Policy Provider in respect of
principal of such Equipment Note) and accrued interest on such amounts at the
Stated Interest Rate for the Class G Certificates from the immediately preceding
Regular Distribution Date to such Special Distribution Date. The Subordination
Agent shall make each such drawing referred to in this subparagraph (c) under
the Policy (for payment into the Policy Account) no later than 1:00 p.m. (New
York City time) on the relevant Special Distribution Date and upon its receipt
of the proceeds thereof pay the amount thereof from the Policy Account to the
Class G Trustee in reduction of the outstanding Pool Balance of the Class G
Certificates together with such accrued and unpaid interest thereon.
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In addition, regardless of whether or not the Policy Provider makes
a Policy Provider Election, the Policy Provider shall, at the end of the first
occurring 18-month period described in Section 3.7(c), amend the Policy (if not
already amended to so provide) to provide for the payment to the Class G
Liquidity Provider, the Class B Liquidity Provider and the Class C Liquidity
Provider of interest accruing on the outstanding drawings in respect of the
Class G Liquidity Facility, Class B Liquidity Facility and Class C Liquidity
Facility from and after the end of such 18-month period as and when such
interest becomes due in accordance with such Liquidity Facilities.
(d) Final Policy Drawing. If on the Final Legal Distribution Date of
the Class G Certificates after giving effect to the application of available
funds in accordance with the priorities specified in Section 2.4 and Article
III, and taking into account the application of any amounts received by the
Escrow Agent in the Class G Paying Agent Account in respect of accrued interest
on the Class G Deposits, any Drawing paid under the Class G Liquidity Facility
in respect of interest included in the Final Distribution and any withdrawal of
funds in the Class G Cash Collateral Account in respect of interest included in
the Final Distribution, the Subordination Agent does not then have sufficient
funds available on such date for the payment in full of the Final Distribution
(calculated as at such date but excluding any accrued and unpaid premium) on the
Class G Certificates then, prior to 1:00 p.m. (New York City time) on such date
the Subordination Agent shall: (i) deliver a Notice of Nonpayment, as provided
in the Policy, to the Policy Provider or its fiscal agent, requesting a Policy
Drawing under the Policy (for payment into the Policy Account) in an amount
equal to the minimum amount sufficient to enable the Subordination Agent to pay
the Final Distribution (calculated as at such date but excluding any accrued and
unpaid premium) on the Class G Certificates, and (ii) shall pay such amount from
the Policy Account to the Class G Trustee in payment of such amount on such
date.
(e) Avoidance Drawings. If at any time the Subordination Agent shall
have actual knowledge of the issuance of any Final Order, the Subordination
Agent shall promptly give notice thereof to each Trustee, the Liquidity
Providers and the Policy Provider. The Subordination Agent shall thereupon
calculate the relevant Preference Amounts resulting therefrom and shall
promptly: (a) send to the Class G Trustee a Written Notice of such amount and
(b) deliver to the Policy Provider or its fiscal agent, a Notice of Avoided
Payment, together with a copy of the documentation required by the Policy with
respect thereto, requesting a Policy Drawing (for payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy and/or to the
Subordination Agent for deposit into the Policy Account) in an amount equal to
the amount of relevant Preference Amount. Such Written Notice shall also set the
date for the distribution of the proceeds of such Policy Drawing which date
shall constitute a Special Distribution Date and shall be the earlier of the
third Business Day that immediately precedes the expiration of the Policy and
the Business Day that immediately follows the 25th day after the date of such
Written Notice. No later than 1:00 p.m. (New York City time) on the specified
Special Distribution Date, the Subordination Agent shall make the specified
Policy Drawing and upon its receipt of the proceeds thereof, pay the amount
thereof from the Payment Account to the Class G Trustee in reinstatement of the
Preference Amount.
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(f) Application of Policy Drawings. Notwithstanding anything to the
contrary contained in this Agreement (including, without limitation, Sections
2.4, 3.2 and 3.3 hereof), all payments received by the Subordination Agent in
respect of a Policy Drawing shall be promptly paid from the Payment Account to
the Class G Trustee for distribution to the Class G Certificateholders.
(g) Reduction of Outstanding Pool Balance. Promptly following each
date on which the Pool Balance of the Class G Certificates is reduced as a
result of a payment under this Agreement, the Subordination Agent shall inform
the Policy Provider of such reduction. Anything contained herein to the contrary
notwithstanding, no Policy Drawing under clauses (a)(d) of this Section 3.7
shall be for an amount in excess of the outstanding Pool Balance of the Class G
Certificates plus accrued and unpaid interest thereon at the Stated Interest
Rate for the Class G Certificates.
(h) Resubmission of Notice for Payment. If the Policy Provider at
any time informs the Subordination Agent in accordance with the Policy that a
Notice of Nonpayment or Notice of Avoided Payment submitted by the Subordination
Agent does not satisfy the requirements of the Policy, the Subordination Agent
shall, as promptly as possible after being so informed, submit to the Policy
Provider an amended and revised Notice of Nonpayment or Notice of Avoided
Payment, as the case may be, and shall pay to the Class G Trustee out of the
Policy Account the amount received pursuant to such amended or revised Notice of
Nonpayment or Notice of Avoided Payment, as the case may be, when received.
(i) Subrogation. The Policy Provider will be subrogated to all of
the rights of the holders of the Class G Certificates to payment on the Class G
Certificates to the extent of the payments made under the Policy as set forth
herein.
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
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less than all) of such Equipment Notes to any Person at public or private sale,
at any location at the option of the Controlling Party, all upon such terms and
conditions as it may reasonably deem advisable in accordance with applicable
law.
(ii) Subject to the Owner Trustees' and the Owner
Participants' rights set forth in the Indentures, 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 NonPerforming 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 Policy Provider, the
Controlling Party or the
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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 Policy Provider,
the Controlling Party or the Subordination Agent, as appropriate, and the
exercise or the beginning of the exercise of any power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power or remedy. No delay or omission by any Trustee, any
Liquidity Provider, the Policy 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, Liquidity
Provider or the Policy 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,
such Liquidity Provider or the Policy 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, the Policy Provider or a Trustee or a suit by
Certificateholders holding more than 10% of the original principal amount of any
Class of Certificates.
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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 Liquidity Providers,
the Policy Provider 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, the Policy Provider or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish to each
Liquidity Provider, the Policy 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, the Policy 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
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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, the Policy Provider or Trustee
has actual notice of an Indenture Default or a Triggering Event, such Person
shall promptly use its best efforts give notice thereof to all other Liquidity
Providers, the Policy Provider 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 G 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, the Policy Provider and the Trustees
hereby designates and appoints the Subordination Agent as the Subordination
Agent under this Agreement.
The Subordination Agent 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.
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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 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, the Policy Provider 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, the Policy 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, the Policy Provider 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
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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, Liquidity Provider, or the Policy Provider for any fee as compensation
for its services as agent under this Agreement. The provisions of this Section
6.7 shall survive the termination of this Agreement.
SECTION 6.8 May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9 Subordination Agent Required; Eligibility. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any State
thereof or of the District of Columbia and having a combined capital and surplus
of at least $100,000,000), if there is such an institution willing and able to
perform the duties of the Subordination Agent hereunder upon reasonable or
customary terms. Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any State thereof or
of the District of Columbia to exercise corporate trust powers and shall be
subject to supervision or examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition at least
annually, pursuant to law 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.
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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.
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
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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, the Policy Provider and the
Trustees. The retiring Subordination Agent shall promptly transfer its rights
under each of the Liquidity Facilities, the Policy and all of the property held
by it as Subordination Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers, the Policy Provider 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
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, the Policy Provider and each Liquidity
Provider; provided, however, that this Agreement may be supplemented, amended or
modified
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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),
(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, the Policy Provider 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 or the Policy. Nothing contained in this Section shall
require the consent of a Trustee at any time following the payment of Final
Distributions with respect to the related Class of Certificates.
(b) In the event that the Subordination Agent, as the registered
holder of any Equipment Notes, receives a request for its consent to any
amendment, modification, 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, except that so long as the Final Distribution on the Class G Certificates
has not been made or any Policy Provider Obligations remain outstanding and no
Policy Provider Default shall have occurred and be continuing, the Subordination
Agent shall request directions from the Policy Provider rather than the Class G
Trustee with respect to the Class G Equipment Notes held in the Class G Trust,
and shall vote or consent in accordance with the directions of such Trustee or
the Policy Provider 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 and the Policy 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
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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,
any Liquidity Facility or the Policy, 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 and the Policy Provider.
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 and the Policy Provider.
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 G 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 and the Class G Certificates. No such amendment shall materially
adversely affect any Trustee, any Liquidity Provider or the Policy Provider. 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
(iii) the provisions of this Agreement governing payments with
respect to Certificates and related notices, including, without
limitation, Sections 2.4, 3.1, 3.2, 3.3
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and 3.6(e), shall be revised to provide for distributions on the Class D
Certificates after payment of all relevant distributions on the Class C
Certificates.
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 Policy Provider, of the Class G
Trustee, the Class B Trustee and the Class C Trustee to be such "Controlling
Party"). No such amendment shall materially adversely affect any Trustee, any
Liquidity Provider or the Policy Provider.
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
all Policy Provider Obligations to the Policy Provider and provided that there
shall then be no other amounts due to the Certificateholders, the Trustees, the
Liquidity Providers, the Subordination Agent and the Policy Provider hereunder
or under the Trust Agreements, and that the commitment of (i) the Liquidity
Providers under the Liquidity Facilities and (ii) the Policy Provider under the
Policy 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, the Policy Provider 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, the Subordination Agent
and the Policy Provider any legal or equitable right, remedy or claim under or
in respect of this Agreement.
SECTION 10.3 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
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(i) if to the Subordination Agent, addressed to it at its office
at:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Fax: (612) 726-0655
(ii) if to the Trustee, addressed to it at its office at:
State Street Bank and Trust Company of Connecticut, National
Association
225 Asylum Street, Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate/Muni Department
Fax: (860) 244-1889
(iii) if to any Liquidity Provider, addressed to it at its office
at:
Morgan Stanley Capital Services, Inc.
1585 Broadway
New York, New York 10036
Attention: Keith Amburgey
Fax: (212) 761-0580
(iv) if to the Policy Provider, addressed to it at its office at:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance
Fax: (914) 765-3163
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider, the Subordination Agent or the Policy Provider 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.
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SECTION 10.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
SECTION 10.7 Headings. The headings of the various Articles and
Sections herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.8 Counterpart Form. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same agreement.
SECTION 10.9 Subordination. (a) As between the Liquidity Providers
and the Policy Provider, 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 (i) Liquidity Providers of all Liquidity Obligations
then due and payable and (ii) Policy Provider of all Policy Provider 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, the Subordination Agent
or the Policy Provider receives any payment in respect of any obligations owing
hereunder (or, in the case of the Liquidity Providers or the Policy Provider, in
respect of the Liquidity Obligations or the
65
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Policy Provider Obligations, as the case may be), 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 or the Policy Provider,
such Liquidity Obligations or the Policy Provider Obligations, as the case may
be) 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, the Subordination Agent and the Policy
Provider 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 and Policy Provider Obligations may
not be so secured. The Trustees expressly agree (on behalf of themselves and the
holders of Certificates) not to assert priority over the holders of Liquidity
Obligations or Policy Provider 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, the Subordination Agent and the Policy
Provider 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 and the
Policy Provider, the Liquidity Obligations or the Policy Provider
Obligations, as the case may be,
(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 and the Policy Provider, any of the
Liquidity Obligations or the Policy Provider Obligations, as the case may
be,
(iii) renew, extend, increase, alter or exchange any amounts
owing to it hereunder, including, in the case of the Liquidity Providers
and the Policy Provider, any of the Liquidity Obligations or the Policy
Provider Obligations, as the case may be, 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, the Policy Provider or the Subordination Agent shall
not prejudice the rights or adversely affect the obligations of any other party
under this Agreement.
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SECTION 10.10 Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the nonexclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts from any thereof;
(ii) consents that any such action or proceedings may be brought in
such courts, and waives any objection that it may now or hereafter have
that the venue of any such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 10.3
hereof, or at such other address of which the other parties shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written, 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.
(Signature Pages to Follow)
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STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Trustee for
each of the Trusts
By:______________________________________
Name:
Title:
MORGANSTANLEY CAPITAL SERVICES,
INC., as Class G Liquidity Provider, Class B
Liquidity Provider and Class C Liquidity
Provider
By:______________________________________
Name:
Title:
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:______________________________________
Name:
Title:
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MBIA INSURANCE CORPORATION
as Policy Provider
By:______________________________________
Name:
Title:
70
<PAGE>
Exhibit 4(g)(1)
EXECUTION COPY
DEPOSIT AGREEMENT
(Class G)
Dated as of December 9, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V.,
as Depositary
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE 2
MAINTENANCE OF DEPOSITS......................................................2
Section 2.1 Deposits.............................................2
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.....................................4
ARTICLE 3
TERMINATION..................................................................4
ARTICLE 4
PAYMENTS.....................................................................4
ARTICLE 5
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE 6
TRANSFER.....................................................................6
ARTICLE 7
AMENDMENT....................................................................6
ARTICLE 8
NOTICES......................................................................7
ARTICLE 9
OBLIGATIONS UNCONDITIONAL....................................................7
ARTICLE 10
ENTIRE AGREEMENT.............................................................7
ARTICLE 11
GOVERNING LAW................................................................8
<PAGE>
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE 13
COUNTERPARTS.................................................................8
<PAGE>
Page
----
iii
<PAGE>
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
iv
<PAGE>
DEPOSIT AGREEMENT (CLASS G)
This DEPOSIT AGREEMENT (Class G) dated as of December 9, 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., 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, Inc., a Minnesota corporation ("Northwest")
and State Street Bank and Trust Company of Connecticut, National Association,
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
1999-3G, dated December 9, 1999, to the Pass Through Trust Agreement dated as of
June 3, 1999, by and among the Guarantor, Northwest and the Pass Through Trustee
(the "Basic Agreement") relating to Northwest Airlines Pass Through Trust
1999-3G pursuant to which the Northwest Airlines Pass Through Trust, Series
1999-3G Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Salomon Smith Barney and U.S. Bancorp Piper Jaffray (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 December 9, 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 G)]
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.
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 #02009580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-3 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$150,203,000.00. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in
2
<PAGE>
[Deposit Agreement (Class G)]
Schedule I hereto maturing on the respective dates (each such date, as it may be
extended from time to time in accordance with, and subject to the requirements
of, the Indemnity Agreement (as defined herein) 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 7.935% 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 April 1 and October
1, commencing on April 1, 2000 (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 each Deposit, the Escrow Agent may, by providing at least one
(1) Business Days 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. At any time prior to the actual withdrawal of
any 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, Hartford, Connecticut, Salt Lake City, Utah or Chicago, Illinois.
The Depositary reserves the right, upon at least fourteen (14) days prior notice
to Northwest, the Escrow Agent and the Pass Through Trustee, to require seven
(7) days notice for any withdrawal.
(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 July 31, 2000, and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on such date as designated by Northwest
3
<PAGE>
[Deposit Agreement (Class G)]
pursuant to the Indemnity Agreement dated as of December 9, 1999 between
Northwest and the Depositary (the "Indemnity Agreement") but in any event not
later than August 15, 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 such date as
designated by Northwest pursuant to the Indemnity Agreement and bear interest as
provided in Section 2.2 hereof. 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 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 1999-3 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
4
<PAGE>
[Deposit Agreement (Class G)]
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;
(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 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;
5
<PAGE>
[Deposit Agreement (Class G)]
(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;
(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; and
(g) the Depositary shall act through its Chicago branch office in
connection with the transactions contemplated by 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 G)]
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.
7
<PAGE>
[Deposit Agreement (Class G)]
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., 208
South LaSalle Street, Suite 1500, Chicago, IL 60604-1003, Attention: Credit
Administration (Telecopier: 312-992-5111) and ABN AMRO BANK N.V., 135 South
LaSalle Street, Suite 611, Chicago, IL 60603, Attention: Claudia Heldring
(Telecopier: 312- 606-8428) 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 of Connecticut, National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103, Attention: Corporate/Muni Department, (Telecopier:
(860) 244-1889) 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.
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.
8
<PAGE>
[Deposit Agreement (Class G)]
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.
* * *
9
<PAGE>
[Deposit Agreement (Class G)]
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:__________________________
Name:
Title:
ABN AMRO BANK N.V.,
as Depositary
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
<PAGE>
[Deposit Agreement (Class G)]
SCHEDULE I
SCHEDULE OF DEPOSITS
(Class G)
MATURITY
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. DATE
---- -------- -------------- ----------- --------
12/9/99 N523XJ 10,370,630.00 795099 1/10/00
12/9/99 N524XJ 10,370,630.00 795111 1/10/00
12/9/99 N525XJ 10,428,220.00 795114 1/10/00
12/9/99 N526XJ 10,428,220.00 795142 1/10/00
12/9/99 N527XJ 10,485,810.01 795153 1/10/00
12/9/99 N528XJ 10,485,810.01 795179 1/10/00
12/9/99 N529XJ 10,769,330.00 795208 1/10/00
12/9/99 N530XJ 10,902,230.00 795212 1/13/99
12/9/99 N531XJ 10,902,230.00 795216 1/27/00
12/9/99 N532XJ 10,973,110.00 795292 3/13/00
12/9/99 N533XJ 10,973,110.00 795323 3/17/00
12/9/99 N534XJ 11,030,700.01 795341 4/13/00
12/9/99 N535XJ 11,030,700.01 795355 4/27/00
12/9/99 N536XJ 11,052,269.96 795390 5/15/00
<PAGE>
[Deposit Agreement (Class G)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class G) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., 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 G)]
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
ABN AMRO BANK N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class G) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V. (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 1999-3 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:_________________________________
Name:______________________________
Title:_____________________________
Dated:___________________,_______
<PAGE>
Exhibit 4(g)(2)
EXECUTION COPY
DEPOSIT AGREEMENT
(Class B)
Dated as of December 9, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V.,
as Depositary
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE 2
MAINTENANCE OF DEPOSITS......................................................2
Section 2.1 Deposits.............................................2
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.....................................4
ARTICLE 3
TERMINATION..................................................................4
ARTICLE 4
PAYMENTS.....................................................................4
ARTICLE 5
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE 6
TRANSFER.....................................................................6
ARTICLE 7
AMENDMENT....................................................................6
ARTICLE 8
NOTICES......................................................................7
ARTICLE 9
OBLIGATIONS UNCONDITIONAL....................................................7
ARTICLE 10
ENTIRE AGREEMENT.............................................................7
ARTICLE 11
GOVERNING LAW................................................................8
<PAGE>
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE 13
COUNTERPARTS.................................................................8
<PAGE>
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
iii
<PAGE>
DEPOSIT AGREEMENT (CLASS B)
This DEPOSIT AGREEMENT (Class B) dated as of December 9, 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., 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, Inc., a Minnesota corporation ("Northwest")
and State Street Bank and Trust Company of Connecticut, National Association,
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
1999-3G, dated December 9, 1999, to the Pass Through Trust Agreement dated as of
June 3, 1999, by and among the Guarantor, Northwest and the Pass Through Trustee
(the "Basic Agreement") relating to Northwest Airlines Pass Through Trust
1999-3G pursuant to which the Northwest Airlines Pass Through Trust, Series
1999-3G Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Salomon Smith Barney and U.S. Bancorp Piper Jaffray (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 December 9, 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.
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 #02009580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-3 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$58,013,000.00. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in
2
<PAGE>
[Deposit Agreement (Class B)]
Schedule I hereto maturing on the respective dates (each such date, as it may be
extended from time to time in accordance with, and subject to the requirements
of, the Indemnity Agreement (as defined herein) 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 9.485% 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 April 1 and October
1, commencing on April 1, 2000 (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 each Deposit, the Escrow Agent may, by providing at least one
(1) Business Days 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. At any time prior to the actual withdrawal of
any 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, Hartford, Connecticut, Salt Lake City, Utah or Chicago, Illinois.
The Depositary reserves the right, upon at least fourteen (14) days prior notice
to Northwest, the Escrow Agent and the Pass Through Trustee, to require seven
(7) days notice for any withdrawal.
(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 July 31, 2000, and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on such date as designated by Northwest
3
<PAGE>
[Deposit Agreement (Class B)]
pursuant to the Indemnity Agreement dated as of December 9, 1999 between
Northwest and the Depositary (the "Indemnity Agreement") but in any event not
later than August 15, 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 such date as
designated by Northwest pursuant to the Indemnity Agreement and bear interest as
provided in Section 2.2 hereof. 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 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 1999-3 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
4
<PAGE>
[Deposit Agreement (Class B)]
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;
(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 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;
5
<PAGE>
[Deposit Agreement (Class B)]
(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;
(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; and
(g) the Depositary shall act through its Chicago branch office in
connection with the transactions contemplated by 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.
7
<PAGE>
[Deposit Agreement (Class B)]
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., 208
South LaSalle Street, Suite 1500, Chicago, IL 60604-1003, Attention: Credit
Administration (Telecopier: 312-992-5111) and ABN AMRO BANK N.V., 135 South
LaSalle Street, Suite 611, Chicago, IL 60603, Attention: Claudia Heldring
(Telecopier: 312- 606-8428) 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 of Connecticut, National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103, Attention: Corporate/Muni Department, (Telecopier:
(860) 244-1889) 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.
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.
8
<PAGE>
[Deposit Agreement (Class B)]
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.
* * *
9
<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:_______________________________
Name:
Title:
ABN AMRO BANK N.V.,
as Depositary
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
<PAGE>
[Deposit Agreement (Class B)]
SCHEDULE I
SCHEDULE OF DEPOSITS
(Class B)
MATURITY
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. DATE
---- -------- -------------- ----------- --------
12/9/99 N523XJ 4,392,620.00 795109 1/10/00
12/9/99 N524XJ 4,392,620.00 795112 1/10/00
12/9/99 N525XJ 4,411,480.00 795115 1/10/00
12/9/99 N526XJ 4,411,480.00 795143 1/10/00
12/9/99 N527XJ 4,430,340.01 795158 1/10/00
12/9/99 N528XJ 4,430,340.01 795187 1/10/00
12/9/99 N529XJ 4,468,060.00 795209 1/10/00
12/9/99 N530XJ 4,468,060.00 795213 1/13/99
12/9/99 N531XJ 4,468,060.00 795226 1/27/00
12/9/99 N532XJ 4,468,060.00 795303 3/13/00
12/9/99 N533XJ 4,468,060.00 795334 3/17/00
12/9/99 N534XJ 4,468,060.00 795342 4/13/00
12/9/99 N535XJ 4,468,060.00 795371 4/27/00
12/9/99 N536XJ 267,699.98 795394 5/15/00
<PAGE>
[Deposit Agreement (Class B)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., 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.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V. (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 1999-3 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:________________________________
Name:_____________________________
Title:____________________________
Dated:____________________,________
<PAGE>
Exhibit 4(g)(3)
EXECUTION COPY
DEPOSIT AGREEMENT
(Class C)
Dated as of December 9, 1999
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Escrow Agent,
and
ABN AMRO BANK N.V.,
as Depositary
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
FORMATION OF DEPOSITS........................................................2
Section 1.1 Acceptance of Depositary.............................2
Section 1.2 Establishment of Accounts............................2
ARTICLE 2
MAINTENANCE OF DEPOSITS......................................................2
Section 2.1 Deposits.............................................2
Section 2.2 Interest.............................................3
Section 2.3 Withdrawals..........................................3
Section 2.4 Other Accounts.....................................4
ARTICLE 3
TERMINATION..................................................................4
ARTICLE 4
PAYMENTS.....................................................................4
ARTICLE 5
REPRESENTATIONS AND WARRANTIES...............................................5
ARTICLE 6
TRANSFER.....................................................................6
ARTICLE 7
AMENDMENT....................................................................6
ARTICLE 8
NOTICES......................................................................7
ARTICLE 9
OBLIGATIONS UNCONDITIONAL....................................................7
ARTICLE 10
ENTIRE AGREEMENT.............................................................7
ARTICLE 11
GOVERNING LAW................................................................8
<PAGE>
ARTICLE 12
WAIVER OF JURY TRIAL RIGHT...................................................8
ARTICLE 13
COUNTERPARTS.................................................................8
<PAGE>
Page
----
iii
<PAGE>
Schedule I Schedule of Deposits
Exhibit A Notice of Purchase Withdrawal
Exhibit B Notice of Final Withdrawal
iv
<PAGE>
DEPOSIT AGREEMENT (CLASS C)
This DEPOSIT AGREEMENT (Class C) dated as of December 9, 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., 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, Inc., a Minnesota corporation ("Northwest")
and State Street Bank and Trust Company of Connecticut, National Association,
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
1999-3G, dated December 9, 1999, to the Pass Through Trust Agreement dated as of
June 3, 1999, by and among the Guarantor, Northwest and the Pass Through Trustee
(the "Basic Agreement") relating to Northwest Airlines Pass Through Trust
1999-3G pursuant to which the Northwest Airlines Pass Through Trust, Series
1999-3G Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and Morgan Stanley & Co. Incorporated, Chase Securities
Inc., Salomon Smith Barney and U.S. Bancorp Piper Jaffray (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 December 9, 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.
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 #02009580, Account: Chicago Treasury, Reference: Northwest Airlines
1999-3 EETC, and the Depositary shall accept from the Underwriters, on behalf of
the Escrow Agent, the sum of US$31,947,000.00. Upon acceptance of such sum, the
Depositary shall (i) establish each of the deposits specified in
2
<PAGE>
[Deposit Agreement (Class C)]
Schedule I hereto maturing on the respective dates (each such date, as it may be
extended from time to time in accordance with, and subject to the requirements
of, the Indemnity Agreement (as defined herein) 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 9.152% 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 April 1 and October
1, commencing on April 1, 2000 (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 each Deposit, the Escrow Agent may, by providing at least one
(1) Business Days 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. At any time prior to the actual withdrawal of
any 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, Hartford, Connecticut, Salt Lake City, Utah or Chicago, Illinois.
The Depositary reserves the right, upon at least fourteen (14) days prior notice
to Northwest, the Escrow Agent and the Pass Through Trustee, to require seven
(7) days notice for any withdrawal.
(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 July 31, 2000, and there are unwithdrawn Deposits
on such date, the Depositary shall pay the amount of the Final Withdrawal to the
Paying Agent on such date as designated by Northwest
3
<PAGE>
[Deposit Agreement (Class C)]
pursuant to the Indemnity Agreement dated as of December 9, 1999 between
Northwest and the Depositary (the "Indemnity Agreement") but in any event not
later than August 15, 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 such date as
designated by Northwest pursuant to the Indemnity Agreement and bear interest as
provided in Section 2.2 hereof. 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 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 1999-3 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
4
<PAGE>
[Deposit Agreement (Class C)]
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;
(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 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;
5
<PAGE>
[Deposit Agreement (Class C)]
(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;
(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; and
(g) the Depositary shall act through its Chicago branch office in
connection with the transactions contemplated by 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.
7
<PAGE>
[Deposit Agreement (Class C)]
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., 208
South LaSalle Street, Suite 1500, Chicago, IL 60604-1003, Attention: Credit
Administration (Telecopier: 312-992-5111) and ABN AMRO BANK N.V., 135 South
LaSalle Street, Suite 611, Chicago, IL 60603, Attention: Claudia Heldring
(Telecopier: 312- 606-8428) 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 of Connecticut, National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103, Attention: Corporate/Muni Department, (Telecopier:
(860) 244-1889) 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.
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.
8
<PAGE>
[Deposit Agreement (Class C)]
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.
* * *
9
<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:__________________________
Name:
Title:
ABN AMRO BANK N.V.,
as Depositary
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
<PAGE>
[Deposit Agreement (Class C)]
SCHEDULE I
SCHEDULE OF DEPOSITS
(Class C)
MATURITY
--------
DATE TAIL NO. DEPOSIT AMOUNT ACCOUNT NO. DATE
---- -------- -------------- ----------- ----
12/9/99 N523XJ 2,533,552.33 795110 1/10/00
12/9/99 N524XJ 2,533,552.33 795113 1/10/00
12/9/99 N525XJ 2,531,705.90 795116 1/10/00
12/9/99 N526XJ 2,531,705.90 795151 1/10/00
12/9/99 N527XJ 2,529,859.43 795172 1/10/00
12/9/99 N528XJ 2,529,859.43 795195 1/10/00
12/9/99 N529XJ 2,757,071.03 795210 1/10/00
12/9/99 N530XJ 2,786,695.84 795214 1/13/99
12/9/99 N531XJ 2,786,695.84 795279 1/27/00
12/9/99 N532XJ 2,573,973.39 795312 3/13/00
12/9/99 N533XJ 2,573,973.39 795338 3/17/00
12/9/99 N534XJ 2,497,669.59 795346 4/13/00
12/9/99 N535XJ 780,685.60 795380 4/27/00
12/9/99 N536XJ 0.00 795405 5/15/00
<PAGE>
[Deposit Agreement (Class C)]
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
ABN AMRO BANK N.V.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO BANK N.V., 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.
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: 312-992-5111
ABN AMRO BANK N.V.
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: 312-606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of December
9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABM AMRO BANK, N.V. (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 1999-3 EETC].
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
as Escrow Agent
By:_________________________________
Name:______________________________
Title:_____________________________
Dated:___________________,_______
<PAGE>
Exhibit 4(h)(1)
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class G)
Dated as of December 9, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
AND
U.S. BANCORP PIPER JAFFRAY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-3G
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.....................................................5
Section 2.1 Appointment of Paying Agent...............................5
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...............8
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 G) dated as of
December 9, 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, SALOMON
SMITH BARNEY INC., CHASE SECURITIES INC. and U.S. BANCORP PIPER JAFFRAY 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 OF CONNECTICUT, NATIONAL ASSOCIATION,
a national banking association, 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, 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, Inc., a Minnesota corporation ("Northwest")
and the Pass Through Trustee have entered into Trust Supplement No. 1999-3G,
dated as of the date hereof (the "Trust Supplement"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, Northwest and
the Pass Through Trustee (the "Pass Through Trust Agreement") relating to
Northwest Airlines Pass Through Trust 1999-3G (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-3G
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of December 2, 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 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.,
acting through a United States branch, as Depositary (the "Depositary") under
the
<PAGE>
2
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
(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
<PAGE>
3
misconduct or gross negligence (or simple negligence in connection with
the handling of funds) or breach of its obligations hereunder.
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) July 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 July 31, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be August 15, 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 $150,203,000 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
(the "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 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
<PAGE>
4
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 pursuant to clause (d) of
Section 1.2 hereof (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 Ratings
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 (or, if received outside of business hours, on the next opening
of business on a Business day). 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
<PAGE>
12
case of the Pass Through Trustee, State Street Bank and Trust Company of
Connecticut, National Association, 225 Asylum Street, Goodwin Square, Hartford,
Connecticut 06103, Attention: Corporate/Muni Department (Telecopier: (860)
244-1889) 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.
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 G) to be duly executed as of the day and year first above
written.
<PAGE>
13
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Pass Through Trustee for and on behalf of
Northwest Airlines Pass Through Trust 1999-3G
By:_______________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:_______________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By:_______________________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED,
SALOMON SMITH BARNEY INC.,
CHASE SECURITIES INC. and
U.S. BANCORP PIPER JAFFRAY INC., as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Northwest Airlines 1999-3G 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 G) dated as of December 9, 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, Salomon Smith Barney
Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., as
Underwriters, State Street Bank and Trust Company of Connecticut, National
Association, 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 c 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: _________________, ____
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT B
Withdrawal Certificate
(Class G)
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 (Class G)
dated as of December 9, 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 OF CONNECTICUT, NATIONAL
ASSOCIATION, 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., acting through a United States branch
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: (312) 992-5111
ABN AMRO Bank N.V., acting through a United States branch
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class G) dated as of
December 9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO Bank N.V., acting through a United
States 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>
Exhibit 4(h)(2)
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of December 9, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
AND
U.S. BANCORP PIPER JAFFRAY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-3B
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.....................................................5
Section 2.1 Appointment of Paying Agent...............................5
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...............8
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
December 9, 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, SALOMON
SMITH BARNEY INC., CHASE SECURITIES INC. and U.S. BANCORP PIPER JAFFRAY 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 OF CONNECTICUT, NATIONAL ASSOCIATION,
a national banking association, 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, 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, Inc., a Minnesota corporation ("Northwest")
and the Pass Through Trustee have entered into Trust Supplement No. 1999-3B,
dated as of the date hereof (the "Trust Supplement"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, Northwest and
the Pass Through Trustee (the "Pass Through Trust Agreement") relating to
Northwest Airlines Pass Through Trust 1999-3B (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-3B
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of December 2, 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 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.,
acting through a United States branch, as Depositary (the "Depositary") under
the
<PAGE>
2
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
(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
<PAGE>
3
misconduct or gross negligence (or simple negligence in connection with
the handling of funds) or breach of its obligations hereunder.
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) July 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 July 31, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be August 15, 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 $58,013,000 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
(the "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 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
<PAGE>
4
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 pursuant to clause (d) of
Section 1.2 hereof (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 Ratings
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 (or, if received outside of business hours, on the next opening
of business on a Business day). 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
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12
case of the Pass Through Trustee, State Street Bank and Trust Company of
Connecticut, National Association, 225 Asylum Street, Goodwin Square, Hartford,
Connecticut 06103, Attention: Corporate/Muni Department (Telecopier: (860)
244-1889) 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.
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.
<PAGE>
13
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Pass Through Trustee for and on behalf of
Northwest Airlines Pass Through Trust 1999-3G
By:_______________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:_______________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By:_______________________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED,
SALOMON SMITH BARNEY INC.,
CHASE SECURITIES INC. and
U.S. BANCORP PIPER JAFFRAY INC., as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Northwest Airlines 1999-3B 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 December 9, 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, Salomon Smith Barney
Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., as
Underwriters, State Street Bank and Trust Company of Connecticut, National
Association, 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 c 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: _________________, ____
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 (Class B)
dated as of December 9, 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 OF CONNECTICUT, NATIONAL
ASSOCIATION, 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., acting through a United States branch
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: (312) 992-5111
ABN AMRO Bank N.V., acting through a United States branch
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
December 9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO Bank N.V., acting through a United
States 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>
Exhibit 4(h)(3)
EXECUTION COPY
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of December 9, 1999
among
FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Escrow Agent,
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
AND
U.S. BANCORP PIPER JAFFRAY INC.
as Underwriters,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Northwest Airlines Pass Through Trust 1999-3C
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.....................................................5
Section 2.1 Appointment of Paying Agent...............................5
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...............8
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
December 9, 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, SALOMON
SMITH BARNEY INC., CHASE SECURITIES INC. and U.S. BANCORP PIPER JAFFRAY 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 OF CONNECTICUT, NATIONAL ASSOCIATION,
a national banking association, 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, 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, Inc., a Minnesota corporation ("Northwest")
and the Pass Through Trustee have entered into Trust Supplement No. 1999-3C,
dated as of the date hereof (the "Trust Supplement"), to the Pass Through Trust
Agreement, dated as of June 3, 1999, by and among the Guarantor, Northwest and
the Pass Through Trustee (the "Pass Through Trust Agreement") relating to
Northwest Airlines Pass Through Trust 1999-3C (the "Pass Through Trust")
pursuant to which the Northwest Airlines Pass Through Trust, Series 1999-3C
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Northwest and the Underwriters have entered into an
Underwriting Agreement dated as of December 2, 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 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.,
acting through a United States branch, as Depositary (the "Depositary") under
the
<PAGE>
2
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
(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
<PAGE>
3
misconduct or gross negligence (or simple negligence in connection with
the handling of funds) or breach of its obligations hereunder.
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) July 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 July 31, 2000, and there are unwithdrawn Deposits on
such date, the Final Withdrawal Date shall be deemed to be August 15, 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 $31,947,000 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
(the "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 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
<PAGE>
4
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 pursuant to clause (d) of
Section 1.2 hereof (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 Ratings
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 (or, if received outside of business hours, on the next opening
of business on a Business day). 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
<PAGE>
12
case of the Pass Through Trustee, State Street Bank and Trust Company of
Connecticut, National Association, 225 Asylum Street, Goodwin Square, Hartford,
Connecticut 06103, Attention: Corporate/Muni Department (Telecopier: (860)
244-1889) 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.
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.
<PAGE>
13
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Pass Through Trustee for and on behalf of
Northwest Airlines Pass Through Trust 1999-3G
By:_______________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:_______________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Paying Agent
By:_______________________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED,
SALOMON SMITH BARNEY INC.,
CHASE SECURITIES INC. and
U.S. BANCORP PIPER JAFFRAY INC., as Underwriters
By: MORGAN STANLEY & CO.
INCORPORATED
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
Northwest Airlines 1999-3C 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 December 9, 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, Salomon Smith Barney
Inc., Chase Securities Inc. and U.S. Bancorp Piper Jaffray Inc., as
Underwriters, State Street Bank and Trust Company of Connecticut, National
Association, 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 c 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: _________________, ____
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 (Class C)
dated as of December 9, 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 OF CONNECTICUT, NATIONAL
ASSOCIATION, 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., acting through a United States branch
208 South LaSalle Street, Suite 1500
Chicago, IL 60604-1003
Attention: Claudia Heldring
Telecopier: (312) 992-5111
ABN AMRO Bank N.V., acting through a United States branch
135 South LaSalle Street, Suite 611
Chicago, IL 60603
Attention: Claudia Heldring
Telecopier: (312) 606-8428
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
December 9, 1999 (the "Deposit Agreement") between First Security Bank, National
Association, as Escrow Agent, and ABN AMRO Bank N.V., acting through a United
States 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>
Exhibit 4(i)
EXECUTION COPY
NOTE PURCHASE AGREEMENT
Dated as of December 9, 1999
Among
NORTHWEST AIRLINES, INC.,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
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 ................................ 7
Section 5. Covenants ..................................................... 11
Section 6. Notices ....................................................... 12
Section 7. Expenses ...................................................... 12
Section 8. Further Assurances ............................................ 13
Section 9. Miscellaneous ................................................. 13
Section 10. Indemnity .................................................... 14
Section 11. Termination .................................................. 17
Section 12. Governing Law ................................................ 17
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
<PAGE>
ANNEX
Annex A Definitions
Annex B Form of Opinion of Special English Counsel
Annex C Form of Opinion Re: ss. 1110 (Mesaba)
EXHIBITS
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 December 9, 1999, among
(i) Northwest Airlines, Inc., a Minnesota corporation (the "Company"), (ii)
State Street Bank and Trust Company of Connecticut, National Association, a
national banking association, 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
Manufacturer pursuant to the Aircraft Purchase Agreement for the delivery of the
fourteen (14) aircraft listed in Schedule I hereto (together with any aircraft
substituted therefor in accordance with the Aircraft Purchase Agreement prior to
the delivery thereof, 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 or refinancing of the Aircraft;
WHEREAS, the Company has entered into the Underwriting Agreement
dated as of December 2, 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 G Trust, the Class B
Trust and the Class C Trust to issue and sell the Class G 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
<PAGE>
set forth in Schedule IV hereto (the "Escrow and Paying Agent Agreements")
whereby, among 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 or
refinance 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) Morgan Stanley Capital Services, Inc., a Delaware corporation
(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;
(ii) the Pass Through Trustee, the Liquidity Provider, the Policy Provider (as
defined below) and the Subordination Agent have entered into the Intercreditor
Agreement, dated as of the date hereof (the "Intercreditor Agreement") and (iii)
MBIA Insurance Corporation (the "Policy Provider"), the Company and the
Subordination Agent have entered into an Insurance and Indemnity Agreement (the
"Policy Provider Agreement") providing for the issuance by the Policy Provider
of the Policy (as defined in 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. The Company confirms that it
has entered into the Aircraft Purchase Agreement with the Manufacturer pursuant
to which it has agreed to purchase or has purchased, and the Manufacturer has
agreed to deliver or has delivered, 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 or
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refinance 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") (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
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respect, as to which prior written consent of the Policy Provider shall have
been obtained and 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 Policy Provider consent and Rating Agency
Confirmation shall have been received with respect to any Financing Agreements
and such Financing Agreements are utilized for subsequent New Aircraft (or
Substitute Aircraft) without material modifications, no additional Policy
Provider consent or 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 (without regard to the Policy) or (B) a
withdrawal or suspension of the rating of any Class of Certificates, in each
case, without reference to the Policy.
(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 the Policy Provider or either Rating Agency, the
Company shall deliver or cause to be delivered to the Policy Provider or each
Rating Agency, as the case may be, 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 and
the Policy Provider prompt notice thereof. Concurrent with the giving of such
notice of postponement or subsequent thereto, the Company shall give the parties
hereto and the Policy Provider 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
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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 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, (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
(other than such change in amount, manner and timing of interest that results
from any reoptimization of the Equipment Notes permitted pursuant to Section 16
of the applicable Owned Aircraft Participation Agreement in connection with such
conversion) and that the Pass Through Trusts will not be subject to federal
income tax as a result of such conversion and (iii) obtain Rating Agency
Confirmation. If the delivery date for any New Aircraft under the Aircraft
Purchase Agreement is delayed for more than 30 days beyond the month scheduled
for delivery or beyond the Cut-Off Date, the Company may identify for delivery a
substitute aircraft therefor meeting the following conditions (together with the
substitute aircraft referred to in the next sentence, a "Substitute Aircraft"):
(i) a Substitute Aircraft must be an Avro RJ85 aircraft delivered by the
Manufacturer to the Company after the date of this Agreement, (ii) the
Substitute Aircraft must have been manufactured after the Issuance Date and
(iii) the Company shall be obligated to obtain prior written consent of the
Policy Provider and Rating Agency Confirmation in respect of the replacement of
any New Aircraft by Substitute Aircraft. Upon the satisfaction of the conditions
set forth above with respect to a Substitute Aircraft, the New Aircraft to be
replaced shall cease to be subject to this Agreement and all rights
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and obligations of the parties hereto concerning such New Aircraft shall cease,
and such Substitute Aircraft shall become and thereafter be subject to the terms
and conditions of this Agreement to the same extent as such New Aircraft.
(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 or
Substitute 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 a Substitute 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 or Substitute 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.
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 , each Liquidity Provider and the Policy 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 Liquidity
Provider or the Certificate Holders or the Policy Provider, 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 and Policy Provider consent.
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Anything herein to the contrary notwithstanding, the obligation of
each Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-Off Date.
In addition to the conditions specified in the Participation
Agreements, the obligation of the Pass Through Trustees to purchase on any
Scheduled Closing Date (or Substitute Closing Date) Equipment Notes is
subject to the receipt by Standard & Poor's of (x) an opinion of special
English counsel to the Company substantially in the form of Annex B hereto
and (y), if related to an Aircraft which is to be contemporaneously leased or
subleased to Mesaba, an opinion of special counsel to the Company
substantially in the form of Annex C hereto.
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.
(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 or Paying Agent,
as the case may be, under this Agreement and each Financing Agreement to
which it will be a party;
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ii. the execution and delivery by State Street Bank and Trust
Company, in its capacity as Subordination Agent 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 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 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 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 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;
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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 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,
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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.
(g) State Street Bank and Trust Company of Connecticut, National
Association represents and warrants on the date hereof and on each Closing Date
that:
i. State Street Bank and Trust Company of Connecticut, National
Association is a national association validly existing and in good
standing with the Comptroller of the Currency under the laws of the United
States and is a "citizen of the United States" as defined in 49 U.S.C.ss.
40102 (a)(15), and has the full 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 Financing Agreement
to which it will be a party and to carry out the obligations of State
Street Bank and Trust Company of Connecticut, National Association, in its
capacity as Pass Through Trustee 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 of Connecticut, National Association, in its capacity as Pass
Through Trustee under this Agreement and the performance by State Street
Bank and Trust Company of Connecticut, National Association, in its
capacity as Pass Through Trustee, of its obligations under this Agreement
have been duly authorized by State Street Bank and Trust Company of
Connecticut, National Association, in its capacity as Pass Through 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; and
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iii. this Agreement constitutes the legal, valid and binding
obligation of State Street Bank and Trust Company of Connecticut, National
Association in its capacity as Pass Through Trustee 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;
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,
without regard to the Policy. 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
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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. Notice shall be given to the Policy Provider at the
address specified in the Policy Provider 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 and the
related Fee Letter 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 the Series G 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. The Company agrees to pay the Subordination Agent when due for
application in accordance with the Intercreditor Agreement an amount or amounts
equal to the fees payable to the Policy Provider under Section 3.02 of the
Policy Provider Agreement multiplied by a fraction the numerator of which shall
be the then outstanding aggregate amount of the Deposits under the Deposit
Agreement pertaining to the Class G Trust and the denominator of which shall be
the sum of (x) the then outstanding aggregate principal amount of the Series G
Equipment Notes issued under all of the Indentures and (y) the then outstanding
aggregate amount of the Deposits under the Deposit Agreement pertaining to the
Class G Trust.
(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,
and (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
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disbursements of counsel) of the Policy Provider, 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," "Applied Downgrade 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, 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.
13
<PAGE>
(d) So long as the Certificates are rated by the Ratings Agencies,
the Company shall provide the Ratings Agencies written notice of any Lease
(other than to Mesaba) under an Owned Aircraft Indenture (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 a
copy of any such Lease which has a term of more than three months.
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 (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.
14
<PAGE>
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 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
15
<PAGE>
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.
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,
8 and 9 hereof shall survive any termination of this Agreement.
16
<PAGE>
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.)
17
<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:
-------------------------------------
Name:
Title:
Address:
Attention:
Facsimile:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not
in its individual capacity, except as
otherwise provided herein, but solely
as Pass Through Trustee
By:
------------------------------------
Name:
Title:
Address:
Attention:
Facsimile:
18
<PAGE>
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent
By:
------------------------------------
Name:
Title:
Address:
Attention:
Facsimile:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Escrow Agent
By:
-------------------------------------
Name:
Title:
Address:
Attention:
Facsimile:
STATE STREET BANK AND TRUST COMPANY, as
Paying Agent
By:
-------------------------------------
Name:
Title:
Address:
Attention:
Facsimile:
19
<PAGE>
SCHEDULE I TO
NOTE PURCHASE AGREEMENT
NEW AIRCRAFT AND SCHEDULED CLOSING MONTHS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Expected
Expected Manufacturer's Scheduled
New Aircraft Type Registration Number Serial Number Delivery Months
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Avro RJ85 N523XJ E2348 April 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N524XJ E2349 April 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N525XJ E2350 May 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N526XJ E2351 May 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N527XJ E2352 June 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N528XJ E2353 June 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N529XJ E2363 December 1999
- -----------------------------------------------------------------------------------------------
Avro RJ85 N530XJ E2364 January 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N531XJ E2365 January 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N532XJ TBD March 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N533XJ TBD March 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N534XJ TBD April 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N535XJ TBD April 2000
- -----------------------------------------------------------------------------------------------
Avro RJ85 N536XJ TBD May 2000
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE II TO
NOTE PURCHASE AGREEMENT
TRUST SUPPLEMENTS
Trust Supplement, dated as of the Issuance Date, among the Company,
NWA Corp. and the Pass Through Trustee in respect of Northwest Airlines Pass
Through Trust, Series 1999-3G.
Trust Supplement, dated as of the Issuance Date, among the Company,
NWA Corp. and the Pass Through Trustee in respect of Northwest Airlines Pass
Through Trust, Series 1999-3B.
Trust Supplement, dated as of the Issuance Date, among the Company,
NWA Corp. and the Pass Through Trustee in respect of Northwest Airlines Pass
Through Trust, Series 1999-3C.
<PAGE>
SCHEDULE III TO
NOTE PURCHASE AGREEMENT
DEPOSIT AGREEMENTS
Deposit Agreement (Class G), 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 G), 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,
the Policy 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, the Policy 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,
the Policy 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 Policy Provider,
the Indenture Trustee or the Certificate Holders.
Sch. V-2
<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
"Summary of Terms--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 of Terms--Equipment Notes and the Aircraft'` under the column "Appraised
Base Value"):
Series G: not in excess of 44.1%
Series B: not in excess of 64.1%
Series C: not in excess of 69.1%
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 at
the time of issuance thereof and as of any Regular Distribution Date thereafter
(assuming no default in the payment of the Equipment Notes) 44.3% in the case of
the Series G Equipment Notes and 64.1% in the case of the Series B Equipment
Notes and 72.2% in the case of the Series C Equipment Notes. Initial Average
Life (in years) of the Series G Equipment Notes, the Series B Equipment Notes
and the Series C Equipment Notes on any Aircraft will not be more than 13.0
years, 10.5 years and 5.5 years, respectively, in each case from the Issuance
Date.
<PAGE>
AVERAGE LIFE (IN YEARS)
As of the first Regular Distribution Date following the Delivery
Period Termination Date, the average life of the Class G Certificateswill not be
less than 10.0 years or more than 12.7 years and the average life of the Class B
Certificates and the Class C Certificates shall not be more than 10.0 years and
5.0 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
Class G Certificates: April 1, 2019
Class B Certificates: April 1, 2015
Class C Certificates: April 1, 2010
Past Due Rate: Debt Rate plus 2% per annum.
Payment Dates: April 1 and October 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.
At the earlier of the date all Aircraft have been delivered and all Equipment
Notes issued and the Delivery Period Termination Date, the aggregate principal
amount of each Series of Equipment Notes shall equal the original aggregate face
amount of the related Class of Certificates without giving effect to any
scheduled principal payments on such Equipment Notes but after giving effect to
any reductions to the Pool Balance for such Class of Certificates from Deposits
not used to purchase Equipment Notes on or before such date.
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).
Sch. VI-2
<PAGE>
LEASE
Term: The Basic Lease Term shall expire by its terms on or
after final maturity date of the related Series G,
Series B or Series C Equipment Notes.
Lease Period Dates: Each April 1 and October 1, commencing with the first
such date after the Lease is entered into, to and
including the last such date in the Term.
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 Equipment
Loss Value: Notes together with accrued interest thereon.
Minimum Liability $150,000,000 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
The Loan Trustee, the Subordination Agent, the Liquidity Provider,
the Policy Provider, the Pass Through Trustees and the 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 Policy 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
1999-3G 1999-3B 1999-3C
Trust Equipment Trust Equipment Trust Equipment
Notes Scheduled Notes Scheduled Notes Scheduled
Payments of Payments of Payments of
Principal Principal Principal
Date Class G Class B Class C
--------------- --------------- ---------------
April 1, 2000 $ 1,877,080 $ 0 $ 2,811,252
October 1, 2000 670,672 25,197 3,394,963
April 1, 2001 3,834,855 0 3,139,199
October 1, 2001 110,888 1,346,446 0
April 1, 2002 4,395,129 0 164,065
October 1, 2002 0 4,130,347 0
April 1, 2003 4,506,107 0 998,406
October 1, 2003 0 4,729,928 79,280
April 1, 2004 4,506,107 0 1,970,004
October 1, 2004 0 4,019,460 0
April 1, 2005 4,506,107 0 2,970,293
October 1, 2005 1,667,306 3,062,620 0
April 1, 2006 2,838,801 0 4,855,816
October 1, 2006 2,593,787 3,092,979 0
April 1, 2007 1,912,320 0 5,258,194
October 1, 2007 4,930,689 2,393,023 0
April 1, 2008 918,291 0 4,660,226
October 1, 2008 5,565,945 2,041,333 0
April 1, 2009 94,275 0 590,014
October 1, 2009 6,930,313 2,211,444 920,250
April 1, 2010 0 2,286,960 135,039
October 1, 2010 6,484,234 1,190,988 0
April 1, 2011 0 4,947,981 0
October 1, 2011 7,024,588 1,290,238 0
April 1, 2012 0 7,061,669 0
October 1, 2012 6,484,236 444,619 0
April 1, 2013 0 5,004,836 0
October 1, 2013 7,024,589 158,557 0
April 1, 2014 0 2,374,855 0
October 1, 2014 6,484,235 6,033,714 0
April 1, 2015 0 165,805 0
October 1, 2015 7,024,588 0 0
April 1, 2016 0 0 0
October 1, 2016 10,274,207 0 0
April 1, 2017 2,411,812 0 0
October 1, 2017 16,880,017 0 0
<PAGE>
April 1, 2018 0 0 0
October 1, 2018 26,140,607 0 0
April 1, 2019 2,111,121 0 0
Sch. VII-2
<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 Sale and Purchase Agreement,
dated as of February 5, 1997, between the Company and the Manufacturer
(including the Manufacturer Support 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 at the redemption date 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, 1999, among the Company, Northwest Airlines
Corporation and the Pass Through Trustee, as amended, 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, Hartford,
Connecticut, Boston, Massachusetts or Salt Lake City, Utah.
"Certificate" has the meaning set forth in the recitals to the Note
Purchase Agreement.
"Certificate Holder" means the Person in whose name a Certificate is
registered in the Register.
Annex A-1
<PAGE>
"Class" means the class of Certificates issued by each Pass Through
Trust.
"Class B Certificates" means the Class B Certificates issued by the
Northwest Airlines Pass Through Trust, Series 1999-3B.
"Class B Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-3B 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 1999-3C.
"Class C Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-3C 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.
"Class G Certificates" means the Class G Certificates issued by the
Northwest Airlines Pass Through Trust, Series 1999-3G.
"Class G Trust" means the Northwest Airlines Pass Through Trust,
Series 1999-3G formed pursuant to the Basic Pass Through Trust Agreement and
Class G Trust Supplement.
"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 July 31, 2000..
"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.
Annex A-2
<PAGE>
"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 related series of 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 [ ] basis points in the case of the Class G Certificates
and [ ] basis points in the case of the Class B Certificates and [ ] 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., doing business through a
United States 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.
"Fee Letter" means the Fee Letter dated as of the date hereto among
the Liquidity Provider, the Subordination Agent and Northwest with respect to
the Liquidity Facilities.
"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.
"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,
Annex A-3
<PAGE>
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.
"Leased Aircraft Indenture" means a Trust Indenture and Security
Agreement substantially in the form of Exhibit A-3 to the Note Purchase
Agreement.
Annex A-4
<PAGE>
"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 British Aerospace (Operations) Limited.
"Manufacturer Support Agreement" means that certain Manufacturer
Support Agreement, dated February 5, 1997, between the Company and the
Manufacturer.
"Mesaba" means Mesaba Aviation, Inc.
"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, $5.0 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.
"NWA Corp." means Northwest Airlines Corporation, a Delaware
corporation.
"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.
Annex A-5
<PAGE>
"Owned Aircraft Indenture" means a Trust Indenture and Security
Agreement substantially in the form of Exhibit C-2 to the Note Purchase
Agreement.
"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.
"Policy" means the Financial Guaranty Insurance Policy No. 30951
issued as of the Closing Date, by the Policy Provider in favor of the
Subordination Agent, for the benefit of the Class G Certificateholders, as
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
Annex A-6
<PAGE>
"Policy Provider" means MBIA Insurance Corporation, or any successor
thereto, as issuer of the Policy.
"Qualified Owner Participant" means a Person which has a tangible
net worth (exclusive of goodwill) greater than $50,000,000.
"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.
"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 (without regard to the Policy) or (ii) a withdrawal or
suspension of the rating of any Class of Certificates, in each case, without
reference to the Policy.
"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 April 1 and October 1 of
each year, commencing April 1, 2000.
"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 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.
"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.
Annex A-7
<PAGE>
"Series D Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series D" thereunder.
"Series G Equipment Notes" means Equipment Notes issued under an
Indenture and designated as "Series G" thereunder.
"Subordination Agent" has the meaning set forth in the first
paragraph of the Note Purchase Agreement.
"Substitute Aircraft" has the meaning set forth in Section 2(g) of
the Note Purchase Agreement.
"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.
Annex A-8
<PAGE>
"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-9
<PAGE>
Annex B-1 to Note Purchase Agreement
[Form of Opinion of Freshfields, special counsel for the Manufacturer]
for aircraft sold to Northwest Airlines Inc]
To: Standard & Poor's Rating Service
55 Water Street - 35th Floor
New York, NY 10004
Our Ref: Dated
Dear Sirs
BRITISH AEROSPACE AVRO 146-RJ85 PASSENGER TRANSPORT AIRCRAFT (MSN ----) (THE
AIRCRAFT)
INTRODUCTION
1. We have acted as Special English and French Counsel to British Aerospace
(Operations) Limited (BAE) in relation to (i) the assignment of warranties by
Northwest Airlines, Inc. (NORTHWEST) to State Street Bank and Trust Company, as
Indenture Trustee and (ii) certain aspects of the sale of the Aircraft from BAe
to Northwest. We have been asked to provide an opinion to you in connection
therewith.
2. In connection with the transaction mentioned in paragraph 1(i) above, we have
examined the documents detailed in Schedule 1 to this letter (the SCHEDULE 1
DOCUMENTS) and in connection with the transaction mentioned in paragraph 1(ii)
above we have examined the documents detailed in Schedule 2 to this letter (the
SCHEDULE 2 DOCUMENTS) together the DOCUMENTS.
In giving this opinion we have relied upon the statements as to factual matters
contained in or made pursuant to the Documents.
3.
(a) The opinions given in paragraph 5(a) below are in respect of the
Schedule 1 Documents only and are confined to matters of English and
French law. In relation to the Schedule 1 Documents we express no
opinion herein with regard to any system of law other than the laws of
England and France as currently applied by the English courts and, as
the case may be, the French courts. In particular, we express no
opinion on European Community law as it affects any jurisdiction other
than England and France.
<PAGE>
(b) The opinions given in paragraph 5(b) below are in respect of the
Schedule 2 Documents and are confined to matters of English law. In
relation to the Schedule 2 Documents we express no opinion herein with
regard to any system of law other than the laws of England as currently
applied by the English courts. In particular, we express no opinion on
European Community law as it affects any jurisdiction other than
England.
4. ASSUMPTIONS
SCHEDULE 1 DOCUMENTS
(a) In rendering this opinion on the Schedule 1 Documents we have, with your
consent and without any further enquiry, assumed:
(i) that the Schedule 1 Documents have been duly authorised,
executed and delivered by each of the parties thereto in
accordance with all applicable laws and each party had and
still has the necessary corporate power to enter into and
perform the obligations on its part pursuant to or in
connection with the Schedule 1 Documents;
(ii) that the Purchase Agreement Assignment [_________], dated as
of [___________] (the ASSIGNMENT) between Northwest and First
Security Bank, National Association constitutes legal, valid
and binding obligations of each of the parties thereto
enforceable under all applicable laws;
(iii) that subject only to the effectiveness of the Agency Agreement
(AGENCY AGREEMENT) dated [1 July 1998] between BAe and British
Aerospace (Regional) Aircraft S.A. (BARASA) to bind BAe as
principal (as to which we opine below), the Consent and
Agreement [_______________], dated as of [____________]
(CONSENT AND AGREEMENT) signed by BARASA as agent for and on
behalf of BAe constitutes legal, valid and binding obligations
of BAe enforceable under all applicable laws;
(iv) that the substance of the Consent and Agreement conforms to
the subject matter of, and the conditions set out in the
Agency Agreement;
(v) the Manufacturers Support Agreement dated 5 February 1997, as
amended, between Aero International (Regional) SAS, acting as
agent of BAe, and Northwest constitutes legal, valid and
binding obligations of BAe enforceable under all applicable
laws; and
Page 2
<PAGE>
(vi) that the faxed copies of the Schedule 1 Documents which we
have received accurately reflect the original Schedule 1
Documents in their entirety.
(vii) that satisfactory evidence of the laws of France or the State
of New York which are required to be pleaded and proved as a
fact in any proceedings before the English Court, could be so
pleaded and proved.
(viii) that there has been no amendment, rescission or termination of
the Agency Agreement or any breach of any of its provisions by
any of the parties to it and that the Agency Agreement is not
affected in any way by any other document or agreement (not
seen) or any course of dealing between the parties.
SCHEDULE 2 DOCUMENTS
(b) In rendering this opinion on the Schedule 2 Documents we have, with
your consent and without any further enquiry, assumed:
(i) that Schedule 2 Documents have been duly authorised, executed
and delivered by each of the parties thereto in accordance
with all applicable laws;
(ii) that the Schedule 2 Documents constitute legal, valid and
binding obligations of each of the parties thereto enforceable
under all applicable laws;
(iii) that, pursuant to appropriate documentation governed by the
laws of the State of New York (the SALE AGREEMENT), legal and
beneficial ownership in the Aircraft is to be transferred to
Northwest (or a trustee on behalf of a leveraged lease lessor)
by the parties referred to in the Sale Agreement and that, as
a matter of New York law, such transfer of legal and
beneficial ownership is legal, valid and binding.
(iv) that the faxed copies of the Schedule 2 Documents which we
have received accurately reflect the original Schedule 2
Documents in their entirety.
5. OPINION
SCHEDULE 1 DOCUMENTS
(a) On the basis of, and subject to, paragraphs 3(a) and 4(a) and the
Page 3
<PAGE>
matters set out in paragraphs 6 and 7 below and any matters not
disclosed to us, and
(i) having regard to such considerations of French law in force as
at the date of this letter as we consider relevant, we are of
the opinion that the execution and delivery by BARASA of the
Consent and Agreement is, pursuant to the Agency Agreement
which is expressed to be governed by the laws of France,
effective to bind BAe as principal in respect of the
obligations and other provisions expressed to be undertaken by
BAe therein;
(ii) having regard to such considerations of English law in force
at the date of this letter as we consider relevant, we are of
the opinion that an English court would regard obligations
validly undertaken by BAe through BARASA pursuant to the
operation of the Agency Agreement to be enforceable against
BAe.
SCHEDULE 2 DOCUMENTS
(b) In respect of the Schedule 2 Documents, on the basis of, and subject
to, paragraphs 3(b) and 4(b) and the matters set out in paragraph 6
below and any matters not disclosed to us, and having regard to such
considerations of English law in force as at the date of this letter as
we consider relevant, we are of the opinion that if a liquidator or
administrator is appointed in relation to BAe, neither the liquidator
nor the administrator nor any creditor of BAe would be able to contest
successfully or avoid or have set aside the transfer of title in the
Aircraft pursuant to the Sale Agreement by reason of the terms of the
Schedule 2 Documents.
OBSERVATIONS
6. We should also like to make the following observations:
(a) it should be understood that we have not been responsible for
investigating or verifying the accuracy of the facts including
statements of foreign law, or the reasonableness of any statement of
opinion or intention, contained in or relevant to any document referred
to herein, or that no material facts have been omitted therefrom;
(b) the term "enforceable" as used in the opinion given in paragraph 5(a)
means that the obligations assumed by the relevant party under the
relevant document are of the type which the English
Page 4
<PAGE>
courts enforce. The opinion given is not to be taken to imply that any
obligation would necessarily be capable of enforcement in all
circumstances in accordance with its terms. In particular:
(i) an English court will not necessarily grant any remedy the
availability of which is subject to equitable considerations
or which is otherwise in the discretion of the court. In
particular, orders for specific performance and injunctions
are, in general, discretionary remedies under English law and
specific performance is not available where damages are
considered by the court to be an adequate alternative remedy;
(ii) claims may become barred under the Limitation Act 1980 or the
Foreign Limitation Periods Act 1984 or may be or become
subject to the defence of set-off or to counterclaim;
(iii) where obligations are to be performed in a jurisdiction
outside England, they may not be enforceable in England to the
extent that performance would be illegal under the laws, or
contrary to the exchange control regulations, of the other
jurisdiction; and
(iv) the enforcement of obligations may be limited by the
provisions of English law applicable to agreements held to
have been frustrated by events happening after their
execution.
(v) English courts can give judgments in currencies other than
sterling if, subject to the terms of the contract, it is the
currency which most fairly expresses the plaintiff's loss but
such judgments may be required to be converted into sterling
for enforcement purposes;
(vi) an English court has power to stay an action where it is shown
that there is some other forum, having competent jurisdiction,
which is more appropriate for the trial of the action, that is
in which the case can be tried more suitably for the interests
of all the parties and the ends of justice, and where staying
the action is not inconsistent with the EEC Convention on
Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters of 1968 (as amended) as applied by virtue
of the Civil Jurisdiction and Judgments Act 1982 (as amended)
and subordinate legislation made thereunder or with the Lugano
Convention on Jurisdiction and the Enforcement of Judgments in
Civil
Page 5
<PAGE>
and Commercial Matters of 1988 as applied by virtue of the
Civil Jurisdiction and Judgments Act 1991;
(vii) under the rules of procedure applicable, an English court may,
at its discretion, order a plaintiff in an action, being a
party who is not ordinarily resident in some part of the
United Kingdom, to provide security for costs;
(viii) an English court may refuse to give effect to any provision in
an agreement (a) for the payment of expenses in respect of the
costs of enforcement (actual or contemplated) or of
unsuccessful litigation brought before an English court or
where the court has itself made an order for costs or (b)
which would involve the enforcement of foreign revenue or
penal law
QUALIFICATION
7. The choice of the applicable law to govern the Schedule 1 Documents would not
be recognised or upheld if there were reasons for avoiding the choice of law on
the grounds that its application would be manifestly incompatible with public
policy. The choice of the applicable law would not be upheld, for example, if it
was made with the intention of evading the law of the jurisdiction with which
the relevant agreement had its most substantial connection and which, in the
absence of the applicable law, would have invalidated the agreement or been
inconsistent therewith. We are not aware of any circumstances which would result
in the choice of the applicable law to govern the Schedule 1 Documents not being
recognised and upheld.
BENEFIT OF OPINION
8. This opinion is addressed to the addressee solely for its benefit in relation
to the transaction described above and, except with our prior written consent,
none of the opinions given in respect of either the Schedule 1 Documents or the
Schedule 2 Documents is to be transmitted or disclosed to or used or relied upon
by any other person or used or relied upon for any other purpose.
Yours faithfully
Page 6
<PAGE>
SCHEDULE 1
DOCUMENTS
[A faxed copy of the] Purchase Agreement Assignment [______________], dated
[_____ _____] between (1) Northwest and (2) First Security Bank, National
Association [transmitted to Freshfields on [_____]].
[A faxed copy of the] Consent and Agreement [___________], dated [________]
signed by BARASA as agent for and on behalf of BAe [transmitted to Freshfields
on [_____]].
[A faxed copy of the] Agency Agreement dated [1 July 1998] between (1) BAe and
(2) BARASA [transmitted to Freshfields on [_____].]
A faxed copy of the Manufacturer's Support Agreement dated 5 February 1997, as
amended, between Aero International (Regional) SAS, acting as agent for and on
behalf of BAe [transmitted to Freshfields on [_____]].
SCHEDULE 2
DOCUMENTS
Purchase Agreement dated 5 February 1997 between (1) Aero International
(Regional), SAS and (2) Northwest
[Amendment to Purchase Agreement dated [_____ _____] between (1) Aero
International (Regional), SAS and (2) Northwest]
Asset Value Agreement (N ______) dated [_____ _____] between Northwest and BAe
in relation to the Aircraft.
Page 7
<PAGE>
Annex B-2 to Note Purchase Agreement
[Form of Opinion of Freshfields, special counsel for the Manufacturer]
Aircraft sold direct to trustee]
To: Standard & Poor's Rating Service
55 Water Street - 35th Floor
New York, NY 10004
Our Ref: Dated
Dear Sirs
BRITISH AEROSPACE AVRO 146-RJ85 PASSENGER TRANSPORT AIRCRAFT (MSN ----) (THE
AIRCRAFT)
INTRODUCTION
1. We have acted as Special English and French Counsel to British Aerospace
(Operations) Limited (BAE) in relation to (i) the assignment of warranties by
Northwest Airlines, Inc. (NORTHWEST) to State Street Bank and Trust Company
(INDENTURE TRUSTEE) and (ii) certain aspects of the sale of the Aircraft from
BAe to First Security Bank, National Association, as Owner Trustee. We have been
asked to provide an opinion to you in connection therewith.
2. In connection with the transaction mentioned in paragraph 1(i) above, we have
examined the documents detailed in the Schedule 1 to this letter (the SCHEDULE 1
DOCUMENTS) and in connection with the transaction mentioned in paragraph 1(ii)
above we have examined the documents detailed in Schedule 2 to this letter (the
SCHEDULE 2 DOCUMENTS) together the DOCUMENTS.
In giving this opinion we have relied upon the statements as to factual matters
contained in or made pursuant to the Documents.
3.
(a) The opinions given in paragraph 5(a) below are in respect of the
Schedule 1 Documents only and are confined to matters of English and
French law. In relation to the Schedule 1 Documents, we express no
opinion herein with regard to any system of law other than the laws of
England and France as currently applied by the English courts and, as
the case may be, the French courts. In particular, we express no
opinion on
<PAGE>
European Community law as it affects any jurisdiction other than
England and France.
(b) The opinions given in paragraph 5(b) below are in respect of the
Schedule 2 Documents and are confined to matters of English law. In
relation to the Schedule 2 Documents, we express no opinion herein with
regard to any system of law other than the laws of England as currently
applied by the English courts. In particular, we express no opinion on
European Community law as it affects any jurisdiction other than
England.
4. ASSUMPTIONS
SCHEDULE 1 DOCUMENTS
(a) In rendering this opinion on the Schedule 1 Documents we have, with
your consent and without any further enquiry, assumed:
(i) that the Schedule 1 Documents have been duly authorised,
executed and delivered by each of the parties thereto in
accordance with all applicable laws and each party had and
still has the necessary corporate power to enter into and
perform the obligations on its part pursuant to or in
connection with the Schedule 1 Documents;
(ii) that the Trust Indenture and Security Agreement [_________]
(TRUST INDENTURE), dated as of [___________], between
Northwest, as owner, and the Indenture Trustee, as indenture
trustee, constitute legal, valid and binding obligations of
each of the parties thereto enforceable under all applicable
laws;
(iii) that subject only to the effectiveness of the Agency Agreement
(AGENCY AGREEMENT) dated [1 July 1998] between BAe and British
Aerospace (Regional) Aircraft S.A. (BARASA) to bind BAe as
principal (as to which we opine below), the Consent and
Agreement [_______________], dated as of [____________]
(CONSENT AND AGREEMENT) signed by BARASA as agent for and on
behalf of BAe constitutes legal, valid and binding obligations
of BAe enforceable under all applicable laws;
(iv) that the substance of the Consent and Agreement conforms to
the subject matter of, and the conditions set out in the
Agency Agreement;
(v) the Manufacturers Support Agreement dated 5 February
Page 2
<PAGE>
1997, as amended, between Aero International (Regional) SAS,
acting as agent of BAe, and Northwest constitutes legal,
valid and binding obligations of BAe enforceable under all
applicable laws; and
(vi) that the faxed copies of the Schedule 1 Documents we have
received accurately reflect the original Schedule 1 Documents
in their entirety.
(vii) that satisfactory evidence of the laws of France or the State
of New York which are required to be pleaded and proved as a
fact in any proceedings before the English Court, could be so
pleaded and proved.
(viii) that there has been no amendment, rescission or termination of
the Agency Agreement or any breach of any of its provisions by
any of the parties to it and that the Agency Agreement is not
affected in any way by any other document or agreement (not
seen) or any course of dealing between the parties.
SCHEDULE 2 DOCUMENTS
(b) In rendering this opinion on the Schedule 2 Documents we have, with
your consent and without any further enquiry, assumed:
(i) that Schedule 2 Documents have been duly authorised, executed
and delivered by each of the parties thereto in accordance
with all applicable laws;
(ii) that the Schedule 2 Documents constitute legal, valid and
binding obligations of each of the parties thereto enforceable
under all applicable laws;
(iii) that, pursuant to appropriate documentation governed by the
laws of the State of New York (the SALE AGREEMENT), legal and
beneficial ownership in the Aircraft is to be transferred to
Atlantic (or a trustee on behalf of a leveraged lease lessor)
by the parties referred to in the Sale Agreement and that, as
a matter of New York law, such transfer of legal and
beneficial ownership is legal, valid and binding.
(iv) that the faxed copies of the Schedule 2 Documents we have
received accurately reflect the original Schedule 2 Documents
in their entirety.
Page 3
<PAGE>
5. OPINION
SCHEDULE 1 DOCUMENTS
(a) On the basis of, and subject to, paragraphs 3(a) and 4(a) and the
matters set out in paragraphs 6 and 7 below and any matters not
disclosed to us, and
(i) having regard to such considerations of French law in force as
at the date of this letter as we consider relevant, we are of
the opinion that the execution and delivery by BARASA of the
Consent and Agreement is, pursuant to the Agency Agreement
which is expressed to be governed by the laws of France,
effective to bind BAe as principal in respect of the
obligations and other provisions expressed to be undertaken by
BAe therein;
(ii) having regard to such considerations of English law in force
at the date of this letter as we consider relevant, we are of
the opinion that an English court would regard obligations
validly undertaken by BAe through BARASA pursuant to the
operation of the Agency Agreement to be enforceable against
BAe.
SCHEDULE 2 DOCUMENTS
(b) In respect of the Schedule 2 Documents, on the basis of, and subject
to, paragraphs 3(b) and 4(b) and the matters set out in paragraph 6
below and any matters not disclosed to us, and having regard to such
considerations of English law in force as at the date of this letter as
we consider relevant, we are of the opinion that if a liquidator or
administrator is appointed in relation to BAe, neither the liquidator
nor the administrator nor any creditor of BAe would be able to contest
successfully or avoid or have set aside the transfer of title in the
Aircraft pursuant to the Sale Agreement by reason of the terms of the
Schedule 2 Documents.
OBSERVATIONS
6. We should also like to make the following observations:
(a) in respect of the Documents it should be understood that we have not
been responsible for investigating or verifying the accuracy of the
facts including statements of foreign law, or the reasonableness of any
statement of opinion or intention, contained in or relevant to any
document referred to herein, or
Page 4
<PAGE>
that no material facts have been omitted therefrom;
(b) the term "enforceable" as used in the opinion given in paragraph 5(a)
means that the obligations assumed by the relevant party under the
relevant document are of the type which the English courts enforce. The
opinion given in respect of the Schedule 1 Documents is not to be taken
to imply that any obligation would necessarily be capable of
enforcement in all circumstances in accordance with its terms. In
particular:
(i) an English court will not necessarily grant any remedy the
availability of which is subject to equitable considerations
or which is otherwise in the discretion of the court. In
particular, orders for specific performance and injunctions
are, in general, discretionary remedies under English law and
specific performance is not available where damages are
considered by the court to be an adequate alternative remedy;
(ii) claims may become barred under the Limitation Act 1980 or the
Foreign Limitation Periods Act 1984 or may be or become
subject to the defence of set-off or to counterclaim;
(iii) where obligations are to be performed in a jurisdiction
outside England, they may not be enforceable in England to the
extent that performance would be illegal under the laws, or
contrary to the exchange control regulations, of the other
jurisdiction; and
(iv) the enforcement of obligations may be limited by the
provisions of English law applicable to agreements held to
have been frustrated by events happening after their
execution.
(v) English courts can give judgments in currencies other than
sterling if, subject to the terms of the contract, it is the
currency which most fairly expresses the plaintiff's loss but
such judgments may be required to be converted into sterling
for enforcement purposes;
(vi) an English court has power to stay an action where it is shown
that there is some other forum, having competent jurisdiction,
which is more appropriate for the trial of the action, that is
in which the case can be tried more suitably for the interests
of all the parties and the ends of justice, and where staying
the action is not inconsistent with the EEC Convention on
Jurisdiction and the Enforcement of
Page 5
<PAGE>
Judgments in Civil and Commercial Matters of 1968 (as amended)
as applied by virtue of the Civil Jurisdiction and Judgments
Act 1982 (as amended) and subordinate legislation made
thereunder or with the Lugano Convention on Jurisdiction and
the Enforcement of Judgments in Civil and Commercial Matters
of 1988 as applied by virtue of the Civil Jurisdiction and
Judgments Act 1991;
(vii) under the rules of procedure applicable, an English court may,
at its discretion, order a plaintiff in an action, being a
party who is not ordinarily resident in some part of the
United Kingdom, to provide security for costs;
(viii) an English court may refuse to give effect to any provision in
an agreement (a) for the payment of expenses in respect of the
costs of enforcement (actual or contemplated) or of
unsuccessful litigation brought before an English court or
where the court has itself made an order for costs or (b)
which would involve the enforcement of foreign revenue or
penal law
QUALIFICATION
7. The choice of the applicable law to govern the Schedule 1 Documents would not
be recognised or upheld if there were reasons for avoiding the choice of law on
the grounds that its application would be manifestly incompatible with public
policy. The choice of the applicable law would not be upheld, for example, if it
was made with the intention of evading the law of the jurisdiction with which
the relevant agreement had its most substantial connection and which, in the
absence of the applicable law, would have invalidated the agreement or been
inconsistent therewith. We are not aware of any circumstances which would result
in the choice of the applicable law to govern the Schedule 1 Documents not being
recognised and upheld.
BENEFIT OF OPINION
8. This opinion is addressed to the addressee solely for your its benefit in
relation the transaction described above and, except with our prior written
consent, none of the opinions given in respect of either the Schedule 1
Documents or the Schedule 2 Documents is to be transmitted or disclosed to or
used or relied upon by any other person or used or relied upon for any other
purpose.
Yours faithfully
Page 6
<PAGE>
SCHEDULE 1
DOCUMENTS
[A faxed copy of the] Trust Indenture and Security Agreement [______________]
dated as of [_____ _____] between (1) Northwest, as owner, and (2) State Street
Bank and Trust Company, as indenture trustee, [transmitted to Freshfields on
[_____]].
[A faxed copy of the] Consent and Agreement [___________] dated [________]
signed by BARASA as agent for and on behalf of BAe [transmitted to Freshfields
on [_____]].
[A faxed copy of the] Agency Agreement dated [1 July 1998] between (1) BAe and
(2) BARASA [transmitted to Freshfields on [_____].]
A faxed copy of the Manufacturer's Support Agreement dated 5 February 1997, as
amended, between Aero International (Regional) SAS, acting as agent for and on
behalf of BAe [transmitted to Freshfields on [_____]].
SCHEDULE 2
DOCUMENTS
Purchase Agreement dated 5 February 1997 between (1) Aero International
(Regional), SAS and (2) Northwest
[Amendment to Purchase Agreement dated [_____ _____] between (1) Aero
International (Regional), SAS and (2) Northwest]
Asset Value Agreement (N ______) dated [_____ _____] between Northwest and BAe
in relation to the Aircraft.
Page 7
<PAGE>
Annex C to Note Purchase Agreement
[Form of Opinion of Cadwalader, Wickersham & Taft,
Special Counsel for the Company]
[_____________________]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: Northwest Airlines, Inc.
Opinion of Special Counsel to [Lessor][Sublessor] Concerning
Section 1110 of the Federal Bankruptcy Code
Gentlemen:
We have acted as special counsel for Northwest Airlines, Inc., a
Minnesota corporation (["LESSOR"]["SUBLESSOR"]), in connection with the
transactions contemplated by the [Lease][Sublease] Agreement listed on
Exhibit A hereto (the ["LEASE"]["SUBLEASE"]). Capitalized terms used herein
but not defined herein have the respective meanings given to them in or by
reference to the [Lease][Sublease], unless the context otherwise requires. As
used herein, the term "Airframe" shall mean the Airframe related to the
[Lease][Sublease] as identified on Exhibit A hereto, the term "Engines" shall
mean the Engines related to the [Lease][Sublease] as identified on Exhibit A
hereto, and the term "Aircraft" shall mean the Airframe and the related
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 [Lease]
[Sublease] and [Lease][Sublease] Supplement. As to any facts material to our
opinions expressed herein, we have, without independent investigation, relied
upon the representations and warranties contained in the [Lease][Sublease]
(including, without limitation, in Sections 29 and 30 thereof), and
certificates of officers of each of the [Lessor][Sublessor] and the [Lessee]
[Sublessee] including, without limitation, the certificates delivered in
connection with the [Lease][Sublease], 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.
<PAGE>
We express no opinion concerning the laws of any jurisdiction other
than the laws of the State of New York and the federal laws of the United
States of America.
You have requested our opinion as to whether the [Lessor][Sublessor],
as [lessor][sublessor] under the [Lease][Sublease], 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][Sublessee] 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 additional facts of which we
are not aware which would be material to a court's decision on this issue.
We have assumed that:
(i) the [Lessor][Head Lessor] will continue to be the registered
owner of the Aircraft;
(ii) the [Lessee][Sublessee] 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 [Lease][Sublease] and [Lease][Sublease] Supplement
constitute the legal, valid and binding obligations of [Lessee][Sublessee]
and the [Lessor][Sublessor] in accordance with their respective terms;
(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 leasehold interest of [Lessor][Sublessor] as [lessor][sublessor] in the
Aircraft;
(v) all of the statements, representations, warranties, agreements,
disclosures and other information furnished by the [Lessee][Sublessee] and
contained in the [Lease][Sublease], [Lease][Sublease] Supplement, and other
documents delivered in connection therewith are true, accurate and complete
in all respects;
(vi) the Aircraft identified on Exhibit A hereto was first placed
in service after October 22, 1994;
-2-
<PAGE>
(vii) all documents executed and delivered by any Person referred to
herein have been duly authorized, executed and delivered pursuant to adequate
corporate power and authority; and
(viii) 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.
DISCUSSION
We have assumed that the Aircraft identified on Exhibit A hereto 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]
[Sublessee] were to become a debtor under chapter 11 of the Bankruptcy Code,
[Lessor][Sublessor] as [lessor][sublessor] under the [Lease][Sublease], would
be entitled to the benefits of Section 1110 with respect to the Airframe and
the Engines comprising the Aircraft but may not be entitled to such benefits
with respect to any replacement of an 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 (IN RE WESTERN PACIFIC AIRLINES, INC.), 219
B.R. 305, ON REHEARING, 221 B.R. 1 (D. Colo. 1998), APPEAL DISMISSED AS MOOT
SUB NOM., BOULLIOUN AIRCRAFT HOLDING CO., INC. V. SMITH MANAGEMENT, Nos.
98-1018, 98-1214, 1999 WL 459469 (10th Cir. July 7, 1999), 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
- ------------------------
1 Pub. L. 103-394.
-3-
<PAGE>
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 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 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][sub-sublessee] of the Aircraft which may be
[subleased][sub-subleased] by the [Lessee][Sublessee].
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 to be [leased][subleased] by the
[Lessee][Sublessee] 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.
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 are furnishing this opinion letter to you solely for your benefit in
connection with the transactions referred to herein. This opinion letter is
not to be relied upon, used, circulated, quoted or otherwise referred to by
any person or entity for any other purpose without our prior written consent.
In addition, we disclaim any obligation to update this opinion letter for
changes in fact or law, or otherwise.
Very truly yours,
-4-
<PAGE>
SCHEDULE A
Standard & Poor's Ratings Services
<PAGE>
EXHIBIT A
1. [Lease][Sublease] Agreement [ ], dated as of [ ],
between Northwest Airlines, Inc., as [Lessor][Sublessor], and Mesaba
Aviation, Inc., as [Lessee][Sublessee].
Airframe: British Aerospace Avro 146-RJ85A bearing U.S. Registration No.
N[ ]and Manufacturer Serial No. [ ].
Engines: AlliedSignal LF507 type bearing manufacturer Serial Nos. LFO
[ ], LFO [ ], LFO [ ]and LFO [ ]
<PAGE>
PARTICIPATION AGREEMENT
[NW ____ _]
DATED AS OF
[_________________ ]
AMONG
NORTHWEST AIRLINES, INC.,
LESSEE,
NORTHWEST AIRLINES CORPORATION,
GUARANTOR,
[________________________________ ],
OWNER PARTICIPANT,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
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 BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
N[_____]
LEASED TO NORTHWEST AIRLINES, INC.
<PAGE>
INDEX TO PARTICIPATION AGREEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
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]......................................................................14
SECTION 6. Extent of Interest of Certificate Holders....................................................14
SECTION 7. Representations and Warranties of Lessee and the Guarantor; Indemnities......................14
(a) Representations and Warranties........................................................14
(b) General Tax Indemnity.................................................................17
(c) General Indemnity.....................................................................18
(d) Income Tax............................................................................18
SECTION 8. Representations, Warranties and Covenants....................................................18
SECTION 9. Reliance of Liquidity Provider and Policy Provider...........................................36
SECTION 10. Other Documents..............................................................................36
SECTION 11. Certain Covenants of Lessee..................................................................36
SECTION 12. Owner for Federal Tax Purposes...............................................................37
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction........................................37
SECTION 14. Change of Situs of Owner Trust...............................................................38
SECTION 15. Miscellaneous................................................................................39
SECTION 16. Expenses.....................................................................................40
SECTION 17. Refinancings.................................................................................41
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
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-1 - Form of Opinion of Vedder, Price, Kaufman & Kammholz,
special counsel for the Manufacturer
Exhibit C-2 - 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 (Section) 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
Exhibit J-2 - Form of Opinion of Bingham Dana LLP, special counsel for
the Subordination Agent
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
</TABLE>
-iii-
<PAGE>
PARTICIPATION AGREEMENT
[NW ____ _]
THIS PARTICIPATION AGREEMENT [NW ____ _] 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 OF CONNECTICUT,
NATIONAL ASSOCIATION, 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") (this
"AGREEMENT");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is
defined in the Lease hereinafter referred to) between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain British Aerospace Avro 146-RJ85A aircraft, including the Aircraft which
has been delivered by the Manufacturer to Lessee and which 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 ____ _], 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
to assignment of warranties [NW ____ __] (herein called the "CONSENT
AND AGREEMENT"), substantially in the form attached to the Purchase
Agreement Assignment;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW ____ _],
dated as of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST AGREEMENT", such
term to include, unless the context otherwise
<PAGE>
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 ____ _], 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 ____ _], 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
____ _], 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 ____ _], 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 the
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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) Morgan Stanley Capital
Services, Inc. (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 the
obligations of the Liquidity Provider under each Liquidity Facility were
guaranteed by Morgan Stanley Dean Witter & Co.; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated [__________] (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 [_________], 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 [_____ __], 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.
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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 [_____ __],
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 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;
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(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the
Aircraft on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the Bill of Sale and the FAA Bill
of Sale for the Aircraft referred to in Section 4(a)(v)(8) and
4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the
Lease Supplement and the Trust Supplement, in each case covering the
Aircraft;
(v) to borrow from the Pass Through Trustee to finance a
portion of the Lessor's Cost for the Aircraft and to execute and
deliver to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts a principal amount of
Secured Certificates bearing the interest rate set forth opposite the
name of such Pass Through Trust on Schedule II hereto 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.
(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.
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(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto,
shall each be satisfactory in form and substance to the Pass Through
Trustee and the Owner Participant and shall be in full force and effect
and executed counterparts shall have been delivered to the Pass Through
Trustee and the Owner Participant, or their respective counsel,
PROVIDED that only the Subordination Agent on behalf of each Pass
Through Trustee shall receive an executed original of such Pass Through
Trustee's respective Secured Certificate and PROVIDED, FURTHER, that an
excerpted copy of the Purchase Agreement shall only be delivered to and
retained by the Owner Trustee (but the Indenture Trustee shall also
retain an excerpted copy of the Purchase Agreement which may be
inspected by the Owner Participant and its counsel prior to the
Delivery Date and subsequent to the Delivery Date may be inspected and
reviewed by the Indenture Trustee if and only if there shall occur and
be continuing an Event of Default), the chattel paper counterpart of
the Lease and the Lease Supplement covering the Aircraft dated the
Delivery Date shall be delivered to the Indenture Trustee, and the Tax
Indemnity Agreement and the Residual Agreement need only be
satisfactory to the Owner Participant and Lessee and shall only be
delivered to Lessee and the Owner Participant and their respective
counsel:
(1) an excerpted copy of the Purchase Agreement (insofar
as it relates to the Aircraft);
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Bill of Sale;
(9) the FAA Bill of Sale;
(10) an acceptance certificate covering the Aircraft in
the form agreed to by the Owner Participant and Lessee (herein
called the "ACCEPTANCE CERTIFICATE") duly completed and
executed by the Owner Trustee or its agent, which may be a
representative of Lessee, and by such representative on behalf
of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
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(14) the Guarantee; and
(15) the Residual Agreement.
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 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
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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 and any other documents to
be executed on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby and the signatures
of such person or persons;
(2) a copy of the resolutions of the board of directors
of the Indenture Trustee, certified by the Secretary or an
Assistant Secretary of the Indenture Trustee, duly authorizing
the transactions contemplated hereby and the execution and
delivery of each of the documents required to be executed and
delivered on behalf of the Indenture Trustee in connection
with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of
the Indenture Trustee, each certified by the Secretary or an
Assistant Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that
the representations and warranties contained herein of the
Indenture Trustee are correct as though made on and as of the
Delivery Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of
such earlier date).
(C)(1) an incumbency certificate of the Owner Trustee as
to the person or persons authorized to execute and deliver
this Agreement, the Lease, the Lease Supplement covering the
Aircraft, the Trust Agreement, the Trust Indenture, the
Residual Agreement, the Purchase Agreement Assignment and any
other documents to be executed on behalf of the Owner Trustee
in connection with the transactions contemplated hereby and
the signatures of such person or persons;
(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
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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, the Residual Agreement and any other documents to
be executed on behalf of the Owner Participant in connection
with the transactions contemplated hereby and the signatures
of such person or persons;
(2) a certificate signed by the Secretary or an Assistant
Secretary of the Owner Participant, to the effect that the
transactions contemplated hereby and the execution and
delivery of each of the documents required to be executed and
delivered on behalf of the Owner Participant in connection
with the transactions contemplated hereby have been duly
authorized;
(3) a copy of the articles of association and by-laws of
the Owner Participant, each certified by the Secretary or an
Assistant Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the
Owner Participant, dated the Delivery Date, certifying that
the representations and warranties contained herein of the
Owner Participant are correct as though made on and as of the
Delivery Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of
such earlier date).
(viii) All appropriate action required to have been taken
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such
entities required to be in effect on the 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
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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 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-1 hereto from Vedder,
Price, Kaufman & Kammholz, special counsel to the Manufacturer, and an
opinion substantially in the form of EXHIBIT C-2 hereto from the
Manufacturer's in-house counsel, in each case with respect to the
Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant
shall have received, addressed to the Pass Through Trustee, the
Indenture Trustee, the Owner Participant, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, the Owner Participant, the
Guarantor and Lessee, an opinion substantially in the form of EXHIBIT 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
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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].
(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
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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 Lessee, which opinion shall
state (with customary assumptions and qualifications) that the Owner
Trustee, as lessor under the Lease, and the Indenture Trustee, as
assignee of the Owner Trustee's rights under the Lease pursuant to the
Trust Indenture, would be entitled to the benefits of 11 U.S.C.
(Section)1110 with respect to the Aircraft.
(xxiv) The Owner Participant shall have received (A) a
certificate signed by an authorized officer of the Pass Through
Trustee, dated the Delivery Date, certifying that the representations
and warranties contained herein of the Pass Through Trustee are correct
as though made on and as of the Delivery Date, except to the extent
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties are correct on
and as of such earlier date), (B) an opinion substantially in the form
of EXHIBIT 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)(1) an incumbency
certificate of the Pass Through Trustee as to the person or persons
authorized to execute and deliver this Agreement and any other
documents to be executed on behalf of the Pass Through Trustee in
connection with the transactions contemplated hereby and the signatures
of such person or persons; (2) a copy of the articles of association
and by-laws of the Pass Through Trustee, each certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee; and
(3) 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 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
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Lease and the filing of the Trust Agreement and the lack of filing of any
intervening documents with respect to the Aircraft.
(b) CONDITIONS PRECEDENT TO THE OBLIGATIONS OF LESSEE AND THE
GUARANTOR. It is agreed that (A) the obligations of Lessee to sell the Aircraft
to the Owner Trustee and to accept delivery of the Aircraft under the Lease, and
(B) the obligations of Lessee and the Guarantor to enter into the other
Operative Documents, are all subject to the fulfillment to the satisfaction of
Lessee and the Guarantor prior to or on the Delivery Date of the following
conditions precedent:
(i) All appropriate action required to have been taken on or
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii)
and 4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have
been duly authorized, executed and delivered by the respective party or
parties thereto (other than Lessee and the Guarantor) in the manner
specified in Section 4(a)(v), shall each be satisfactory in form and
substance to Lessee and the Guarantor, shall be in full force and
effect on the Delivery Date, and an executed counterpart of each
thereof (other than the Secured Certificates) shall have been delivered
to Lessee or its special counsel and the Guarantor or its special
counsel.
(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)(1) an incumbency
certificate of the Pass Through Trustee as to the person or persons
authorized to execute and deliver this Agreement and any other
documents to be executed on behalf of the Pass Through Trustee in
connection with the transactions contemplated hereby and the signatures
of such person or persons; (2) a copy of the articles of association
and by-laws of the Pass Through Trustee, each certified by the
Secretary or an Assistant Secretary of the Pass Through Trustee; and
(3) 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 necessary action 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
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case in scope and substance reasonably satisfactory to
Lessee and its special counsel and the Guarantor and its special
counsel.
(vi) No action or proceeding shall have been instituted nor
shall governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at
the time of the Delivery Date to set aside, restrain, enjoin or prevent
the completion and consummation of this Agreement or the transactions
contemplated hereby.
(vii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations or guidelines or interpretations by appropriate regulatory
authorities which would make it a violation of law or regulations or
guidelines for Lessee or the Guarantor to enter into any transaction
contemplated by the Operative Documents.
(viii) In the opinion of Lessee and its special counsel, there
shall have been, since the date hereof, no amendment, modification,
addition or change in or to the Internal Revenue Code of 1986, as
amended through the date hereof, the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service
Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the
Aircraft.
SECTION 5. [Intentionally Omitted].
SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No
Certificate Holder (as defined in the Trust Indenture) shall have any further
interest in, or other right with respect to, the mortgage and security interests
created by the Trust Indenture when and if the principal of and interest on all
Secured Certificates held by such holder and all other sums payable to such
holder hereunder, under the Trust Indenture and under such Secured Certificates
shall have been 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
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corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under (i) in the case of Lessee, the Lessee Documents, the
Pass Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party and (ii) in the case of the
Guarantor, this Agreement, the Pass Through Trust Agreements, the
Underwriting Agreement and the other Operative Documents to which it is
a party, and is duly qualified to do business as a foreign corporation
in each state in which its operations or the nature of its business
requires other than failures to so qualify which would not have a
material adverse effect on the condition (financial or otherwise),
consolidated business or properties of it and its subsidiaries
considered as one enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement and each other Operative
Document to which Lessee or the Guarantor (as the case may be) is a
party, and the performance of the obligations of Lessee or the
Guarantor (as the case may be) under the Lessee Documents, the Pass
Through Trust Agreements, the Underwriting Agreement and each other
Operative Document to which Lessee or the Guarantor (as the case may
be) is a party, have been duly authorized by all necessary corporate
action on the part of Lessee or the Guarantor, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of Lessee or the
Guarantor, except such as have been duly obtained and are in full force
and effect, and do not contravene any law, governmental rule,
regulation or order binding on Lessee or the Guarantor (as the case may
be) or the certificate of incorporation or by-laws of Lessee or the
Guarantor (as the case may be), or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee or the
Guarantor (as the 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
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governmental authority having jurisdiction over Lessee or the
Guarantor, other than (A) the registration of the Certificates under
the Securities Act of 1933, as amended, and under the securities laws
of any state in which the Certificates may be offered for sale if the
laws of such state require such action, (B) the qualification of the
Pass Through Trust Agreements under the Trust Indenture Act of 1939, as
amended, pursuant to an order of the Securities and Exchange
Commission, (C) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee or any
Sublessee required to be obtained on or prior to the Delivery Date,
which orders, permits, waivers, exemptions, authorizations and
approvals have been duly obtained and are, or on the Delivery Date will
be, in full force and effect (other than a flying time wire, all steps
to obtain the issuance of which will have been, on the Delivery Date,
taken or caused to be taken by Lessee), (D) the registration of the
Aircraft referred to in Section 4(a)(ix)(3), (E) the registrations and
filings referred to in Section 7(a)(vi), and (F) authorizations,
consents, approvals, actions, notices and filings required to be
obtained, taken, given or made either only after the date hereof or the
failure of which to obtain, take, give or make would not be reasonably
likely to have a material adverse effect on the condition (financial or
otherwise), business or properties of the Guarantor and its
subsidiaries considered as one enterprise;
(v) this Agreement, each of the other Lessee Documents, the
Pass Through Trust Agreements and the Guarantee constitute the legal,
valid and binding obligations of Lessee or the Guarantor (as the case
may be) enforceable against Lessee or the Guarantor (as the case may
be) in accordance with their respective terms, except as the same may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in
the case of the Lease, as limited by applicable laws which may affect
the remedies provided in the Lease, which laws, however, do not make
the remedies provided in the Lease inadequate for practical realization
of the benefits intended to be afforded thereby;
(vi) except for (A) [the filing for recording pursuant to the
Federal Aviation Act of the termination of the Mortgage and the
Predecessor Lease, (B)] 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 the filing of a UCC-3
termination statement relating to the financing statement filed in
connection with the Mortgage, 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
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applicable jurisdiction) is necessary under the laws of the United
States of America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against Lessee and any third
parties, or to perfect the security interest in favor of the Indenture
Trustee in the Owner Trustee's interest in the Aircraft (with respect
to such portion of the Aircraft as is covered by the recording system
established by the FAA pursuant to 49 U.S.C. Section 44107) and in the
Lease in any applicable jurisdiction in the United States;
(vii) neither Lessee, the Guarantor nor any of their
affiliates has directly or indirectly offered the Certificates for sale
to any Person other than in a manner permitted by the Securities Act of
1933, as amended, and by the rules and regulations thereunder;
(viii) neither Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(ix) no event has occurred and is continuing which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes
an Event of Loss or would constitute an Event of Loss with the lapse of
time;
(xi) Lessee is solvent and will not be rendered insolvent by
the sale of the Aircraft; after the sale of the Aircraft the capital of
Lessee will not be unreasonably small for the conduct of the business
in which Lessee is engaged or is about to engage; Lessee has no
intention or belief that it is about to incur debts beyond its ability
to pay as they mature; and Lessee's sale of the Aircraft is made
without any intent to hinder, delay or defraud either present or future
creditors;
(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.
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(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) 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
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Event of Default but for lapse of time or the giving of notice or both) shall
not have occurred and be continuing under the Lease due to non-compliance by
Lessee with the registration requirements in the Lease.
(d) First Security Bank, National Association, in its
individual capacity, represents and warrants that both the principal place of
business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are kept is Salt Lake City, Utah. First Security Bank,
National Association, in its individual capacity, agrees that it will not change
the location of such office to a location outside of Salt Lake City, Utah,
without prior written notice to all parties. First Security Bank, National
Association, in its individual capacity, further represents and warrants that
(A) on the Delivery Date the Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Lessee, and (B) the Trust Agreement, and,
assuming due authorization, execution and delivery of the Trust Agreement by the
Owner Participant, the other Owner Trustee Documents, when executed and
delivered, shall have been duly executed and delivered by one of its officers
who is duly authorized to execute and deliver such instruments on behalf of the
Owner Trustee. First Security Bank, National Association, in its individual
capacity, represents that it has not offered any interest in the Trust Estate or
any Secured Certificates or any similar securities for sale to, or solicited any
offer to acquire the same from, anyone, and that no officer or responsible
employee of the Corporate Trust Department of First Security Bank, National
Association, has knowledge of any such offer or solicitation by anyone other
than Lessee.
(e) Each Loan Participant represents and warrants that neither
it nor anyone acting in its behalf has offered any Secured Certificates for sale
to, or solicited any offer to buy any Secured Certificate from, any Person 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
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laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner
Trustee's right, title and interest in and to the Aircraft and
the Lease shall continue as a valid and duly perfected first
priority security interest and all filing, recording or other
action necessary to protect the same shall have been
accomplished (or, if such opinion cannot be given at the time
of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall
detail what filing, recording or other action is necessary and
(2) the Owner Trustee and the Indenture Trustee shall have
received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other
action shall have been done, and such filing, recording and
other action shall be accomplished and a supplemental opinion
to that effect shall be delivered to the Owner Trustee and the
Indenture Trustee on or prior to the effective date of such
change in registration), (D) it is not necessary, solely as a
consequence of such change in registration and without giving
effect to any other activity of the Owner Trustee, the Owner
Participant or the Indenture Trustee (or any Affiliate
thereof), as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify to do business
in such jurisdiction, (E) there is no tort liability of the
owner of an aircraft not in possession thereof under the laws
of such jurisdiction (it being agreed that, in the event such
latter opinion cannot be given in a form satisfactory to the
Owner Participant, such opinion shall be waived if insurance
reasonably satisfactory to the Owner Participant is provided
to cover such risk), and (F) (unless Lessee shall have agreed
to provide insurance covering the risk of requisition of use
of such Aircraft by the government of such jurisdiction so
long as such Aircraft is registered under the laws of such
jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use
of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, Lessee
shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom. Lessee shall pay all costs, expenses, fees, recording and
registration taxes, including the reasonable fees and 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
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and authority to enter into and to perform its obligations under the
Owner Participant Documents; this Agreement and the other Owner
Participant Documents have been duly authorized, executed and delivered
by it; and this Agreement and each of the other Owner Participant
Documents constitute the legal, valid and binding obligations of the
Owner Participant enforceable against it in accordance with its
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity; and it has a tangible net worth (exclusive of goodwill) greater
than $50,000,000;
(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 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
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(vii) it is a Citizen of the United States (without making use
of a voting trust agreement, voting powers agreement or similar
arrangement).
(h) Each of First Security Bank, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each of First Security
Bank, National Association, in its individual capacity, and the Owner
Participant agrees that it will promptly, at its own expense, take such action
as may be necessary duly to discharge such Lessor Lien attributable to it. Each
of First Security Bank, National Association, in its individual capacity, and
the Owner Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its individual
capacity, covenants and agrees that it shall not cause or permit to exist any
Lien, arising as a result of (A) claims against the Indenture Trustee not
related to its interest in the Aircraft or the administration of the Trust
Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any action
required by, the Operative Documents to the extent such acts arise or such
failure arises from or constitutes gross negligence or willful misconduct, (C)
claims against the Indenture Trustee relating to Taxes or Expenses which are
excluded from the indemnification provided by Section 7 pursuant to said Section
7, or (D) claims against the Indenture Trustee arising out of the transfer by
the Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture 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 pursuant to
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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) it is a Massachusetts trust company duly incorporated,
validly existing and in good standing under the laws of Massachusetts,
is a Citizen of the United States (without making use of any voting
trust, voting powers agreement or similar arrangement), will notify
promptly all parties to this Agreement if in its reasonable opinion its
status as a Citizen of the United States (without making use of any
voting trust, voting powers agreement or similar arrangement) is likely
to change and will resign as Indenture Trustee as provided in Section
8.02 of the Trust Indenture promptly after it obtains actual knowledge
that it has ceased to be such a Citizen of the United States (without
making use of a voting trust, voting powers agreement or similar
arrangement), and has the full corporate power, authority and legal
right under the laws of the Commonwealth of Massachusetts and the
United States pertaining to its banking, trust and fiduciary powers to
execute and deliver each of this Agreement, the Trust Indenture and
each other Operative Document to which it is a party and to carry out
its obligations under this Agreement, the Trust Indenture, each other
Operative Document to which it is a party and to authenticate the
Secured Certificates;
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(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 $50,000,000 or a corporation whose tangible net worth is at
least $50,000,000, exclusive of goodwill, in either case as of the proposed date
of such transfer, as determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution 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
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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 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.
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(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 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 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
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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:
(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
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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, 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(a)(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;
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(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 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 financing contemplated hereby and agreed to
herein by the Owner Trustee, 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
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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 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. Section 1110; PROVIDED that the opinion required by
subclause (ii) need only be given if immediately prior to such assumption the
Owner Trustee should have been entitled to the benefits of 11 U.S.C. Section
1110 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;
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(ii) the corporation formed by such consolidation or into
which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee and the Owner Participant an agreement in form and substance
reasonably satisfactory to the Indenture Trustee and the Owner
Participant containing an assumption by such successor corporation or
Person of the due and punctual performance and observance of each
covenant and condition of this Agreement, the Lease, the Purchase
Agreement Assignment and the Tax Indemnity Agreement to be performed or
observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and the Owner Participant a certificate signed by the
President, any Executive Vice President, any Senior Vice President, 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
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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
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 a duly organized national
banking association, validly existing and in good standing with the
Comptroller of the Currency under the laws of the United States, has
the full power, authority and legal right under the laws of the United
States pertaining to its banking, trust and fiduciary powers to execute
and deliver each of the 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, and has its chief executive office
located in Hartford, Connecticut;
(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,
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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 State of
Connecticut 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 Connecticut 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 State of Connecticut 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 State of Connecticut 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 for
federal income tax purposes 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 or as a partnership, such trusts will not be
subject to any Taxes imposed by the State of Connecticut 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;
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(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 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
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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, 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 AND POLICY PROVIDER.
Each of the parties hereto agrees and acknowledges that the Liquidity Provider
and the Policy Provider shall be a third party beneficiary of each of the
representations and warranties made herein by such party, and that the Liquidity
Provider and the Policy Provider may rely on such representations and warranties
to the same extent as if such representations and warranties were made to the
Liquidity Provider and the Policy Provider directly. Lessee agrees and
acknowledges that the Liquidity Provider, Morgan Stanley and the Policy Provider
shall each 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, Morgan Stanley and the Policy
Provider directly.
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SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and
the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to
comply with all of the terms of the Trust Agreement (as the same may hereafter
be amended or supplemented from time to time in accordance with the terms
thereof) applicable to it; (B) agrees with Lessee and the Indenture Trustee not
to amend, supplement or otherwise modify any provision of the Trust Agreement in
a manner adversely affecting such party without the prior written consent of
such party; and (C) agrees with Lessee and the Loan Participants not to revoke
the Trust Agreement without the prior written consent of Lessee (so long as the
Lease remains in effect) and the Indenture Trustee (so long as the Lien of the
Trust Indenture remains in effect or there are any Secured Certificates
outstanding). Notwithstanding the foregoing, so long as the Lease has not been
terminated, the Indenture Trustee and the Owner Trustee hereby agree for the
benefit of Lessee that without the consent of Lessee they will not (i) amend or
modify Article III or IX of the Trust Indenture, (ii) make any amendment which
will affect the stated principal amount or interest on the Secured Certificates
or (iii) amend or modify the provisions of Sections 2.05 or 10.14 of the Trust
Indenture. The Indenture Trustee and the Owner Trustee agree to promptly furnish
to Lessee copies of any supplement, amendment, waiver or modification of any of
the Operative Documents to which Lessee is not a party. Notwithstanding anything
to the contrary contained herein, in the Trust Agreement or in any other
Operative Document, the Owner Participant will not consent to or direct a change
in the situs of the Trust Estate without the prior written consent of Lessee.
Each Loan Participant agrees that it will not take any action in respect of the
Trust Indenture Estate except through the Indenture Trustee pursuant to the
Trust Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and
agrees with each of the Loan Participants, the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other Operative
Documents; PROVIDED that any instrument or other document so executed by Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act, or shall furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to make
application for such registration, and shall promptly furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to
timely file 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
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Trust Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; FIRST, the
FAA Bill of Sale, SECOND, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and THIRD, the
Trust Indenture, with the Trust Supplement attached.
SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for
Federal income tax purposes the Owner Participant will be the owner of the
Aircraft to be delivered under the Lease and Lessee will be the lessee thereof,
and each party hereto agrees to characterize the Lease as a lease for Federal
income tax purposes.
SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO
JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust
Agreement. Unless the context otherwise requires, any reference herein to any of
the Operative Documents refers to such document as it may be amended from time
to time.
(b) All notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto or to the Guarantor shall be in writing and shall be personally delivered
or sent by registered or certified mail, postage prepaid, or by telecopier, or
by prepaid courier service, and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 13(b).
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) as follows: (A) if to Lessee, the Guarantor, the Owner Trustee, the
Pass Through Trustee, the Subordination Agent, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures of
such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto, or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(c) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court for
the Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Agreement, the Lease, the
Tax Indemnity Agreement or any other Operative Document, the subject matter of
any thereof or any of the transactions contemplated hereby or thereby brought by
any party or parties thereto, or their successors or assigns, and (B) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, to the extent permitted by applicable
law, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or that this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or
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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, (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), and (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), (E) if such removal
involves the replacement of the Owner Trustee, the Indenture Trustee and the
Owner Participant shall have received 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
(F) Lessee shall indemnify and hold harmless the Owner Participant and the
Indenture Trustee on a net after-tax basis against any and all reasonable and
actual costs and expenses including reasonable counsel fees and disbursements,
registration fees, recording or filing fees and taxes incurred by the Owner
Trustee, the Owner Participant and the Indenture Trustee in connection with such
change of situs.
SECTION 15. MISCELLANEOUS. (a) The Owner Participant covenants
and agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Trustee, as Lessor, under the terms of the Lease which by
its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor.
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(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, to the Policy Provider, its
successors and permitted assigns and to Morgan Stanley. THIS AGREEMENT SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement or
such other agreements against the Owner Trustee in its individual capacity or
against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; PROVIDED, HOWEVER, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct
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for which it would otherwise be liable; and PROVIDED, FURTHER, that nothing
contained in this Section 15(d) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this Agreement
and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any
reorganization of Lessee under 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 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
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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) with the institution or institutions to be named therein providing
for (i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information which amount shall be
equal to the aggregate principal amount of all Secured Certificates outstanding
on the Refinancing Date (such debt securities, the "NEW DEBT") except that the
principal amount of New Debt may exceed the principal amount of all outstanding
Secured Certificates in connection with the first refinancing under this Section
17, (ii) the application of the proceeds of the sale of the New Debt to the
redemption of all such Secured Certificates on the Refinancing Date and (iii)
the payment of the excess, if any, of such proceeds over the amounts necessary
to effect such redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee
pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner
Trustee will amend the Lease to provide that (i) Basic Rent payable in respect
of the period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of the Special
Purchase Price, [Initial Installment, Remaining Installments,] 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;
-41-
<PAGE>
(5) the Owner Participant shall pay all of the expenses (other
than those of Lessee) of such refinancing (including, but not limited to, the
fees, expenses and disbursements of counsel and any placement or underwriting
fees) and such expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date in
connection with an adjustment to Rents pursuant to Section 3(d) of the Lease or
such assumptions are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A).
(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.
-42-
<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: U.S. Mail
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
Overnight Courier
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
FIRSTSECURITY 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>
STATESTREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity,
except as otherwise provided herein, but
solely as Pass Through Trustee,
PASS THROUGH TRUSTEE
By: ____________________________________________
Name:
Title:
Address: 225 Asylum Street
Goodwin Square
Hartford, CT 06103
Attn: Corporate/Muni
Department
Telecopy No.: (860) 244-1889
STATESTREET 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: U.S. Mail
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
Overnight Courier
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
-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: _____________________________
SCHEDULE I - PAGE 1
<PAGE>
Indenture Trustee: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
Overnight Courier
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
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 [____ _]
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 [____ _]
Loan Participant: State Street Bank and Trust Company
of Connecticut, National Association
225 Asylum Street, Goodwin Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (860) 244-1889
SCHEDULE I - PAGE 2
<PAGE>
Subordination Agent: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
Overnight Courier
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
SCHEDULE I - PAGE 3
<PAGE>
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
INTEREST RATE PERCENTAGE OF
PURCHASERS AND MATURITY PURCHASE PRICE LESSOR'S COST
---------- ------------ -------------- -------------
<S> <C> <C> <C>
Northwest Airlines
Pass Through Trust
1999-3G 7.935% Series G Secured $[___________] [___________]%
Certificates due [___________]
1999-3B 9.485% Series B Secured $[___________] [___________]%
Certificates due [___________]
1999-3C 9.152% Series C Secured $[___________] [___________]%
Certificates due [___________]
OWNER PARTICIPANT EQUITY INVESTMENT
- ----------------- -----------------
[_____________] $[___________] [___________]%
Total Commitments $[___________] 100%
</TABLE>
SCHEDULE II - PAGE 1
<PAGE>
SCHEDULE III
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3G, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3B, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
3. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3C, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
SCHEDULE III - PAGE 1
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW ____ _]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
<TABLE>
<S> <C>
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
</TABLE>
EXHIBIT A - PAGE 1
<PAGE>
Exhibit B-1 to Participation Agreement
[Form of Opinion of Simpson Thacher & Bartlett
special counsel for the Lessee and the Guarantor]
[______ __, _____]
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)
$150,203,000 aggregate principal amount of 7.935% Pass Through Trust
Certificates, Series 1999-3G (the "Class G Certificates"), (ii) $58,013,000
aggregate principal amount of 9.485% Pass Through Trust Certificates, Series
1999-3B (the "Class B Certificates") and (iii) $31,947,000 aggregate principal
amount of 9.152% Pass Through Trust Certificates, Series 1999-3C (the "Class C
Certificates" and, together with the Class G Certificates and the Class B
Certificates, the "Certificates") pursuant to the Underwriting Agreement, dated
as of December 2, 1999 (the "Underwriting Agreement"), by and among Morgan
Stanley & Co. Incorporated, Chase Securities Inc., Salomon Smith Barney Inc.,
and U.S. Bancorp Piper Jaffray Inc., as underwriters, the Company and NWA Corp.
Capitalized terms used herein unless otherwise defined herein have the
respective meanings given them in the Underwriting Agreement.
In connection with this opinion we have examined the
following:
(i) the Pass Through Trust Agreement dated as of June 3, 1999,
by and among NWA Corp., the Company and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as
trustee (the "Trustee") (the "Basic Agreement");
(ii) the Trust Supplement No. 1999-3G, dated as of December 9,
1999, to the Basic Agreement, by and among NWA Corp., the Company and
the Trustee (the Basic Agreement as so supplemented, the "1999-3G Pass
Through Trust Agreement"); the Trust Supplement No. 1999-3B, dated as
of December 9, 1999, to the Basic Agreement, by and among NWA Corp.,
the Company and the Trustee (the Basic Agreement as so supplemented,
the "1999-3B Pass Through Trust Agreement"); and the Trust Supplement
No. 1999-3C, dated as of December 9, 1999, to the Basic Agreement, by
and among NWA Corp., the Company and the Trustee (the Basic Agreement
as so supplemented, the "1999-3C Pass Through Trust Agreement" and,
together with the 1999-3G Pass Through Trust Agreement and the 1999-3B
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");
<PAGE>
The Persons Listed on Annex A hereto -2- [_____ __, ____]
(iii) the Intercreditor Agreement dated as of December 9, 1999
(the "Intercreditor Agreement"), by and among the Trustee, Morgan
Stanley Capital Services, Inc. (the "Liquidity Provider"), State Street
Bank and Trust Company, not in its individual capacity, except as set
forth therein, but solely as subordination agent (the "Subordination
Agent"), and MBIA Insurance Corporation;
(iv) the Revolving Credit Agreement, Class G Certificates, the
Revolving Credit Agreement, Class B Certificates and the Revolving
Credit Agreement, Class C Certificates (collectively, the "Liquidity
Facilities"), each dated as of December 9, 1999, by and between the
Subordination Agent and the Liquidity Provider; and
(v) the Indemnity Agreement, dated as of December 9, 1999,
between ABN AMRO Bank, N.V., and the Company.
Unless otherwise indicated, "Pass Through Documents" refers to
the documents, described in (i) and (ii) above.
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.
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.
In addition, for purposes of this opinion we have assumed the
following:
(c) each of the Company and the Trustee has been duly
incorporated and, since the date of execution of each Pass Through Document, has
been validly existing and in good standing as a corporation and trust company,
respectively, under the laws of the jurisdiction of its incorporation and
qualification, respectively;
(d) each of the Company and the Trustee has duly authorized,
executed and delivered each Pass Through Document to which it is a party;
(e) each of the Company and the Trustee has full power,
authority and legal right to enter into and perform its respective obligations
under, and consummate the transactions contemplated by, each Pass Through
Document to which it is a party;
(f) the execution, delivery and performance of the Pass
Through Documents by the Company and the Trustee do not violate the laws of the
jurisdiction in which each entity is organized or any other applicable laws,
excepting the laws of the State of New York and the General Corporation Law of
the State of Delaware; and
<PAGE>
The Persons Listed on Annex A hereto -3- [_____ __, ____]
(g) the execution, delivery and performance of the Pass
Through Documents by the Company and the Trustee do not constitute a breach or
violation of any agreement or instrument which is binding upon such entity
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 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.
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 or NWA Corp.
of, and the performance by the Company 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 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.
<PAGE>
The Persons Listed on Annex A hereto -4- [_____ __, ____]
(b) We express no opinion with respect to matters governed by
the Federal Aviation Act and the rules and regulations promulgated
thereunder.
(c) The remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought.
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, 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
<PAGE>
Annex A
[_______________], as Owner Participant
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
MBIA Insurance Corporation
<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 ____ __]
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 ____ __], 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 of
Connecticut, National Association, 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 but not defined herein have the
respective meanings given to them in or by reference to the Participation
Agreement, unless the context otherwise requires. We are rendering this opinion
letter to you at the request of Lessee pursuant to Section 4(a)(xi) of the
Participation Agreement.
In rendering the opinions set forth below, we have examined
and relied upon the originals, copies or specimens, certified or otherwise
identified to our satisfaction, of the Transaction Documents (as defined below)
and such certificates, corporate and public records, agreements and instruments
and other documents, including, among other things, the documents delivered on
the date hereof, as we have deemed appropriate as a basis for the opinions
expressed below. In such examination we have assumed the genuineness of all
signatures, the authenticity of all documents, agreements and instruments
submitted to us as originals, the conformity to original documents, agreements
and instruments of all documents, agreements and instruments submitted to us as
copies or specimens, the authenticity of the originals of such documents,
agreements and instruments submitted to us as copies or specimens, and the
accuracy of the matters set forth in the documents, agreements and instruments
we reviewed. We have also assumed that Lessee is an "air carrier" within the
meaning of the Federal Aviation Act. As to any facts material to such opinions
that were not known to us, we have relied upon statements and representations of
officers and other representatives of Lessee, Guarantor and the other parties to
the Operative Documents, and of public officials. Except as expressly set forth
herein, we have not undertaken any independent investigation (including, without
limitation, conducting
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE A HERETO -2- [______ ___, ____]
any review, search or investigation of any public files, records or dockets) to
determine the existence or absence of the facts that are material to our
opinions, and no inference as to our knowledge concerning such facts should be
drawn from our reliance on the representations and warranties of Lessee,
Guarantor and the other parties to the Operative Documents contained in the
Participation Agreement and the other Operative Documents (including, without
limitation, in Sections 7 and 8 of the Participation Agreement) in connection
with the preparation and delivery of this letter.
In particular, we have examined and relied upon:
(1) the Participation Agreement;
(2) the Lease;
(3) the Lease Supplement covering the Aircraft;
(4) the Trust Agreement;
(5) the Trust Supplement;
(6) the Trust Indenture;
(7) the Secured Certificates;
(8) the Tax Indemnity Agreement;
(9) the Purchase Agreement Assignment;
(10) the Bill of Sale;
(11) the FAA Bill of Sale; and
(12) the Guarantee.
Items A to L above are referred to in this letter as the
"TRANSACTION DOCUMENTS". References in this letter to "APPLICABLE LAWS" shall
mean those laws, rules and regulations of the State of New York which, in our
experience, are normally applicable to transactions of the type contemplated by
the Transaction Documents. References in this letter to the term "GOVERNMENTAL
AUTHORITIES" means executive, legislative, judicial, administrative or
regulatory bodies of the State of New York. References in this letter to the
term "GOVERNMENTAL APPROVAL" means any consent, approval, license, authorization
or validation of, or filing, recording or registration with, any Governmental
Authority pursuant to Applicable Laws.
We have also assumed that all documents, agreements and
instruments have been duly authorized, executed and delivered by all parties
thereto, that all such parties had the power and legal right to execute and
deliver all such documents, agreements and instruments, and that such documents,
agreements and instruments are (other than with respect to Lessee and Guarantor)
valid, binding and enforceable obligations of such parties. As used herein, "to
our knowledge", "known to us" or words of similar import mean the actual
knowledge, without independent investigation, of any lawyer in our firm actively
involved in the transactions contemplated by the Participation Agreement.
We express no opinion concerning the laws of any jurisdiction
other than the laws of the State of New York and the federal laws of the United
States of America.
Based upon and subject to the foregoing, and subject further
to the assumptions, limitations and qualifications set forth below, we are of
the opinion that:
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE A HERETO -3- [______ ___, ____]
1. The execution and delivery by Lessee 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") and the performance
by Lessee of its obligations thereunder (a) do not require any Governmental
Approval to be obtained on the part of Lessee, except those that have been
obtained and, to our knowledge, are in effect, and those required by the terms
of the Operative Documents after the Delivery Date, and (b) do not result in a
violation of any provision of any Applicable Laws applicable to Lessee.
2. The execution and delivery by Guarantor of its obligations
under the Guarantee and the performance by Guarantor of its obligations
thereunder (a) do not require any Governmental Approval to be obtained on the
part of Guarantor, except those that have been obtained and, to our knowledge,
are in effect, and those required by the terms of the Operative Documents after
the Delivery Date, and (b) do not result in a violation of any provision of any
Applicable Laws applicable to Guarantor.
3. Each of the Lessee Documents constitutes a legal, valid and
binding agreement of Lessee, enforceable against Lessee in accordance with its
terms and the Guarantee constitutes a legal, valid and binding agreement of
Guarantor enforceable against Guarantor in accordance with its terms, in each
case subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, receivership or other similar laws relating to or
affecting creditors' or lessors' rights generally, and to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity) and requirements of commercial reasonableness, good faith and fair
dealing, and to 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 except that the
enforcement of rights with respect to indemnification may be limited by
considerations of public policy.
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 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, 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
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE A HERETO -4- [______ ___, ____]
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 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-1 financing statement filed in the Office of the
Secretary of State 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, 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 also 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. We express
no opinion herein as to: (A) any section of any Operative Document relating to
concepts of "severability" of certain provisions in such Operative Document; (B)
any provision in any Operative Document insofar as it constitutes: (i)
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE A HERETO -5- [______ ___, ____]
a waiver of FORUM NON CONVENIENS in respect of any court other than the Supreme
Court of the State of New York; or (ii) a waiver of the right to object to
improper venue in respect of any court other than the Supreme Court of the State
of New York; (C) the effect of any law of any jurisdiction (other than the State
of New York) wherein the Owner Trustee or any assignee of the Owner Trustee may
be located that limits rates of interest, fees or other charges that may be
charged by the Owner Trustee or such assignee; and (D) any provision contained
in the Operative Documents relating to jurisdiction or service of process other
than in respect of the courts of the State of New York or the courts of the
United States of America located in the State of New York. 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. 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 letter 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 are furnishing this opinion letter to you solely for your
benefit in connection with the transactions referred to herein. This opinion
letter is not to be relied upon, used, circulated, quoted or otherwise referred
to by any person or entity for any other purpose without our prior written
consent. In addition, we disclaim any obligation to update this opinion letter
for changes in fact or law, or otherwise.
Very truly yours,
<PAGE>
SCHEDULE A
[____________], as Owner Participant
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company, as Indenture Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 ____ __]
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 ____ __], 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 of
Connecticut, National Association, 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 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
On Page 1 Hereof
[_____ __,___]
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. 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)
violate 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, violate 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 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
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_____ __,___]
Page 3
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, (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,
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 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
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_____ __,___]
Page 4
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, the Predecessor Lease and a UCC-1 financing statement filed in the
Office of the Secretary of State 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.
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.
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_____ __,___]
Page 5
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 benefit 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
[_________________], as Owner Participant
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT C-1 TO PARTICIPATION AGREEMENT
[Form of Opinion of Vedder, Price, Kaufman & Kammholz, special counsel for the
Manufacturer]
[-------------, ----]
To the Parties on Schedule 1
Re: Purchase Agreement dated as of February 5, 1997, as
amended (the "AGREEMENT") between Aero International
(Regional) SAS as agent for and on behalf of British
Aerospace (Operations) Limited ("OPERATIONS") and
Northwest Airlines, Inc. (the "COMPANY") and the
Manufacturer Support Agreement dated February 5,
1997, as amended (the "SUPPORT AGREEMENT") between
Aero International (Regional) SAS, as agent for and
on behalf of Operations, and the Company (the
Agreement, together with the Support Agreement, are
herein referred to collectively as the "PURCHASE
AGREEMENT").
Ladies and Gentlemen:
We have acted as special counsel to Operations in connection
with the Purchase Agreement and the transactions contemplated thereby.
Capitalized terms not otherwise defined herein shall have the respective
meanings specified in the Purchase Agreement.
In connection with the opinions set forth below, we have
examined originals, or copies certified to our satisfaction, of the Purchase
Agreement and the Consent and Agreement [NW ____ _] dated as of [__________]
(the "CONSENT AND AGREEMENT") executed by British Aerospace Regional Aircraft SA
acting as an agent for and on behalf of Operations (the Purchase Agreement
together with the Consent and Agreement are herein referred to as the
"DOCUMENTS") and such other agreements, certificates and other statements of
corporate officers of Operations as we have deemed relevant and necessary as a
basis therefor. As to any facts material to such opinions, we have relied, to
the extent that we deem such reliance proper, upon such agreements,
certificates, statements and documents and on the representations and warranties
set forth in the Documents. In rendering such opinions, we have assumed:
(x) the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to the
authentic original documents of all documents submitted to us as
copies;
(y) the due authorization, execution and delivery by each of
the parties of each of the Documents and of each other document
examined by us for the purposes hereof; and
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_________,_____]
Page 2
(z) that each party to each of the Documents has the power,
corporate or otherwise, and authority to execute, deliver and perform
the Documents and that such execution, delivery and performance do not
and will not contravene such party's charter, by-laws or other
constituent document or any agreement or other document to which such
party or any of its property is subject or any law, rule, regulation or
judicial or administrative mandate applicable to such party or any of
its property.
Based upon and subject to the foregoing and to the matters set
forth below, we are of the opinion that the Documents are legal, valid and
binding obligations of Operations, enforceable against Operations in accordance
with their terms.
The foregoing opinions are subject to the following
qualifications and exceptions:
(a) The opinions set forth above are subject to the
qualifications that the enforceability of the
Documents may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (y)
general principles of equity, regardless of whether
enforcement is pursuant to a proceeding in equity or
at law; and
(b) We express no opinion as to:
(a) whether a Federal court of the United States would
have subject matter jurisdiction over any action brought
pursuant to any of the Documents;
(b) whether a Federal court of the United States or a
New York State court would recognize any claim that any
action brought pursuant to any of the Documents is brought
in an inconvenient forum;
(c) the validity, binding effect and enforceability of
any provision of any of the Documents which purports to bind
the parties to agree to conclude an agreement at a future
date;
(d) the availability of the remedy of specific
performance;
(e) the enforceability of any provision in the
Documents which requires a party to make any or all payments
thereunder without setoff or counterclaim or any other right
which such party may have; or
(f) the enforceability of any indemnity against loss
from a court judgment in another currency.
We are members of the Bar of the State of New York and no
opinion is expressed herein with respect to any jurisdiction other than the
Federal laws of the United States and the laws of the State of New York.
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_________,_____]
Page 3
This opinion is solely for your benefit. No other person or
entity shall be entitled to rely on this opinion without our prior written
consent. This opinion is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
<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 of Connecticut, National Association, as
Pass Through Trustee
[_________________], as Owner Participant
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
Exhibit C-2 to Participation Agreement
[Form of opinion of in-house counsel to the Manufacturer]
[----------, ----]
To the Addressees Listed
in the Attached Schedule A
- ---------------------------
Re: British Aerospace Avro 146-RJ85A Aircraft
Manufacturer's Serial No. [________]
Registration No. N[_____]
Ladies and Gentlemen,
I have acted as counsel to British Aerospace Regional Aircraft S.A., a SOCIETE
ANONYME, with a share capital of 250 000 FF, whose registered office is at 3,
allee Pierre Nadot, 31701 Blagnac Cedex France, registered at the companies
registry in Toulouse under number 419 099 148 ("BAeRASA"), in connection with
the Relevant Documents (as defined below).
In rendering the opinions expressed herein, I have examined copies, certified or
otherwise identified to my satisfaction, of the following documents:
1. the Purchase Agreement, dated as of 5 February 1997, as amended,
between Aero International (Regional) SAS ("AI(R)") (acting as agent on
behalf of British Aerospace (Operations) Limited ("BAE") and Northwest
Airlines, Inc. ("NORTHWEST") (the "PURCHASE AGREEMENT") in relation to,
INTER ALIA, the Aircraft.
2. the Manufacturer Support Agreement, dated 5 February 1997, as amended,
between AI(R), acting as agent of BAe, and Northwest (the "MANUFACTURER
SUPPORT AGREEMENT").
3. the Purchase Agreement Assignment [__ ____ _] (the "ASSIGNMENT
AGREEMENT"), dated as of [______________], between Northwest, as
assignor, and the Owner Trustee, as assignee, relating to the Avro RJ
Aircraft bearing registration mark N[____] (the "AIRCRAFT").
4. the Consent and Agreement [__ ____ _], dated as of [__________] (the
"CONSENT AND AGREEMENT"), in respect of the Assignment Agreement,
executed by BAeRASA acting as the agent of BAe.
(the documents at 1 to 4 above being referred to herein as the "RELEVANT
DOCUMENTS")
I have examined, or caused to be examined, such records and documents and such
questions of law, limited to the laws of England, and facts as I have considered
necessary or appropriate to form the basis of the opinions hereinafter
expressed. I have relied upon the Relevant Documents and on the information
contained therein as to factual matters.
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_________,_____]
Page 2
Based upon the foregoing, and subject to the qualifications and assumptions
herein contained and to the provisions of any law other than English law, I am
of the opinion that at the date hereof:
(i) BAeRASA (a) is duly empowered and authorized to act as, and is acting
as, agent for BAe under the Consent and Agreement (b) has taken all action
necessary for the authorization, execution, delivery and performance of the
Consent and Agreeement and any instrument or agreement required thereunder,
(c) requires no authorizations, approvals, exemptions nor similar consents
from any governmental authority in England in connection with the
execution, delivery and performance of the Consent and Agreement and any
instrument or agreement required thereunder or any transaction contemplated
thereby, and (d) such execution, delivery and performance do not and will
not contravene its charter, by-laws or other constituent document or any
agreement or other document to which it or any its property is subject or
any law, rule, regulation or judicial or administrative mandate applicable
to any of its property.
(ii) AI(R) (a) was duly empowered and authorized to act as, and was acting
as, agent for BAe under the Purchase Agreement and the Manufacturer Support
Agreement (b) has taken all action necessary for the authorization,
execution, delivery and performance of the Relevant Documents to which it
is a party and any instrument or agreement required thereunder, (c)
requires no authorizations, approvals, exemptions nor similar consents from
any governmental authority in England in connection with the execution,
delivery and performance of the Relevant Documents to which it is a party
and any instrument or agreement required thereunder or any transaction
contemplated thereby, and (d) to the best of my knowledge, such execution,
delivery and performance do not and will not contravene its charter,
by-laws or other constituent document or any agreement or other document to
which it or any its property is subject or any law, rule, regulation or
judicial or administrative mandate applicable to any of its property.
(iii) The Consent and Agreement constitutes the legal, valid and binding
obligation of BAeRASA (acting as agent of BAe) enforceable against BAe in
accordance with its terms and would be so treated in the courts of England
except as set out below.
(iv) Upon execution of the Assignment Agreement and the Consent and
Agreement, the Assignment Agreement and the Consent and Agreement shall be
effective to perfect as against BAe, BAeRASA [(AIR)], and third parties the
assignment to the Owner Trustee of the rights of Northwest under the
Manufacturer Support Agreement.
(v) Those of the Relevant Documents to which AI(R) is a party (acting as
agent of BAe) constitute the legal, valid and binding obligations of AI(R)
(acting as agent of BAe) enforceable against BAe in accordance with their
terms and would be so treated in the courts of England except as set out
below.
(vi) To the extent that, notwithstanding any provision in the Relevant
Documents to the contrary, a court should deem applicable the laws of
England, those of
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_________,_____]
Page 3
the Relevant Documents to which either AI(R) or BAeRASA is a party (acting
as agent of BAe) would represent the legal, valid and binding obligations
of BAe (as principal) under the laws of England, enforceable against BAe in
accordance with their respective terms except as set out below.
The opinions set forth above are subject to the following reservations:
(i) the enforceability of the Relevant Documents may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and/or the
general principles of equity;
(ii) provisions in the Relevant Documents as to severability of certain
provisions on the grounds of illegality may not be binding under
English law and would be decided by the court in its absolute
discretion;
(iii) English courts do not necessarily give effect to an indemnity for the
costs of litigation;
(iv) the Relevant Documents may be amended orally by the parties thereto
notwithstanding provisions therein to the contrary;
(v) any provision for interest to be paid on overdue amounts at a rate in
excess of the rate applicable prior to a default may amount to a
penalty and may therefore not be recoverable;
(vi) failure or delay in exercising any right may constitute a waiver of
that right notwithstanding provisions to the contrary in the Relevant
Documents; and
(vii) an instrument liable to stamp duty in the United Kingdom cannot be
relied upon, enforced or registered unless it is duly stamped. I
express no opinion on the application of United Kingdom legislation
relating to stamp duties.
In rendering this opinion I have assumed the due authorization, execution and
delivery of all Relevant Documents by all parties thereto (other than BAeRASA
and AI(R)) and that the Relevant Documents constitute the legal, valid and
binding obligation of the parties thereto in so far as the laws of New York are
concerned which is the law expressed to govern certain of the Relevant
Documents.
<PAGE>
To The Addressees Listed
On Page 1 Hereof
[_________,_____]
Page 4
The law covered by this opinion letter is limited to the laws of England. This
opinion is solely for your benefit in connection with the transactions referred
to therein and may not be relied upon by any other person.
Yours faithfully,
[----------------]
[LEGAL COUNSEL]
<PAGE>
SCHEDULE A
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 of Connecticut, National Association, as
Pass Through Trustee
[_________________], as Owner Participant
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley Dean Witter
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT D TO PARTICIPATION AGREEMENT
[Form of Opinion of Ray, Quinney & Nebeker]
[---------- ---, ----]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO:
Re: NORTHWEST AIRLINES, INC. [NW ____ __]
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 ____ __] 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 ____ __], 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 Airlines Corporation, as Guarantor, State
Street Bank and Trust Company of Connecticut, National Association, not in its
individual capacity except as expressly provided therein, but solely as Pass
Through Trustee under each of the Pass Through Agreements, State Street Bank and
Trust Company, as Subordination Agent and State Street Bank and Trust Company,
as Indenture Trustee (the "Participation Agreement"). This opinion is furnished
pursuant to Section 4(a)(xiii) 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 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.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO: -2- [---------- ---, ----]
(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 by-laws 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, 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) To our knowledge, 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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO: -3- [---------- ---, ----]
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 rights 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, (iii) the Aircraft
will be sold or leased for use in interstate commerce, and (iv) 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 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,
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO: -4- [---------- ---, ----]
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.
Your attention is directed to the Utah UCC, which provides, in
part, that a filed financing statement which does not state a maturity date or
which states a maturity date of more than five (5) years is effective only for a
period of five (5) years from the date of filing, unless within six (6) months
prior to the expiration of said period a continuation statement is filed in the
same office or offices in which the original statement was filed. The
continuation statement must be signed by the secured party, identify the
original statement by file number and state that the original statement is still
effective. Upon the timely filing of a continuation statement, the effectiveness
of the original financing statement is continued for five (5) years after the
last date to which the original statement was effective. Succeeding continuation
statements may be filed in the same manner to continue the effectiveness of the
original statement.
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) Title 49 of the United States Code
Annotated, sometimes referred to as the Transportation Act, which was
enacted in substitution of the Federal Aviation Act of 1958 and the
regulations promulgated pursuant thereto, as amended from time to time and
any similar law of the United States enacted in substitution or replacement
thereof (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.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO: -5- [---------- ---, ----]
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 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.
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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO: -6- [---------- ---, ----]
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, as Owner Trustee
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
[______________________], as Owner Participant
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT E-1 TO PARTICIPATION AGREEMENT
[Form of Opinion of special counsel for the Owner Participant]
[----------- --, ----]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT 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 ____ __] 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 of Connecticut, National
Association, 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, (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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- [----------- --, ----]
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, here
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).
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.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- [----------- --, ----]
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 Trust Indenture duly creates for the benefit of the
Indenture Trustee the security interests which the Trust Indenture purports to
create and the Indenture Trustee is entitled to the benefits and security
afforded by the Trust Indenture.
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 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., as Lessee
Northwest Airlines Corporation, as Guarantor
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT E-2 TO PARTICIPATION AGREEMENT
[Form of Opinion of Owner Participant's in-house counsel]
[---------- ---, ----]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT 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 ____ __] 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 of Connecticut, National Association, 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 delivery of the Owner Participant Documents by each of the parties thereto
other than the Owner Participant.
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE HERETO -2- [----------- --, ----]
5. 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.
6. The Owner Participant Documents have been duly authorized,
executed and delivered by Owner Participant.
7. 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).
8. 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.
9. 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.
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., as Lessee
Northwest Airlines Corporation, as Guarantor
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT F TO PARTICIPATION AGREEMENT
[Form of Opinion of Crowe & Dunlevy, P.C.]
[__________ __, ____]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: British Aerospace Avro 146-RJ85A 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) [Mortgage and Security Agreement Release and Termination
Agreement dated [__________] between [_________] and
Northwest Airlines, Inc., which released the Aircraft and
the AlliedSignal, Inc. model LF507 aircraft engines with
manufacturer's serial numbers PO ___, PO ___, PO ___ and
PO ___ (the "Engines") from the terms of Conveyance
No. [_________] was filed at [____________]];
(b) 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 ____ __] dated as of [__________] (the "Trust
Agreement") between [______________], as Owner Participant,
and the Owner Trustee, covering the Aircraft was filed at
[____________];
(c) 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
[_______________];
(d) the Trust Agreement was filed at [_______________];
(e) Trust Indenture and Security Agreement [NW ____ __] 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
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TO THE ADDRESSEES LISTED [________ __, ____]
ON SCHEDULE HERETO
Supplement [NW _______] dated [______________] (the
"Indenture Supplement") covering the Aircraft and the
AlliedSignal, Inc. model LF507 aircraft engines with
manufacturer's serial numbers PO ___, PO ___, PO ___ and
PO ___ (the "Engines"), was filed at [__________]; and
(f) Lease Agreement [NW _______] 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
<PAGE>
3
TO THE ADDRESSEES LISTED [_________ __, ____]
ON SCHEDULE HERETO
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
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
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
First Security Bank, National Association, as Owner Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
State Street Bank and Trust Company, as Indenture Trustee
[_________________], as Owner Participant
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT G TO PARTICIPATION AGREEMENT
[Form of Opinion of Bingham Dana LLP,
special counsel for the Indenture Trustee]
[ , ]
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TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Leveraged Lease Financing of One
British Aerospace Avro 146-RJ85A Aircraft [NW ____ __]
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 ____] 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 ____] 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 Bank and Trust Company of Connecticut, National
Association, 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. 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.
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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:
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 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
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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. 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). 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. We express no opinion
as to the availability of any specific or equitable relief of any
kind. 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. 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. We express no opinion as
to the effect of events occurring, circumstances
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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. 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 Delivery Date.
2. State Street, in its individual capacity or as Indenture Trustee, as
the case may be, has duly authorized 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 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
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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 are imposed solely because State Street has its
principal place of business in Massachusetts or performs 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, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
First Security Bank, National Association, as Owner Trustee
[____________________], as Owner Participant
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 ____ ___], 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 of Connecticut, National Association, 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
but not defined herein have the respective meanings given to them in or by
reference to the Participation Agreement, unless the context otherwise requires.
As used herein, the term "Airframe" shall mean the British Aerospace Avro
146-RJ85A Airframe bearing U.S. Registration No. N[________] and Manufacturer's
Serial No. [_____], the term "Engines" shall mean the four AlliedSignal, Inc.
Model LF507 Engines bearing manufacturer's Serial Nos. PO ___, PO ___, PO ___
and PO ___, 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. We are
rendering this opinion letter to you at the request of Lessee pursuant to
Section 4(a)(xxiii) of the Participation Agreement.
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, 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
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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.
We express no opinion concerning the laws of any jurisdiction
other than the laws of the State of New York and the federal laws of the United
States of America.
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 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
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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 19941 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 B.R. 305, ON REHEARING, 221 B.R. 1 (D.
Colo. 1998), APPEAL DISMISSED AS MOOT SUB NOM., BOULLION AIRCRAFT HOLDING CO.,
INC. V. SMITH MANAGEMENT, Nos. 98-1018, 98-1214, 1999 WL 459469 (10th Cir. July
7, 1999), 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
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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 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 are furnishing this opinion letter to you solely for your
benefit in connection with the transactions referred to herein. This opinion
letter is not to be relied upon, used, circulated, quoted or otherwise referred
to by any person or entity for any other purpose without our prior written
consent. In addition, we disclaim any obligation to update this opinion letter
for changes in fact or law, or otherwise.
Very truly yours,
<PAGE>
SCHEDULE A
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
[___________________], as Owner Participant
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 British Aerospace Avro 146-RJ85A airframe FAA Registration No.
N[_____] and MSN [_____], and AlliedSignal, Inc. Model LF507 engine MSN PO ___,
AlliedSignal, Inc. Model LF507 engine MSN PO ___, AlliedSignal, Inc. Model LF507
engine MSN PO ___, and AlliedSignal, Inc. Model LF507 engine MSN PO ___,
(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. Section 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]
[___________________, _____]
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
Re: Northwest Airlines, Inc./Leveraged Lease Financing of British
Aerospace Avro 146-RJ85A Aircraft [NW _____ ___]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company of Connecticut, National Association, 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, 1999, among Northwest Airlines
Corporation, Northwest Airlines, Inc. and State Street, as supplemented by Trust
Supplement No. 1999-3G, Trust Supplement No. 1999-3B and Trust Supplement No.
1999-3C, each dated as of December 9, 1999 and each among Northwest Airlines,
Inc., Northwest Airlines Corporation 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 ______] dated as
of [_________________] (the "PARTICIPATION AGREEMENT") by and among State Street
Bank and Trust Company, 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 Bank and Trust Company, 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.
We have examined the Participation Agreement, the Liquidity Facility
for each of the Class G, Class B, and Class C Trusts, the Intercreditor
Agreement, the Note Purchase Agreement, the Escrow and Paying Agent Agreement
for each of the Class G, Class B and Class C Trusts each dated as of December 9,
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 Bank and Trust Company, as Paying Agent, each of the Pass Through
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE HERETO -2- [_______ ___, ___]
Trusts and the Insurance and Indemnity Agreement dated as of December 9, 1999,
among MBIA Insurance Corporation, Northwest Airlines, Inc., State Street Bank
and Trust Company as Subordination Agent and State Street Bank and Trust Company
of Connecticut, National Association as Pass Through Trustee under the Class G
Trust (together, the "OPERATIVE DOCUMENTS"), the Certificate of the Comptroller
of the Currency 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 national
banking association and exercise trust powers, our opinion relies upon and is
limited by such Certificate of the Comptroller of the Currency.
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 State of Connecticut as applied by courts located in
Connecticut 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 State of Connecticut, 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 State of Connecticut.
Our opinion is further subject to the following exceptions,
qualifications and assumptions:
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE HERETO -3- [_______ ___, ___]
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 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 State of Connecticut,
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.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
State of Connecticut 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).
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 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 Pass Through Trustee,
as applicable, under any of the Operative Documents.We express no
opinion as the availability of any specific or equitable relief of any
kind.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.We express no opinion as to the
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE HERETO -4- [_______ ___, ___]
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 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.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.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
Connecticut 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 or as a partnership.
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 national banking association, validly formed and
authorized to operate as a national banking association under the laws of the
United States of America 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
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE HERETO -5- [_______ ___, ___]
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 Connecticut 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
Connecticut 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 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 State of Connecticut 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
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 by State Street, as Pass Through Trustee, pursuant to the
Pass Through Trusts which are imposed solely because State Street has its
principal place of business in Connecticut or performs its administrative duties
under the Operative Documents in Connecticut. Neither State Street, in its
individual capacity or as the Pass Through Trustee, as the case may be, the
Indenture Trustee, 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 State of
Connecticut or any political subdivision thereof (except for Taxes on any fees
payable to State Street in its individual capacity) which are imposed because
State Street has its principal place of business in Connecticut or performs its
administrative duties under the Operative Documents in Connecticut, and there
are no Taxes under the laws of the State of Connecticut 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
<PAGE>
TO THE ADDRESSES LISTED
ON SCHEDULE HERETO -6- [_______ ___, ___]
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 are imposed because State Street has its
principal place of business in Connecticut or performs its administrative duties
under the Operative Documents in Connecticut.
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, as Indenture Trustee
First Security Bank, National Association, as Pass Through Trustee
[___________________], as Owner Participant
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT J-2 TO PARTICIPATION AGREEMENT
[Form of Opinion of Bingham Dana LLP,
special counsel for the Subordination Agent]
[____________, ____]
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
Re: Northwest Airlines, Inc./Leveraged Lease Financing
of One British Aerospace Avro 146-RJ85A Aircraft
[NW _____ ____]
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
December 9, 1999 (the "INTERCREDITOR AGREEMENT") among State Street Bank and
Trust Company of Connecticut, National Association, in its capacity as Trustee
under the Northwest Airlines Pass Through Trust 1999-3G, Northwest Airlines Pass
Through Trust 1999-3B and Northwest Airlines Pass Through Trust 1999-3C, Morgan
Stanley Capital Services, Inc. as Class G 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 ____] 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 Bank and
Trust Company of Connecticut, National Association, 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, the Intercreditor Agreement and the Insurance and Indemnity Agreement
(together, the "OPERATIVE
<PAGE>
-2-
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO [_____________, ____]
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 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 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:
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 and in
<PAGE>
-3-
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO [_____________, ____]
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.
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).
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.
We express no opinion as the availability of any specific or
equitable relief of any kind.
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.
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
<PAGE>
-4-
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO [_____________, ____]
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.
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.
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 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 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
<PAGE>
-5-
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO [_____________, ____]
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 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.
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 are imposed solely because State Street has its
principal place of business in Massachusetts or performs 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 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
Subordination Agent, as the case may be, to enter into or perform its
obligations under the Operative Documents.
<PAGE>
-6-
TO THE PARTIES SET FORTH
IN SCHEDULE A HERET [_____________, ____]
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>
SCHEDULE A
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
First Security Bank, National Association, as Owner Trustee
[_______________], as Owner Participant
Northwest Airlines, Inc., as Lessee
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW ____ _]
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:
(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;
EXHIBIT K - PAGE 2
<PAGE>
(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 have been 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, branch profits tax, 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 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, the
Policy Provider 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, the Owner Trust or the Pass
Through 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 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;
EXHIBIT K - PAGE 3
<PAGE>
(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;
(14) to any Tax imposed on any Tax Indemnitee under
Section 4975 of the Internal Revenue Code or under subtitle B of ERISA or any
equivalent state law 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;
(15) to any Tax that would not have been imposed but for
an amendment to any Operative Document to which Lessee is not a party, which
amendment was not required or consented to by Lessee in writing; or
(16) in the case of the Policy Provider, to any
premium or similar Tax.
(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
EXHIBIT K - PAGE 4
<PAGE>
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 benefit
(whether by deduction, allocation, apportionment 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 tax
benefit 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 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).
EXHIBIT K - PAGE 5
<PAGE>
(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 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
EXHIBIT K - PAGE 6
<PAGE>
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 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
EXHIBIT K - PAGE 7
<PAGE>
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 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.
EXHIBIT K - PAGE 8
<PAGE>
(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
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 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 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>
<PAGE>
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW ____ _]
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, the Policy
Provider Agreement 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, the Policy Provider Agreement
or the Pass Through Trust Agreements applicable to it 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
EXHIBIT L - PAGE1
<PAGE>
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 (III) 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 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
EXHIBIT L - PAGE2
<PAGE>
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 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 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
(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
EXHIBIT L - PAGE3
<PAGE>
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.
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
EXHIBIT L - PAGE4
<PAGE>
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 - PAGE5
<PAGE>
Exhibit 99(b)
================================================================================
LEASE AGREEMENT
[NW ____ _]
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 British Aerospace Avro 146-RJ85A Aircraft
================================================================================
As set forth in Section 20 hereof, Lessor has assigned to the Indenture Trustee
(as defined herein) certain of its right, title and interest in and to this
Lease. To the extent, if any, that this Lease constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease may be created through the
transfer or possession of any counterpart other than the original executed
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by the Indenture Trustee on the signature page thereof.
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions....................................................1
SECTION 2. Acceptance and Lease..........................................17
SECTION 3. Term and Rent.................................................17
(a) Basic Term................................................17
(b) [Intentionally Omitted]...................................17
(c) Basic Rent................................................17
(d) Adjustments to Basic Rent.................................17
(e) Supplemental Rent.........................................19
(f) Payments in General.......................................19
SECTION 4. Lessor's Representations and Warranties.......................20
SECTION 5. Return of the Aircraft........................................21
(a) Condition Upon Return.....................................21
(b) Return of the Engines.....................................22
(c) Fuel; Manuals.............................................22
(d) Storage Upon Return.......................................23
SECTION 6. Liens.........................................................23
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia........................................23
(a) Registration and Maintenance..............................24
(b) Possession and Subleases..................................25
(c) Insignia..................................................28
SECTION 8. Replacement and Pooling of Parts; Alterations, Modifications
and Additions..............................................29
(a) Replacement of Parts......................................29
(b) Pooling of Parts..........................................30
(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
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...................35
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<PAGE>
Page
----
(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.....................................................38
(a) Public Liability and Property Damage Insurance............38
(b) Insurance Against Loss or Damage to the Aircraft..........40
(c) Reports, etc..............................................42
(d) Self-Insurance............................................43
(e) Additional Insurance by Lessor and Lessee.................43
(f) Indemnification by Government in Lieu of Insurance........44
(g) Application of Payments During Existence of an Event of
Default................................................44
SECTION 12. Inspection....................................................44
SECTION 13. Assignment....................................................45
SECTION 14. Events of Default.............................................45
SECTION 15. Remedies......................................................47
SECTION 16. Lessee's Cooperation Concerning Certain Matters...............50
SECTION 17. Notices.......................................................51
SECTION 18. No Set-Off, Counterclaim, etc.................................51
SECTION 19. Renewal Options; Purchase Options; Valuation..................52
(a) Renewal Options...........................................52
(b) Purchase Options..........................................53
(c) Valuation.................................................53
(d) Special Purchase Option...................................55
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates...............................................55
SECTION 21. Lessor's Right to Perform for Lessee..........................56
SECTION 22. Investment of Security Funds; Liability of Lessor Limited.....56
(a) Investment of Security Funds..............................56
(b) Liability of Lessor Limited...............................57
-ii-
<PAGE>
Page
----
SECTION 23. Service of Process............................................57
SECTION 24. Miscellaneous.................................................57
SECTION 25. Successor Trustee.............................................58
SECTION 26. Covenant of Quiet Enjoyment...................................58
-iii-
<PAGE>
EXHIBITS
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Lessor's Cost and Special Purchase Price Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation Verification
EXHIBIT F - Schedule of Domiciles of Permitted Sublessees
EXHIBIT G - Return Conditions
EXHIBIT H - Return Conditions (EBT)
-iv-
<PAGE>
LEASE AGREEMENT
[NW ____ _]
This LEASE AGREEMENT [NW ____ _], 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 ____ _] and shall be equally applicable to both the singular and
the plural forms of the terms herein defined:
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For the purposes of this
definition, "control" (including "controlled by" and "under common
control with") shall mean the power, directly or indirectly, to
direct or cause the direction of the management and policies of such
person whether through the ownership of voting securities or by
contract or otherwise.
"Aircraft" means the Airframe to be delivered and leased
hereunder (or any airframe from time to time substituted for such
Airframe pursuant to Section 10(a) hereof) together with the four
Engines initially leased hereunder (or any engine substituted for
any of such Engines pursuant to the terms hereof), whether or not
any of such initial or substituted Engines may from time to time be
installed on such initial or substituted Airframe or may be
installed on any other airframe or on any other aircraft.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A
aircraft (except Engines or engines from time to time installed
thereon) specified in the initial Lease Supplement, which aircraft
shall be leased by Lessor to Lessee hereunder and under such Lease
Supplement, and any aircraft (except Engines or engines from time to
time installed thereon) which may from time to time be substituted
for such aircraft (except Engines or engines from time to time
installed thereon) pursuant to clause (ii) of the first paragraph of
Section 10(a); and (ii) any and all Parts (A) so long as the same
shall be incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed thereon), or
(B) so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 after removal from such
aircraft (except Engines or engines from time to time installed
thereon); provided, however, that at such time as an aircraft
(except Engines or engines from time to time installed thereon)
shall be deemed part of the property leased hereunder in
substitution for
<PAGE>
the Airframe pursuant to the applicable provisions hereof, the
replaced Airframe shall cease to be an Airframe hereunder.
"Applicable Rate" means as of any date the weighted average of
the interest rates borne by the Secured Certificates then
outstanding and, if no Secured Certificates shall be outstanding,
the Base Rate.
"Asset Value Agreement" means that certain Asset Value
Agreement (N[________]), dated [__________], between the
Manufacturer and Lessee, as such Asset Value Agreement may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"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.
"Class G Trustee" means the Pass Through Trustee under the
Pass Through Trust Agreement, dated as of June 3, 1999, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company of Connecticut, National Association,
as supplemented by Trust Supplement No. 1999-3G, dated as of
December 9, 1999 among Northwest Airlines, Inc., Northwest Airlines
Corporation and State Street Bank and Trust Company of Connecticut,
National Association.
"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 ______ __ ], dated as of the date hereof, executed by
the Manufacturer, as the same may be amended, modified or
supplemented from time to time in accordance with the applicable
provisions thereof.
"Contract Rights" means all of Lessee's right, title and
interest in and to Clause 7, paragraphs F.5. and F.7. of Part F, and
Part H and Part J of the Manufacturer Support Agreement as and to
the extent that the same relate to the warranties with respect to
the Aircraft, including, without limitation, (a) all claims for
damages in respect of the Aircraft arising as a result of any
default by the Manufacturer under Clause 7, paragraphs F.5. and F.7.
of Part F, Part H or Part J of the Manufacturer Support Agreement,
including, without limitation, all warranty, service life policy and
indemnity provisions in Clause 7, Part H and Part J of the
Manufacturer Support Agreement in respect of the Aircraft and all
claims thereunder and (b) any and all rights of Lessee to compel
performance of
-3-
<PAGE>
the terms of Clause 7, paragraphs F.5. and F.7. of Part F, Part H
and Part J of the Manufacturer Support Agreement in support thereof.
"Default" means any event which with the giving of notice or
the lapse of time or both would become an Event of Default.
"Delivery Date" means the date of the initial Lease Supplement
for the Aircraft, which date shall be the date the Aircraft is
leased by Lessor to Lessee and accepted by Lessee hereunder.
"Depreciation Period" means the period commencing on the
Delivery Date and ending on [________________], 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
[____________]).
"Engine" means (i) each of the four AlliedSignal LF507 type
engines listed by manufacturer's serial number in the initial Lease
Supplement, whether or not from time to time thereafter installed on
the Airframe or installed on any other airframe or on any other
aircraft; and (ii) any engine which may from time to time be
substituted, pursuant to the terms hereof, for 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
-4-
<PAGE>
settlement with respect to such property on the basis of a total
loss, or a constructive or compromised total loss; (iii) the theft
or disappearance of such property, or the confiscation,
condemnation, or seizure of, or requisition of title to, or use of,
such property (other than a requisition for use by the United States
Government or any other government of registry of the Aircraft, or
any agency or instrumentality of any thereof) which in the case of
any event referred to in this clause (iii) (other than a requisition
of title) shall have resulted in the loss of possession of such
property by Lessee (or any Sublessee) for a period in excess of 180
consecutive days or, if earlier, until the end of the Term or, in
the case of a requisition of title, the requisition of title shall
not have been reversed within 90 days from the date of such
requisition of title or, if earlier, at the end of the Term; (iv) as
a result of any law, rule, regulation, order or other action by the
Federal Aviation Administration or other governmental body of the
government of registry of the Aircraft having jurisdiction, the use
of such property in the normal course of the business of air
transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee (or any Sublessee), prior to the
expiration of such 180 day period, shall have undertaken and shall
be diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such property by Lessee (or
such Sublessee), but in any event if such use shall have been
prohibited for a period of two consecutive years, provided that no
Event of Loss shall be deemed to have occurred if such prohibition
has been applicable to the entire U.S. registered fleet of British
Aerospace Avro 146-RJ85A aircraft of Lessee (or any Sublessee) and
Lessee (or a Sublessee), prior to the expiration of such two-year
period, shall have conformed at least one such aircraft in its fleet
to the requirements of any such law, rule, regulation, order or
other action and commenced regular commercial use of the same in
such jurisdiction and shall be diligently carrying forward, in a
manner which does not discriminate against the Aircraft in so
conforming the Aircraft, all steps which are necessary or desirable
to permit the normal use of the Aircraft by Lessee (or such
Sublessee), provided, further that, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss if
such use shall have been prohibited for a period of three
consecutive years or such use shall be prohibited at the expiration
of the Term; (v) the requisition for use by the United States
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.
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"FAA Bill of Sale" means a bill of sale for the Aircraft on AC
Form 8050-2 or such other form as may be approved by the Federal
Aviation Administration on the Delivery Date for the Aircraft,
executed by Lessee in favor of the Owner Trustee and dated the
Delivery Date.
"Federal Aviation Act" means that portion of the United States
Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that
amends, supplements or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United
States Federal Aviation Administration and any agency or
instrumentality of the United States government succeeding to their
functions.
"Foreign Air Carrier" means any air carrier which is not a
U.S. Air Carrier and which performs maintenance, preventative
maintenance and inspections for the Aircraft, Airframe and/or any
Engine or engine to standards which are approved by, or which are
substantially equivalent to those required by, the Federal Aviation
Administration, the Civil Aviation Authority of the United Kingdom,
the Direction Generale de l'Aviation Civile of the French Republic,
the Luftfahrt Bundesamt of the Federal Republic of Germany, the
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 ____ _], dated as
of the date hereof, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"Guarantor" means Northwest Airlines Corporation, a Delaware
corporation.
"Half-Life Adjustment" has the meaning specified in Exhibit H
hereto.
"Indemnitee" means (i) the Owner Trustee, in its individual
capacity and as trustee under the Trust Agreement, (ii) the
Indenture Trustee, (iii) the Owner Participant, (iv) the Trust
Estate, (v) the Loan Participants and each other Certificate Holder,
(vi) the Subordination Agent, (vii) the Liquidity Provider, Morgan
Stanley (but only so long as it is the guarantor of the Liquidity
Provider) and the Policy 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)
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the successors and permitted assigns of the Persons described in
clauses (v), (vi), (vii) and (viii) inclusive.
"Indenture Trustee" means the Indenture Trustee under the
Trust Indenture, and any entity which may from time to time be
acting as indenture trustee under the Trust Indenture.
"Indenture Trustee Documents" means the Participation
Agreement and the Trust Indenture.
"Indenture Trustee's Liens" means any Lien which arises as a
result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust
Estate pursuant to the Trust Indenture, (B) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to
take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture
Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation Agreement
pursuant to said Section 7, or (D) claims against the Indenture
Trustee arising out of the transfer by the Indenture Trustee of all
or any portion of its interest in the Aircraft, the Trust Estate,
the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the
Lease or Article IV or V of the Trust Indenture, or a transfer of
the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture
Trustee has received all amounts due pursuant to the Trust
Indenture.
["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,
the Policy 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 December 9, 1999.
"Lease Agreement", "this Lease Agreement", "this Lease", "this
Agreement", "herein", "hereof", "hereunder", "hereby" or other like
words mean this Lease Agreement [NW ____ _] 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.
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"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.
"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).
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"Lessor's Cost" for the Aircraft means the amount denominated
as such in Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease, sublease, sub-sublease or security interest.
"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 Morgan Stanley Capital Services,
Inc., as Class G Liquidity Provider, Class B Liquidity Provider and
Class C Liquidity Provider under the Liquidity Facilities, whose
obligations have been guaranteed by Morgan Stanley, or any successor
thereto.
"Loan Participant" means each Purchaser and its respective
successors and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts
or claims against any Loan Participant not related to the
transactions contemplated by the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a)
hereof.
"Majority in Interest of Certificate Holders" has the meaning
set forth in the Trust Indenture.
"Make-Whole Amount" has the meaning assigned to that term in
the Trust Indenture.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales,
and its successors and assigns.
"Manufacturer Documents" means the Purchase Agreement, the
Residual Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means that certain
Manufacturer Support Agreement, dated February 5, 1997, between the
Manufacturer and Lessee, 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.
"Morgan Stanley" means Morgan Stanley Dean Witter & Co. in its
capacity as guarantor of the Liquidity Provider.
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["Mortgage" means that certain Mortgage and Security Agreement
(N[__]), dated as of [_______________] between Lessee and [_____].]
"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" means that certain 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 State Street Bank and Trust Company of
Connecticut, National Association, as 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 Residual Agreement the
Purchase Agreement Assignment and the Consent and Agreement.
"Overall Transaction" means all the transactions contemplated
by the Operative Documents.
"Owner Participant" means the corporation executing the
Participation Agreement as the Owner Participant, and thereafter any
Person to which such corporation transfers all of its right, title
and interest in and to the Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.01 of
the Trust Agreement and Section 8 of the Participation Agreement.
"Owner Participant Documents" means the Participation
Agreement, the Trust Agreement, the Residual 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.
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"Owner Trustee Documents" means the Participation Agreement,
the Trust Agreement, the Trust Supplement covering the Aircraft, the
Lease, the Lease Supplement covering the Aircraft, the Purchase
Agreement Assignment, the Residual Agreement, the Trust Indenture
and the Secured Certificates.
"Participants" means and includes the Loan Participants and
the Owner Participant.
"Participation Agreement" means that certain Participation
Agreement [NW ____ _], dated as of the date hereof, among Lessee,
the Guarantor, the Purchasers, the Indenture Trustee, the
Subordination Agent, the Owner Participant and Owner Trustee, as
such Participation Agreement may be amended or supplemented from
time to time pursuant to the applicable provisions thereof.
"Parties" means the Owner Trustee, the Indenture Trustee and
the Participants.
"Parts" means all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of
whatever nature (other than (a) complete Engines or engines, (b) any
items leased by Lessee from a third party (other than Lessor) and
(c) cargo containers) which may from time to time be incorporated or
installed in or attached to the Airframe or any Engine or so long as
title thereto shall remain vested in Lessor in accordance with
Section 8 after removal therefrom.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trustee in connection
with the Overall Transaction.
"Pass Through Trust" 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 of Connecticut, National Association, a national banking
association, 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.
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"Permitted Lien" means any Lien referred to in clauses (i)
through (viii) of Section 6 hereof.
"Permitted Sublessee" means any entity domiciled in a country
listed in Exhibit F hereto.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Policy Provider" means MBIA Insurance Corporation, a New
York-domiciled stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement dated as of December 9, 1999 among the Subordination
Agent, the Class G Trustee, Northwest and the Policy Provider, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Predecessor Lease" means the Lease Agreement (N XJ), dated as
of [____________, ____], between Lessee and Mesaba Aviation Inc.
"Purchase Agreement" means that certain Sale and Purchase
Agreement, dated as of February 5, 1997, between the Manufacturer
and Lessee relating to the purchase by Lessee of the Aircraft
(including the Manufacturer Support Agreement), as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"Purchase Agreement Assignment" means that certain Purchase
Agreement Assignment [NW ____ _], dated as of the date hereof,
between Lessee and Lessor, as the same may be amended, supplemented
or modified from time to time, with a form of Consent and Agreement
to be executed by the Manufacturer attached thereto.
"Purchasers" means the Pass Through Trustees under each Pass
Through Trust Agreement.
"Related Indemnitee Group" means, with respect to any
Indemnitee, any officer, director, servant, employee, agent or
Affiliate thereof.
["Remaining Installments" has the meaning set forth in Section
19(d) hereof.]
"Renewal Term" means any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 hereof.
"Rent" means Basic Rent and Supplemental Rent, collectively.
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"Residual Agreement" means that certain Agreement [(N_____)],
dated as of the date hereof, among the Manufacturer, the Owner
Participant and the Owner Trustee.
"Secured Certificates" has the meaning assigned to that term
in the Trust Indenture.
"Special Purchase Price" means the amount denominated as such
in Exhibit B to the Lease.
"Stipulated Loss Value" with respect to the Aircraft as of any
date through and including [_________________], 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.
["Successor Residual Agreement" means an agreement in
substantially the same form as the Residual Agreement, or with such
changes in such form as are reasonably approved by the Owner
Participant, among the Owner Participant, the Owner Trustee and the
Manufacturer or, in lieu of the Manufacturer, another Person whose
unsecured long-term debt is rated "A" or better by Standard & Poor's
Rating Group or equivalent rating of Moody's Investor Services,
Inc., which Successor Residual Agreement shall protect an Agreed
Residual Value (as such term is used in the Residual Agreement) at
the end of such Renewal Term in an amount that shall be calculated
to preserve the Owner Participant's originally assumed economic
return, taking into account the Basic Rent paid during the previous
Renewal Terms and to be paid during such Renewal Term (such
calculation to be made by the Owner Participant and subject to
verification pursuant to Exhibit E hereto), provided that such
calculation shall be performed by utilizing the highest federal
corporate income tax rate as in effect at such time.]
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"Supplemental Rent" means, without duplication, (a) all
amounts, liabilities, indemnities and obligations (other than Basic
Rent) which Lessee assumes or agrees to pay under any Lessee
Document to or on behalf of Lessor or any other Person, (b) amounts
payable by Lessor pursuant to clauses (b) and (c) 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), (iii) the Policy
Provider, and (iv) the Trust Indenture Estate.
"Tax Indemnity Agreement" means that certain Tax Indemnity
Agreement [NW ____ _], 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 Exhibit
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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, the Policy
Provider Agreement 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, (D)
Crowe & Dunlevy, P.C., special counsel in Oklahoma City,
Oklahoma, and (E) Vedder, Price, Kaufman & Kammholz and
Freshfields, special counsel for the Manufacturer;
(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 Policy 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;
(10) the reasonable fees, expenses and disbursements of
Shearman & Sterling, special counsel to the Liquidity
Provider;
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(11) the reasonable fees, expenses and disbursements of
Shaw Pittman, special counsel to the Policy Provider; and
(12) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation.
"Trust Agreement" means that certain Trust Agreement [NW ____
_], 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 ____ __], 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 December 2, 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 registry, for the performance by such employees of
similar functions within the United States of America or such other
jurisdiction of registry (it is understood that cabin attendants
need not be regular employees of Lessee (or any Sublessee)) and (ii)
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shall be maintained by Lessee (or any Sublessee) in accordance with
its normal maintenance practices.
SECTION 2. Acceptance and Lease. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 4(a) of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 4(b) of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. Term and Rent. (a) Basic Term. The Basic Term shall
commence on the Delivery Date and end on [__________________], 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 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
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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 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
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any, and interest on the Secured Certificates. It is agreed that no
installment of Basic Rent or payment of Termination Value or
Stipulated Loss Value shall be increased or adjusted by reason of
(i) any attachment or diversion of Rent on account of (A) Lessor
Liens or (B) any Loan Participant Lien on or against the Trust
Estate, any part thereof or the Operative Documents arising as a
result of claims against the Indenture Trustee not related to the
transactions contemplated by the Operative Documents, (ii) any
modification of the payment terms of the Secured Certificates made
without the prior written consent of Lessee or (iii) the
acceleration of any Secured Certificate or Secured Certificates due
to the occurrence of an "Event of Default" (as defined in the Trust
Indenture) which does not constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d)
shall be (A) in compliance with the tests of ss.ss. 4.02(5) and 4.07
of Rev. Proc. 75-28 and will not cause this Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning
of Section 467 of the Internal Revenue Code of 1986, as amended, as
each is then in effect and (B) subject to verification pursuant to
Exhibit E.
(e) Supplemental Rent. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting Stipulated Loss Value or Termination Value as the
same shall become due and owing and all other amounts of Supplemental Rent
within five days after demand or within such other relevant period as may be
provided in any Operative Document, and in the event of any failure on the part
of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or in any other Operative Document or by
law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee shall
pay as Supplemental Rent the Make-Whole Amount, if any, due pursuant to Section
2.10(b) or Section 2.11 of the Trust Indenture in connection with a prepayment
of the Secured Certificates upon redemption of such Secured Certificates in
accordance with Section 2.10(b) or Section 2.11 of the Trust Indenture. Lessee
also will pay to Lessor, or to whomsoever shall be entitled thereto, on demand,
as Supplemental Rent, to the extent permitted by applicable law, interest at the
Past Due Rate on any part of any installment of Basic Rent not paid when due for
any period for which the same shall be overdue and on any payment of
Supplemental Rent not paid when due for the period until the same shall be paid.
(f) Payments in General. All payments of Rent shall be made directly
by Lessee (whether or not any Sublease shall be in effect) by wire transfer of
immediately available funds prior to 10:30 A.M., New York time, on the date of
payment, to Lessor at its account at First Security Bank, National Association,
79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-0000-12, Account
No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW
[____ __] (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
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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 [___
__] (or such other account of the Indenture Trustee in the continental United
States as the Indenture Trustee shall direct in a notice to Lessee at least 10
Business Days prior to the date such payment of Rent is due). Lessor hereby
directs and Lessee agrees that all payments of Supplemental Rent owing to the
Indenture Trustee or to a Loan Participant or any other Certificate Holder
pursuant to the Participation Agreement shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date thereof at
the office of the Indenture Trustee or at such other office of such other
financial institution located in the continental United States as the party
entitled thereto may so direct at least 10 Business Days prior to the due date
thereof. All payments of Supplemental Rent payable to the Owner Participant, to
the extent that such amounts constitute Excluded Payments (as defined in the
Trust Indenture), shall be made in Dollars in immediately available funds prior
to 10:30 A.M., New York time, on the due date thereof, to the account of the
Owner Participant specified in Schedule I to the Participation Agreement (or to
such other account as may be specified in writing by the Owner Participant from
time to time).
Notwithstanding anything to the contrary contained herein, if any
date on which a payment of Rent becomes due and payable is not a Business Day,
then such payment shall not be made on such scheduled date but shall be made on
the next succeeding Business Day with the same force and effect as if made on
such scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
SECTION 4. Lessor's Representations and Warranties. LESSOR LEASES
AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS." NEITHER
LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE
DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO
HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that First Security Bank,
National Association, in its individual capacity, (i) represents and warrants
that on the Delivery Date, Lessor shall have received whatever title to the
Aircraft was conveyed to it by Lessee, (ii) represents and warrants that on the
Delivery Date the Aircraft shall be free of Lessor Liens (including for this
purpose Liens which would be Lessor Liens but for the proviso in the definition
of Lessor Liens) attributable to it, (iii) covenants that it will not, through
its own actions or inactions, interfere in Lessee's quiet enjoyment of the
Aircraft during the Term, (iv) agrees that it will 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
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Trust Estate and (v) represents and warrants that it is a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement, and agrees that if at any time it shall cease to be a Citizen of
the United States without making use of a voting trust, voting powers agreement
or similar arrangement it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants, the
Owner Participant or Lessee), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. None of
the provisions of this Lease shall be deemed to amend, modify or otherwise
affect the representations, warranties or other obligations (express or implied)
of the Manufacturer, any subcontractor or supplier of the Manufacturer with
respect to the Airframe, the Engines or any Parts, or to release the
Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor agrees that it will not directly
or indirectly create, incur, assume or suffer to exist any Lessor Lien
attributable to it on or with respect to the Airframe or any Engine.
SECTION 5. Return of the Aircraft. (a) Condition Upon Return. Unless
purchased by Lessee pursuant to Section 19 hereof, upon the termination of this
Lease at the end of the Basic Term or any Renewal Term or pursuant to Section
9(c) or 15, Lessee, at its own expense, will return the Airframe to Lessor at a
major airport in one of the forty-eight contiguous states of the United States
chosen by Lessee, and Lessee will give Lessor at least ten (10) days' prior
written notice of the place of such return; provided, however, that if Lessor
shall have made the request for storage pursuant to Section 5(d) hereof, Lessee
shall return the Airframe to Lessor at the site of the storage at the end of the
storage period. At the time of such return, Lessee will, unless otherwise
requested by Lessor at least ninety (90) days prior to the return hereunder,
cause the Aircraft, if it is not then so registered, to be registered under the
laws of the United States with the Federal Aviation Administration in the name
of the Lessor or its designee, provided that Lessee shall be relieved of its
obligations under this sentence if (i) such registration is prohibited by reason
of the failure of Lessor or its designee to be eligible on such date to own an
aircraft registered with the Federal Aviation Administration or (ii) such
registration is otherwise prohibited by applicable law; the Airframe will be
fully equipped with the Engines (or other AlliedSignal LF507 type engines or
four engines of the same or another manufacturer of not less than equivalent
utility, value and remaining useful life, and suitable for installation and use
on the Airframe without impairing the value, utility or remaining useful life of
the Aircraft; provided that all engines shall be of the same make and model)
duly installed thereon. Also, at the time of such return, such Airframe and
Engines or engines (i) shall be certified (or, if not then registered under the
Federal Aviation Act, shall be eligible for certification) as an airworthy
aircraft by the Federal Aviation Administration, (ii) shall be free and clear of
all Liens (other than Lessor Liens (including for this purpose Liens which would
be Lessor Liens but for the proviso in the definition of Lessor Liens),
Indenture Trustee's Liens and Loan Participant Liens) and rights of third
parties under pooling, interchange, overhaul, repair or other similar agreements
or arrangements, (iii) shall be in as good an operating condition as when
delivered to Lessee hereunder, ordinary wear and tear excepted, or, in the case
of any such engines owned by Lessee, shall have a value, utility and remaining
useful life at least equal to, and shall be in as good an operating condition as
required by the terms hereof with respect to, Engines constituting part of the
Aircraft but not then installed on the Airframe, and (iv) shall be in compliance
with the return conditions, if any, set forth in (a) unless the return
conditions set forth in Exhibit H are
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applicable, Exhibit G, or (b) Exhibit H, in the event such return occurs at the
expiration of this Lease on [__________]or at the expiration of any Renewal Term
but only if, in any such case, Lessor shall have irrevocably exercised its
option to sell the Aircraft at such expiration, and shall be simultaneously
exercising its rights, pursuant to the Residual Agreement [or a Successor
Residual Agreement]. If a Half-Life Adjustment is required to be calculated
pursuant to the terms of Exhibit H, if the Half-Life Adjustment is a positive
number Lessee shall pay Lessor the Half-Life Adjustment and if the Half-Life
Adjustment is a negative number Lessor shall pay Lessee the Half-Life
Adjustment.
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.
(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
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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, 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,
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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 British Aerospace Avro 146-RJ85A aircraft
powered by engines of the same type as those with which the Airframe shall be
equipped at the time of such grounding and registered in the United States have
been grounded by the FAA (although such certification need actually be
maintained only during such periods as the Aircraft is registered in the United
States), or the applicable laws of any other jurisdiction in which the Aircraft
may then be registered from time to time in accordance with Section 8(f) of the
Participation Agreement, and utilizing, except during any period that a Sublease
is in effect, the same manner and standard of maintenance, service, repair or
overhaul used by Lessee with respect to similar aircraft operated by Lessee in
similar circumstances and utilizing, during any period that a Sublease is in
effect, the same manner and standard of maintenance, service, repair or overhaul
used by the Sublessee with respect to similar aircraft operated by the Sublessee
in similar circumstances; provided, however, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Sublessee) in accordance with
maintenance standards required by, or substantially equivalent to those required
by, the FAA or the central civil aviation authority of Canada, France, Germany,
Japan, the Netherlands or the United Kingdom; (iii) maintain or cause to be
maintained all records, logs and other materials required to be maintained in
respect of the Aircraft by the FAA or the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered; and (iv)
promptly furnish or cause to be furnished to Lessor and the Owner Participant
such information as may be required to enable Lessor to file any reports
required to be filed by Lessor or the Owner Participant with any governmental
authority because of Lessor's ownership of the Aircraft. (II) Operation. Lessee
will not maintain, use, service, repair, overhaul or operate the Aircraft (or
permit any Sublessee to maintain, use, service, repair, overhaul or operate the
Aircraft) in violation of any law or any rule, regulation, order or certificate
of any government or governmental authority (domestic or foreign) having
jurisdiction, or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by any such authority, except to
the extent Lessee (or, if a Sublease is then in effect, any Sublessee) is
contesting in good faith the validity or application of any such law, rule,
regulation or order in any reasonable manner which does not materially adversely
affect Lessor or, so long as any Secured Certificates shall be outstanding, the
first priority Lien of the Trust Indenture and does not involve any material
risk of sale, forfeiture or loss of the Aircraft. Lessee will not operate the
Aircraft, or permit any Sublessee to operate the Aircraft, in any area excluded
from coverage by any insurance required by the terms of Section 11; provided,
however, that the failure of Lessee to comply with the provisions of this
sentence shall not give rise to an Event of Default hereunder where such failure
is attributable to causes beyond the reasonable control of Lessee (or any
Sublessee) or to 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
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Lessee, cooperate with Lessee to take all actions required to change the
registration of the Aircraft to another country.
(b) Possession and Subleases. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; provided that, so long as no Default of the type referred to in
Section 14(a), 14(b) or 14(e) or Event of Default shall have occurred and be
continuing at the time of such sublease, delivery, transfer or relinquishment of
possession or installation or such Wet Lease, and so long as the action to be
taken shall not deprive the Indenture Trustee of the perfected first priority
Lien of the Trust Indenture on the Airframe or (subject to the further proviso
(B) to clause (i) of this Section 7(b)) any Engine, and so long as Lessee (or
any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof,
Lessee (or, except with respect to clause (x) below, any Sublessee) may, without
the prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines then
installed thereon to normal interchange agreements or any Engine to
normal pooling or similar arrangements, in each case customary in
the airline industry and entered into by Lessee (or, if a Sublease
is then in effect, by Sublessee) in the ordinary course of its
business; provided that (A) no such agreement or arrangement
contemplates or requires the transfer of title to the Airframe, (B)
if Lessor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and Lessee shall (or shall
cause Sublessee to) comply with Section 10(b) hereof in respect
thereof, and (C) any interchange agreement to which the Airframe may
be subject shall be with a U.S. Air Carrier or a Foreign Air
Carrier;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any
organization (or for delivery thereto) for testing, service, repair,
maintenance or overhaul work on the Airframe or Engine or any part
of any thereof or for alterations or modifications in or additions
to such Airframe or Engine to the extent required or permitted by
the terms of Section 8(c) hereof;
(iii) install an Engine on an airframe which is owned by
Lessee (or any Sublessee) free and clear of all Liens, except: (A)
Permitted Liens and those which apply only to the engines (other
than Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts)
installed on such airframe (but not to the airframe as an entirety),
(B) 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
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shall not become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such airframe;
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, provided that (x) such
airframe is free and clear of all Liens, except: (A) the rights of
the parties to the lease or conditional sale or other security
agreement covering such airframe, or their assignees, and (B) Liens
of the type permitted by subparagraph (iii) of this paragraph (b)
and (y) such lease, conditional sale or other security agreement
effectively provides that such Engine shall not become subject to
the lien of such lease, conditional sale or other security
agreement, notwithstanding the installation thereof on such
airframe;
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by
Lessee (or any Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither subparagraph
(iii) nor subparagraph (iv) of this paragraph (b) is applicable,
provided that such installation shall be deemed an Event of Loss
with respect to such Engine and Lessee shall (or shall cause any
Sublessee to) comply with Section 10(b) hereof in respect thereof,
Lessor not intending hereby to waive any right or interest it may
have to or in such Engine under applicable law until compliance by
Lessee with such Section 10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject
any appliances, Parts or other equipment owned by Lessor and removed
from the Airframe or any Engine to any pooling arrangement referred
to in Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the
Airframe or any Engine to the Civil Reserve Air Fleet Program and
transfer (or permit any Sublessee to transfer) possession of the
Airframe or any Engine to the United States of America or any
instrumentality or agency thereof pursuant to the Civil Reserve Air
Fleet Program, so long as Lessee (or any Sublessee) shall (A)
promptly notify Lessor upon subjecting the Airframe or any Engine to
the Civil Reserve Air Fleet Program in any contract year and provide
Lessor with the name and address of the Contracting Office
Representative for the Air Mobility Command of the United States Air
Force to whom notice must be given pursuant to Section 15 hereof,
and (B) promptly notify Lessor upon 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
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entering into such Wet Lease, if practicable, but in any event
promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term,
transfer possession of the Airframe or any Engine to the United
States of America or any instrumentality or agency thereof pursuant
to a contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1)
a U.S. Air Carrier, (2) any Person approved in writing by Lessor,
which approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any such
case, the Sublessee under such sublease is not subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such sublease is entered into, (B)
in the event that the Sublessee under such sublease is a foreign air
carrier (other than a foreign air carrier principally based in
Taiwan), the United States maintains diplomatic relations with the
country in which such proposed Sublessee is principally based at the
time such sublease is entered into (or, in the case of a sublease to
a proposed Sublessee principally based in Taiwan, maintains
diplomatic relations at least as good as those in effect on the
Delivery Date) and (C) in the event that the Sublessee under such
sublease is a foreign air carrier, Lessor and the Indenture Trustee
shall have received an opinion of counsel to Lessee to the effect
that (I) the terms of the proposed sublease will be legal, valid,
binding and (subject to customary exceptions in foreign opinions
generally) enforceable against the proposed Sublessee in the country
in which the proposed Sublessee is principally based, (II) there
exist no possessory rights in favor of the Sublessee under such
Sublease under the laws of such Sublessee's country of domicile that
would, upon bankruptcy or insolvency of or other default by Lessee
and assuming at such time such Sublessee is not insolvent or
bankrupt, prevent the return or repossession of the Aircraft in
accordance with the terms of this Lease, (III) the laws of such
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely
convertible into Dollars for the loss of use of the Aircraft in the
event of the requisition by such government of such use, and (IV)
the laws of such Sublessee's country of domicile would give
recognition to Lessor's title to the Aircraft, to the registry of
the Aircraft in the name of the Lessor (or Lessee, as "lessee", or
the proposed Sublessee, as "sublessee", as appropriate) and to the
Lien of the 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
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hereof and to avoid such Sublease upon such repossession, and Lessee shall
remain primarily liable hereunder for the performance of all of the terms of
this Lease to the same extent as if such Sublease or transfer had not occurred,
and, except as otherwise provided herein, the terms of any such Sublease shall
not permit any Sublessee to take any action not permitted to be taken by Lessee
in this Lease with respect to the Aircraft. No pooling agreement, sublease or
other relinquishment of possession of the Airframe or any Engine or Wet Lease
shall in any way discharge or diminish any of Lessee's obligations to Lessor
hereunder or constitute a waiver of Lessor's rights or remedies hereunder. Any
sublease permitted under this Section 7(b) shall expressly prohibit any further
sub-sublease by the Sublessee. Lessor agrees, for the benefit of Lessee (and any
Sublessee) and for the benefit of any mortgagee or other holder of a security
interest in any engine (other than an Engine) owned by Lessee (or any
Sublessee), any lessor of any engine (other than an Engine) leased to Lessee (or
any Sublessee) and any conditional vendor of any engine (other than an Engine)
purchased by Lessee (or any Sublessee) subject to a conditional sale agreement
or any other security agreement, that no interest shall be created hereunder in
any engine so owned, leased or purchased and that none of Lessor, its successors
or assigns will acquire or claim, as against Lessee (or any Sublessee) or any
such mortgagee, lessor or conditional vendor or other holder of a security
interest or any successor or assignee of any thereof, any right, title or
interest in such engine as the result of such engine being installed on the
Airframe; provided, however, that such agreement of Lessor shall not be for the
benefit of any lessor or secured party of any airframe (other than the Airframe)
leased to Lessee (or any Sublessee) or purchased by Lessee (or any Sublessee)
subject to a conditional sale or other security agreement or for the benefit of
any mortgagee of or any other holder of a security interest in an airframe owned
by Lessee (or any Sublessee), unless such lessor, conditional vendor, other
secured party or mortgagee has expressly agreed (which agreement may be
contained in such lease, conditional sale or other security agreement or
mortgage) that neither it nor its successors or assigns will acquire, as against
Lessor, any right, title or interest in an Engine as a result of such Engine
being installed on such airframe. Lessee shall provide to the Owner Participant
and the Indenture Trustee (i) written notice of any Sublease hereunder (such
notice to be given not later than five days prior to entering into such
Sublease, if practicable, but in any event promptly after entering into any such
Sublease) and (ii) a copy of each Sublease which has a term of more than three
months.
(c) Insignia. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank, National Association, as Owner Trustee,
Lessor
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
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<PAGE>
Mortgaged To
State Street Bank and Trust Company,
as Indenture Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; provided
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee, at its own cost
and expense, will promptly replace or cause to be replaced all Parts which may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use for any reason whatsoever, except as otherwise provided in
paragraph (c) of this Section 8 or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, Lessee (or any Sublessee)
may, at its own cost and expense, remove in the ordinary course of maintenance,
service, repair, overhaul or testing, any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee (or any Sublessee), except as
otherwise provided in paragraph (c) of this Section 8, will, at its own cost and
expense, replace such Parts as promptly as practicable. All replacement Parts
shall be free and clear of all Liens (except for Permitted Liens and pooling
arrangements to the extent permitted by paragraph (b) of this Section 8 and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in as good operating condition as, and shall have a value
and utility at least equal to, the Parts replaced assuming such replaced Parts
were in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in paragraph (c) of this Section 8, all Parts at
any time removed from the Airframe or any Engine shall remain the property of
Lessor, no matter where located, until such time as such Parts shall be replaced
by Parts which have been incorporated or installed in or attached to the
Airframe or such Engine and which meet the requirements for replacement Parts
specified above. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided,
without further act (subject only to Permitted Liens and any pooling arrangement
to the extent permitted by paragraph (b) of this Section 8 and except in the
case of replacement property temporarily installed on an emergency basis), (i)
title to such replacement Part shall thereupon vest in Lessor, (ii) such
replacement Part shall become subject to this Lease and be deemed part of the
Airframe or such Engine for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to the Airframe or such
Engine, and (iii) title to the replaced Part shall thereupon vest in Lessee (or,
if a Sublease is then in effect, any Sublessee), free and clear of all rights of
Lessor, and shall no longer be deemed a Part hereunder.
(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
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<PAGE>
is then in effect, any Sublessee) is a party entered into in the ordinary course
of Lessee's (or any Sublessee's) business; provided that the Part replacing such
removed Part shall be incorporated or installed in or attached to such Airframe
or Engine in accordance with such paragraph (a) as promptly as practicable after
the removal of such removed Part. In addition, any replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with such paragraph (a) may be owned by any third party subject to
such a normal pooling arrangement, provided that Lessee (or any Sublessee), at
its expense, as promptly thereafter as practicable, either (i) causes title to
such replacement Part to vest in Lessor in accordance with such paragraph (a) by
Lessee (or any Sublessee) acquiring title thereto for the benefit of, and
transferring such title to, Lessor free and clear of all Liens except Permitted
Liens (other than pooling arrangements) or (ii) replaces such replacement Part
by incorporating or installing in or attaching to the Airframe or Engine a
further replacement Part owned by Lessee (or any Sublessee) free and clear of
all Liens except Permitted Liens (other than pooling arrangements) and by
causing title to such further replacement Part to vest in Lessor in accordance
with such paragraph (a).
(c) Alterations, Modifications and Additions. Lessee, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any other governmental authority
having jurisdiction; provided, however, that Lessee (or, if a Sublease is then
in effect, any Sublessee) may, in good faith, contest the validity or
application of any such law, rule, regulation or order in any reasonable manner
which does not adversely affect Lessor or, so long as any Secured Certificates
are outstanding, the Indenture Trustee. In addition, Lessee (or any Sublessee),
at its own expense, may from time to time add further parts or accessories and
make such alterations and modifications in and additions to the Airframe or any
Engine as Lessee (or any Sublessee) may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which Lessee (or
any Sublessee) has determined in its reasonable judgment to be obsolete or no
longer suitable or appropriate for use on the Airframe or such Engine (such
parts, "Obsolete Parts"); provided that no such alteration, modification or
addition shall 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 $250,000. 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
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alteration, modification or addition not occurred, assuming that such Airframe
or Engine was in the condition and repair required to be maintained by the terms
hereof. Upon the removal by Lessee (or Sublessee) of any Part as provided above,
title thereto shall, without further act, vest in Lessee (or any Sublessee, as
the case may be) and such Part shall no longer be deemed part of the Airframe or
Engine from which it was removed. Any Part not removed by Lessee (or any
Sublessee) as above provided prior to the return of the Airframe or Engine to
Lessor hereunder shall remain the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event. (1)
[Intentionally Omitted].
(2) Lessee shall have the right to elect to terminate this Lease on
any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(3) Lessee shall give to Lessor at least 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) 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
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the Owner Participant, five) Business Days prior to such Termination Date, in
the same manner and in the same condition and otherwise in accordance with all
the terms of this Lease as if delivery were made to Lessor pursuant to Section
5, and shall duly transfer to Lessor title to any engines not owned by Lessor
all in accordance with the terms of Section 5, (2) Lessor shall comply with the
terms of the Trust Indenture and shall, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), subject to
prior or concurrent payment by Lessee of all amounts due under clause (3) of
this sentence, sell all of Lessor's right, title and interest in and to the
Aircraft for cash in Dollars to such bidder(s), the total sales price realized
at such sale to be retained by Lessor, and (3) Lessee shall simultaneously pay
or cause to be paid to Lessor in funds of the type specified in Section 3(f)
hereof, an amount equal to the sum of (A) the excess, if any, of (i) the
Termination Value for the Aircraft, computed as of the Termination Date, over
(ii) the net cash proceeds from the sale of the Aircraft after deducting the
reasonable expenses 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
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Participant without due cause to make, or cause to be made, the payment referred
to in the immediately preceding sentence), if any, in connection with
preparation for such sale and Lessee may give one or more additional Termination
Notices in accordance with Sections 9(a)(2) and 9(a)(3), subject to the last
sentence of this Section 9(c). In the event of any such sale or such retention
of the Aircraft by Lessor and upon compliance by Lessee with the provisions of
this paragraph, the obligation of Lessee to pay Basic Rent or any other amounts
hereunder shall cease to accrue and this Lease shall terminate. Lessor may, but
shall be under no duty to, solicit bids, inquire into the efforts of Lessee to
obtain bids or otherwise take any action in connection with any such sale other
than to transfer (in accordance with the foregoing provisions) to the purchaser
named in the highest bid certified by Lessee to Lessor all of Lessor's right,
title and interest in the Aircraft, against receipt of the payments provided
herein. Lessee may revoke a Termination Notice given pursuant to Section 9(a)(3)
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
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
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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 no Event of Loss had occurred and that the Aircraft
had been maintained in accordance with this Lease; provided that any aircraft,
airframe or engine so substituted hereunder shall be of the same or improved
model as those initially leased hereunder and (B) prior to or at the time of any
such substitution, Lessee (or any Sublessee), at its own expense, will (1)
furnish Lessor with a full warranty bill of sale and a Federal Aviation
Administration bill of sale, in form and substance reasonably satisfactory to
Lessor, evidencing such transfer of title, (2) cause a Lease Supplement and a
Trust Supplement to be duly executed by Lessee and filed for recording pursuant
to the Federal Aviation Act, or the applicable laws, rules and regulations of
any other jurisdiction in which the Airframe may then be registered as permitted
by Section 8(f) of the Participation Agreement, (3) cause a financing statement
or statements with respect to such substituted property to be filed in such
place or
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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 (whether or not the Trust
Indenture is then in effect), 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 AlliedSignal LF507 type engine (or engine of the same or
another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; provided that all Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life (without regard to hours or cycles) at least equal to the Engine subject to
such Event of Loss assuming no Event of Loss had occurred and 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
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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 (whether or not the Trust Indenture is then
in effect), 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 (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
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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 (or instrumentality or agency) 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 (or
instrumentality or agency). If, in the event of any such requisition, Lessee
shall fail to return the Aircraft on or before the thirtieth day beyond the end
of the Term, such failure shall constitute an Event of Loss which shall be
deemed to have occurred on the last day of the Term and in such event Lessee
shall make the payment contemplated by Section 10(a)(i) in respect of such Event
of Loss; provided, however, that Lessor may notify Lessee in writing on or
before the twentieth day prior to the last day of the Term that, in the event
Lessee shall fail by reason of such requisition to return the Airframe and such
Engines or engines on or before the thirtieth day beyond the end of the Term,
such failure shall not be deemed an Event of Loss. Upon the giving of such
notice and such failure to return by the thirtieth day beyond the end of the
Term, Lessee shall be relieved of all of its obligations pursuant to the
provisions of Section 5 (including Exhibits G and H) but not under any other
Section, except that if any engine not owned by Lessor shall then be installed
on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
furnished, to Lessor a full warranty (as to title) bill of sale with respect to
each such engine, in form and substance reasonably satisfactory to Lessor
(together with an opinion of counsel to the effect that such full warranty bill
of sale has been duly authorized and delivered and is enforceable in accordance
with its terms and that such engines are free and clear of Liens other than
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Loan Participant Liens and
Indenture Trustee'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 (or instrumentality
or agency) 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
(or instrumentality or agency) for the use of such Airframe and Engines or
engines after the end of the Term shall be paid over to, or retained by, Lessor
unless Lessee shall have exercised its purchase option hereunder, in which case
such payments shall be made to Lessee.
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(e) Requisition for Use of an Engine by the United States Government
or the Government of Registry of the Aircraft. In the event of the requisition
for use of an Engine by the United States Government or any other government of
registry of the Aircraft or any agency or instrumentality of any thereof (other
than in the circumstances contemplated by subsection (d)), Lessee shall replace
such Engine hereunder by complying (or causing any Sublessee to comply) with the
terms of Section 10(b) to the same extent as if an Event of Loss had occurred
with respect thereto, and, upon compliance with Section 10(b) hereof, any
payments received by Lessor or Lessee from such government (or instrumentality
or agency) with respect to such requisition shall be paid over to, or retained
by, Lessee.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Event of Default, such amount shall be
paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. Insurance. (a) Public Liability and Property Damage
Insurance. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i) aircraft
public liability (including, without limitation, passenger legal liability) (and
including aircraft war risk and hijacking insurance, if and to the extent the
same is maintained by Lessee (or, if a Sublease is then in effect, if and to the
extent maintained by Sublessee) with respect to other aircraft owned or leased,
and operated by Lessee (or such Sublessee) on the same routes) insurance and
property damage insurance (exclusive of manufacturer's product liability
insurance) with respect to the Aircraft, in an amount not less than the greater
of (x) the amount of public liability and property damage insurance from time to
time applicable to aircraft owned or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) of the same type as the Aircraft and (y) such
amount per occurrence as may have been agreed to on the Delivery Date by the
Owner Participant [amount shall be at least $150,000,000] 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, the Policy Provider 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, the Policy Provider
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, the Policy Provider and the Owner
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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, the Policy Provider 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, the Policy Provider 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, the
Policy Provider 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, the Policy Provider 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, the Policy Provider 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, the Policy Provider
or the Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that (A) the amounts of coverage shall not be required
to exceed the amounts of public liability and property damage insurance from
time to time applicable to aircraft owned or operated by Lessee (or, if a
Sublease is then in effect, by Sublessee) of the same type as the Aircraft which
are on the ground and not in operation; and (B) the scope of the risks covered
and the type of insurance shall be the same as from time to time shall be
applicable to aircraft owned or operated by Lessee (or, if a Sublease is then in
effect, by Sublessee) of the same type which are on the ground and not in
operation.
(b) Insurance Against Loss or Damage to the Aircraft. (I) Except as
provided in clause (II) of this Section 11(b), Lessee shall maintain or cause to
be maintained in effect, at its or any Sublessee's expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance,
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if and to the extent the same is maintained by Lessee (or, if a Sublease is then
in effect, by Sublessee) with respect to other aircraft owned or operated by
Lessee (or such Sublessee) on the same routes, except that Lessee (or such
Sublessee) shall maintain war risk and governmental confiscation and
expropriation (other than by the government of registry of the Aircraft) and
hijacking insurance if the Aircraft is operated on routes where the custom is
for major international air carriers flying comparable routes to carry such
insurance) which is of the type as from time to time applicable to aircraft
owned or operated by Lessee (or, if a Sublease is then in effect, by Sublessee)
of the same type as the Aircraft; provided that such insurance shall at all
times while the Aircraft is subject to this Lease be for an amount (subject to
self-insurance to the extent permitted by Section 11(d)) not less than the
Stipulated Loss Value for the Aircraft. Any policies carried in accordance with
this paragraph (b) covering the Aircraft and any policies taken out in
substitution or replacement for any such policies (i) shall name Lessor, as
owner trustee, the Indenture Trustee and the Owner Participant (and, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) as additional insureds, as their respective interests may appear (but
without imposing on any such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent permitted in
Section 11(d), (iii) shall provide that (A) in the event of a loss involving
proceeds in excess of $3,500,000 (or, if the Aircraft is then under a Sublease,
in excess of $2,000,000), the proceeds in respect of such loss up to an amount
equal to the Stipulated Loss Value for the Aircraft shall be payable to Lessor
(or, so long as the Trust Indenture shall not have been discharged, the
Indenture Trustee) (except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case Lessee (or any
Sublessee) shall arrange for any payment of insurance proceeds in respect of
such loss to be held for the account of Lessor (or, so long as the Trust
Indenture shall not have been discharged, the Indenture Trustee) whether such
payment is made to Lessee (or any Sublessee) or any third party), it being
understood and agreed that in the case of any payment to Lessor (or the
Indenture Trustee) otherwise than in respect of an Event of Loss, Lessor (or the
Indenture Trustee) shall, upon receipt of evidence satisfactory to it that the
damage giving rise to such payment shall have been repaired or that such payment
shall then be required to pay for repairs then being made, pay the amount of
such payment to Lessee or its order, and (B) the entire amount of any loss
involving proceeds of $3,500,000 (or, if the Aircraft is then under a Sublease,
of $2,000,000) or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to Lessee or its order
unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by Lessor or the Indenture Trustee, (iv)
shall provide that if the insurers cancel such insurance for any reason
whatever, or such insurance lapses for non-payment of premium or if any material
change is made in the insurance which adversely affects the interest of Lessor,
the Indenture Trustee or the Owner Participant, such cancellation, lapse or
change shall not be effective as to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) for thirty (30) days (seven (7) days in the case
of hull war risk and allied perils coverage) after issuance to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity 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,
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Lessee in its capacity as sublessor under the Sublease) in such policies the
insurance shall not be invalidated by any action or inaction of Lessee (or, if a
Sublease is then in effect, any Sublessee) or any other Person and shall insure
the respective interests of Lessor, the Indenture Trustee and the Owner
Participant (and, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease), as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by Lessee (or, if a Sublease is then in effect, any Sublessee), (vi) shall be
primary without any right of contribution from any other insurance which is
carried by Lessor, the Owner Participant or the Indenture Trustee (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (vii) shall waive any right of subrogation of the insurers against
Lessor, the Owner Participant and the Indenture Trustee (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), and
(viii) shall waive any right of the insurers to set-off or counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of Lessor, the Indenture Trustee, the Owner Participant or Lessee (or any
Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee or
the Owner Participant. In the case of a loss with respect to an engine (other
than an Engine) installed on the Airframe, Lessor shall hold any payment to it
of any insurance proceeds in respect of such loss for the account of Lessee or
any other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance
payments received as the result of the occurrence of an Event of Loss will be
applied as follows:
(x) if such payments are received with respect to the Airframe
(or the Airframe and the Engines installed thereon), (i) unless such
property is replaced pursuant to the last paragraph of Section
10(a), so much of such payments remaining, after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement) for
reasonable costs and expenses, as shall not exceed the Stipulated
Loss Value required to be paid by Lessee pursuant to Section 10(a)
hereof shall be applied in reduction of Lessee's obligation to pay
such Stipulated Loss Value, if not already paid by Lessee, or, if
already paid by Lessee, shall be applied to reimburse Lessee for its
payment of such Stipulated Loss Value, and the balance, if any, of
such payments remaining thereafter will be paid over to, or retained
by, Lessee (or if directed by Lessee, any Sublessee); or (ii) if
such property is replaced pursuant to the last paragraph of Section
10(a), such payments shall be paid over to, or retained by, Lessee
(or if directed by Lessee, any Sublessee), provided that Lessee
shall have fully performed, or concurrently therewith will fully
perform, the terms of the last paragraph of Section 10(a) with
respect to the Event of Loss for which such payments are made; and
(y) if such payments are received with respect to an Engine
under the circumstances contemplated by Section 10(b) hereof, so
much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable
costs and expenses, shall be paid over to, or 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.
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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 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
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Indenture Trustee may at its sole option provide such insurance and, in such
event, Lessee shall, upon demand, reimburse Lessor or the Indenture Trustee, as
Supplemental Rent, for the cost thereof to Lessor or the Indenture Trustee, as
the case may be, without waiver of any other rights Lessor or the Indenture
Trustee may have; provided, however, that no exercise by Lessor or the Indenture
Trustee, as the case may be, of said option shall affect the provisions of this
Lease, including the provisions of Section 14(g) hereof.
(d) Self-Insurance. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) Additional Insurance by Lessor and Lessee. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, provided that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
(f) Indemnification by Government in Lieu of Insurance.
Notwithstanding any provisions of this Section 11 requiring insurance, Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft, indemnification from, or insurance provided by, the United States
Government or any agency or instrumentality thereof or, upon the written consent
of Lessor, other government of registry of the Aircraft or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance against such risk maintained by Lessee (or any Sublessee)
with respect to the Aircraft (including permitted self-insurance) shall be at
least equal to the amount of insurance against such risk otherwise required by
this Section 11.
(g) Application of Payments During Existence of an Event of
Default. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default shall have occurred and be continuing, but shall
be held by or paid over to Lessor as security for the obligations of Lessee (or
any Sublessee) under this Lease and, if Lessor declares this Lease to be in
default pursuant to Section 15 hereof, applied against Lessee's obligations
hereunder as and when due. At such time as there shall not be continuing any
such Event of Default, such amount shall be paid to Lessee (or such Sublessee)
to the extent not previously applied in accordance with the preceding sentence.
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SECTION 12. Inspection. At all reasonable times and upon at least 15
days' prior written notice to Lessee, Lessor, the Owner Participant or the
Indenture Trustee or their respective authorized representatives may (not more
than once every calendar year (unless an Event of Default has occurred and is
continuing when such inspection right shall not be so limited)) inspect the
Aircraft and inspect and make copies (at Lessor's, the Owner Participant's or
the Indenture Trustee's expense, as the case may be) of the books and records of
Lessee relating to the maintenance of the Aircraft; any such inspection of the
Aircraft shall be limited to a visual, walk-around inspection and shall not
include opening any panels, bays or the like without the express consent of
Lessee; provided that no exercise of such inspection right shall interfere with
the operation or maintenance of the Aircraft by, or the business of, Lessee (or
any Sublessee). Upon receipt by Lessee of a written request from the Owner
Participant specifying that the Owner Participant desires to have an authorized
representative observe the next scheduled major overhaul to be performed on the
Aircraft, Lessee shall cooperate with the Owner Participant to enable the Owner
Participant's authorized representative to observe the next scheduled major
overhaul to be performed on the Aircraft; provided that Lessee shall be required
to so cooperate only to the extent necessary to enable the Owner Participant's
authorized representative to observe (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
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the party entitled thereto (provided that any failure to pay any amount
owed by Lessee under the Tax Indemnity Agreement or any failure of Lessee
to pay to Lessor or the Owner Participant when due any Excluded Payments
(as defined in the Trust Indenture) shall not constitute an Event of
Default unless notice is given by the Owner Participant to Lessee and the
Indenture Trustee that such failure shall constitute an Event of Default);
or
(c) Lessee shall have failed to perform or observe (or caused to be
performed and observed), in any material respect, any covenant or
agreement (except the covenants set forth in the Tax Indemnity Agreement
and in clauses (i)(B) and (ii) of the first sentence of second paragraph
of Exhibit G) to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof from
Lessor or the Indenture Trustee; provided, however, that if Lessee shall
have undertaken to cure any such failure which arises under clause (ii) or
clause (iii) of the first sentence of Section 7(a), or 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
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property, or sequestering any substantial part of the property of Lessee
and any such order, judgment or decree or appointment or sequestration
shall be final or shall remain in force undismissed, unstayed or unvacated
for a period of ninety (90) days after the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law in
the United States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Lessee or for all or
substantially all of its property, or the making by Lessee of any
assignment for the benefit of creditors, or Lessee shall take any
corporate action to authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect to
the Aircraft (or cause to be carried and maintained) insurance required to
be maintained in accordance with the provisions of Section 11 hereof;
provided, however, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an Event of Loss so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. Remedies. Upon the occurrence of any Event of Default
and at any time thereafter so long as the same shall be continuing, Lessor may,
at its option, declare by written notice to Lessee this Lease Agreement to be in
default, 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
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Lessor may so demand to Lessor or its order in the manner and condition
required by, and otherwise in accordance with all the provisions of,
Section 5 as if such Airframe or Engine were being returned at the end of
the Term, or Lessor, at its option, may enter upon the premises where all
or any part of the Airframe or any Engine is located and take immediate
possession of and remove the same by summary proceedings or otherwise
(and/or, at Lessor's option, store the same at Lessee's premises until
disposal thereof by Lessor), all without liability accruing to Lessor for
or by reason of such entry or taking of possession or removing whether for
the restoration of damage to property caused by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or private sale,
as Lessor may determine, or otherwise dispose of, hold, use, operate,
lease to others or keep idle the Aircraft as Lessor, in its sole
discretion, may determine, all free and clear of any rights of Lessee,
except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or shall thereafter
at any time exercise, any of its rights under paragraph (a) or paragraph
(b) above with respect to the Airframe and/or any Engine, Lessor, by
written notice to Lessee specifying a payment date which shall be the
Lease Period Date not earlier than ten days from the date of such notice,
may demand that Lessee pay to Lessor, and Lessee shall pay Lessor, on the
payment date so specified, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the installments of Basic Rent for the
Aircraft due for Lease Periods commencing on or after the Delivery Date or
the Lease Period Date specified as the payment date in such notice), any
unpaid Basic Rent due on Lease Period Dates prior to the payment date so
specified and, if any Basic Rent is payable in arrears on such payment
date as indicated on Exhibit B, any Basic Rent payable on such payment
date (including, in each case, without limitation, any adjustments to
Basic Rent payable pursuant to Section 3(d)) plus whichever of the
following amounts Lessor, in its sole discretion, shall specify in such
notice (together with interest, if any, on such amount at the Past Due
Rate from such specified payment date until the date of actual payment of
such amount): (i) an amount equal to the excess, if any, of the Stipulated
Loss Value for the Aircraft, computed as of the Lease Period Date
specified as the payment date in such notice, over the aggregate fair
market rental value (computed as hereafter in this Section 15 provided) of
such Aircraft for the remainder of the Term, after discounting such
aggregate fair market rental value to present value as of the Lease Period
Date specified as the payment date in such notice at an annual rate equal
to the Base Rate plus 1%; or (ii) an amount equal to the excess, if any,
of the Stipulated Loss Value for such Aircraft, computed as of the Lease
Period Date specified as the payment date in such notice over the fair
market sales value of such Aircraft (computed as hereafter in this Section
provided) as of the Lease Period Date specified as the payment date in
such notice;
(d) in the event Lessor, pursuant to paragraph (b) above, shall have
sold the Airframe and/or any Engine, Lessor, in lieu of exercising its
rights under paragraph (c) above with respect to such Aircraft, may, if it
shall so elect, demand that Lessee pay Lessor, and Lessee shall pay to
Lessor, on the date of such sale, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the installments of Basic Rent
for the Aircraft due on or after such date), any unpaid Basic Rent with
respect to the Aircraft due
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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
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
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determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the determination
of such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon the parties hereto. If
no determination is more disparate from the average of all three determinations
than each of the other determinations, then such average shall be final and
binding upon the parties thereto. The cost of such appraisal or appointment
shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default shall
in any way be, or be construed to be, a waiver of any future or subsequent Event
of Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust Supplement, this Lease,
the Trust Agreement and the Trust Indenture as well) or amendment to be duly
filed and recorded, and maintained of record, in accordance with the applicable
laws of the government of registry of the Aircraft. In addition, Lessee will
promptly and duly execute and deliver to Lessor such further documents and take
such further action as Lessor or the Indenture Trustee may from time to time
reasonably request in order more effectively to carry out the intent and purpose
of this Lease and to establish and protect the rights and remedies created or
intended to be created in favor of Lessor and the Indenture Trustee hereunder,
including, without limitation, if requested by Lessor or the Indenture Trustee,
at 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
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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, the Treasurer or the Chief Financial Officer of Lessee to the
effect that the signer is familiar with or has reviewed the relevant terms of
this Lease and the signer does not have actual knowledge of the existence, as of
the date of such certificate, of any condition or event which constitutes a
Default or an Event of Default. Lessee agrees that if the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, Treasurer or an
Assistant Treasurer of Lessee has actual knowledge of the existence of a
Default, then Lessee shall promptly give to Lessor, the Owner Participant and
the Indenture Trustee notice thereof and such other information relating thereto
as Lessor, the Owner Participant or the Indenture Trustee may reasonably
request. Lessee agrees that if an officer of Lessee has knowledge of the
existence of an Event of Default, Lessee shall promptly give to Lessor and the
Indenture Trustee notice thereof and such other information relating thereto as
Lessor or the Indenture Trustee may reasonably request. Lessee will deliver to
Lessor, the Owner Participant and the Indenture Trustee (i) within sixty (60)
days after the end of each of the first three quarterly periods of each fiscal
year of the Guarantor, the publicly filed Form 10Q report of the Guarantor; and
(ii) within one hundred twenty (120) days after the close of such fiscal year,
the publicly filed annual report and Form 10K report of the Guarantor.
SECTION 17. Notices. All notices required under the terms and
provisions hereof shall be by telecopier or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. mail at 5101 Northwest Drive
(A4010), St. Paul, Minnesota 55111-3034, and for overnight courier
at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention:
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,
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the Indenture Trustee or the Owner Participant shall have furnished
by notice to Lessor and to Lessee, and, until an address is so
furnished, addressed to such Loan Participant, the Indenture Trustee
or the Owner Participant at its address or telecopy number set forth
in Schedule I to the Participation Agreement.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(f). Lessee's
obligation to pay all Rent payable hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any set-off, counterclaim, recoupment, defense or other right which Lessee
may have against Lessor, in its individual capacity or as Owner Trustee under
the Trust Agreement, the Indenture Trustee (in its individual capacity or as
Indenture Trustee), any Loan Participant, the Owner Participant, or anyone else
for any reason whatsoever (whether in connection with the transactions
contemplated hereby or any other transactions), including, without limitation,
any breach by Lessor or the Owner Participant of their respective warranties,
agreements or covenants contained in any of the Operative Documents, (ii) any
defect in the title, registration, airworthiness, condition, design, operation,
or fitness for use of, or any damage to or loss or destruction of, the Aircraft,
or any interruption or cessation in or prohibition of the use or possession
thereof by Lessee (or any Sublessee) for any reason whatsoever, including,
without limitation, any such interruption, cessation or prohibition resulting
from the act of any government authority, (iii) any insolvency, bankruptcy,
reorganization or similar case or proceedings by or against Lessee (or any
Sublessee) or any other person, or (iv) any other circumstance, happening, or
event whatsoever, whether or not unforeseen or similar to any of the foregoing.
If for any reason whatsoever this Lease shall be terminated in whole or in part
by operation of law or otherwise except as specifically provided herein, Lessee
nonetheless agrees without limitation of the other rights or remedies of Lessor
hereunder to pay to Lessor an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part. Lessee hereby waives, to
the extent permitted by applicable law, any and all rights which it may now have
or which at any time hereafter may be conferred upon it, by statute or
otherwise, to terminate, cancel, quit or surrender this Lease except in
accordance with the express terms hereof.
SECTION 19. Renewal Options; Purchase Options; Valuation. (a)
Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right to renew
this Lease for a one year renewal term which shall commence only upon the
expiration of the Basic Term (the "first Fixed Renewal Term"), 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, of 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
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<PAGE>
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 a Successor Residual
Agreement applicable to the expiration date of the proposed Renewal Term shall
have been delivered to Lessor and the Owner Participant at least ninety (90)
days prior to the commencement of such Renewal Term and that all necessary
governmental authorizations and approvals shall have been received and that
Basic Rent for the Renewal Term has already been determined as above provided
and a Lease Supplement evidencing such renewal has been executed and filed for
recordation with the Federal Aviation Administration, this Lease shall continue
in full force and effect during the Renewal Term, except that (x) Lessee shall
pay Lessor Basic Rent for the Aircraft during the Renewal Term in an amount
equal to the "fair market rental value" thereof determined in accordance with
Section 19(c), each semi-annual installment of Basic Rent not to exceed in the
case of a Fixed Renewal Term [66.66]% of the average Basic Rent during the Basic
Term (such average being determined as the total of all payments of Basic Rent
during the Basic Term added together and divided by the number of payments of
Basic Rent during the Basic Term), which Basic Rent shall be payable in
semi-annual installments in arrears, each such installment being due and payable
on each Lease Period Date occurring during the Renewal Term, commencing with the
Lease Period Date immediately following the commencement of the Renewal Term,
and (y) the Stipulated Loss Values applicable during the Renewal Term shall be
determined separately for each Renewal Term by the Owner Participant in good
faith to reflect Stipulated Loss Values determined in accordance with the
following sentence. Stipulated Loss Values during a Renewal Term shall on the
date on which such Renewal Term begins be equal to the "agreed residual value"
(as in effect under the Residual Agreement or Successor Residual Agreement, as
the case may be) for such date and shall be calculated on a monthly basis based
on the same methodology utilized to calculate Stipulated Loss Values during the
Basic Term on a continuing basis and assuming that the last such Stipulated Loss
Value for such Renewal Term is the "agreed residual value" (as in effect under a
Successor Residual Agreement) for the last day of such Renewal Term.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
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<PAGE>
(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 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 Renewal Term. Upon
receipt of such notice Lessor and Lessee shall confer in good faith with a view
to reaching agreement on the "fair market rental value" or "fair market sales
value" of the Aircraft. If the parties have not so agreed by two hundred seventy
(270) days prior to the end of the Basic Term or the Renewal Term in question,
then the question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee shall have received written notice from the other party of a demand that
such an appraisal be made, which notice shall specify the appraiser chosen by
the party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the City
of New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business
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<PAGE>
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 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].
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<PAGE>
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein set
forth. To the extent, if any, that this Lease, the Lease Supplements and any
amendments to this Lease constitute chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the assignment
of all Lessor's right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. Subject to Section 3(f) hereof, Lessee agrees to
pay directly to the Indenture Trustee (or, after receipt by Lessee of notice
from the Indenture Trustee of the discharge of the Trust Indenture, to Lessor),
all amounts of Rent due or to become due hereunder and assigned to the Indenture
Trustee and Lessee agrees that the Indenture Trustee's right to such payments
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, the circumstances set forth in
clauses (i) through (iv) of Section 18 hereof. Notwithstanding the foregoing
assignment of this Lease, the obligations of Lessor to Lessee to perform the
terms and conditions of this Lease shall remain in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an Event of
Default hereunder) Lessor may itself make such payment or perform or comply with
such agreement but shall not be obligated hereunder to do so, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. Investment of Security Funds; Liability of Lessor
Limited. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Moody's Investors Service,
Inc. ("Moody's") or AA or better by Standard & Poor's
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<PAGE>
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. Any of the investments permitted hereunder may be made through or with,
as applicable, the entity acting as Indenture Trustee or its Affiliates. There
shall be promptly remitted to Lessee or its order (but no more frequently than
monthly) any gain (including interest received) realized as a result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless an Event of Default shall have occurred
and be continuing. Lessee shall be responsible for any net loss realized as a
result of any such investment and shall reimburse Lessor (or the Indenture
Trustee, as the case may be) therefor on demand.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. Service of Process. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
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<PAGE>
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's (or any Sublessee's) continued possession, use and
operation of, and quiet enjoyment of, the Aircraft or Lessee's rights, benefits
and obligations pursuant to the Overall Transaction during the Term of this
Lease, and this Lease shall not be terminated except as expressly provided
herein.
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<PAGE>
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee,
Lessor
By: ____________________________________
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 ____ _]
LEASE SUPPLEMENT No.
[NW ____ _]
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 ____ _], 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 ____ _], dated as of [___________], relating to one British
Aerospace Avro 146-RJ85A aircraft (herein called the "Lease," and the defined
terms therein being hereinafter used with the same meanings). The Lease provides
for the execution and delivery from time to time of Lease Supplements for the
purpose of leasing the Airframe and Engines under the Lease as and when
delivered by Lessor to Lessee in accordance with the terms thereof.
(1) The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the Federal Aviation Administration as one
document.
(2) The Lease Agreement relates to the Airframe and Engines
described below, and a counterpart of the Lease Agreement, attached and made a
part of Lease Supplement No. 1 dated [______________] 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 British Aerospace Avro 146-RJ85A aircraft (the "Aircraft"), which
Aircraft as of the date hereof consists of the following components:
(i) Airframe: FAA Registration No. ______; manufacturer's
serial no. _____; and
- ----------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
EXHIBIT A - PAGE 1
<PAGE>
(ii) Engines: four (4) AlliedSignal LF507 type engines
bearing, respectively, manufacturer's serial nos. __________,
__________, ______ and ______ (each of which engines has 750 or more
rated takeoff horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on [_______________].
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent for
the Aircraft throughout the Term therefor in accordance with Section 3 of the
Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against British
Aerospace (Operations) Limited, or any subcontractor or supplier of British
Aerospace (Operations) Limited, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
<PAGE>
In Witness Whereof, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its Individual Capacity,
but solely as Owner Trustee,
Lessor
By: ____________________________________
Name:
Title:
NORTHWEST AIRLINES, INC.,
Lessee
By: ____________________________________
Name:
Title:
(3) Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of [______________]
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: ____________________________________
Name:
Title:
- ----------
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
<PAGE>
EXHIBIT B
to
Lease Agreement
[NW ____ _]
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 1
<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)
- ----------------- ------------------- ------------------- ---------------
EXHIBIT B - PAGE 2
<PAGE>
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft: $[___________]
Special Purchase Price: [_____________]% of Lessor's Cost on [______________].
[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]
EXHIBIT B - PAGE 3
<PAGE>
EXHIBIT C
to
Lease Agreement
[NW ____ _]
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 1
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 2
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 3
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 4
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 5
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 6
<PAGE>
STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss
Loss Value Date Value Percentage
--------------- ----------------
EXHIBIT C - PAGE 7
<PAGE>
EXHIBIT D
to
Lease Agreement
[NW ____ _]
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 Date Value Percentage
---------------- ----------------
EXHIBIT D - PAGE 1
<PAGE>
EXHIBIT E
to
Lease Agreement
[NW ____ _]
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.
EXHIBIT E - PAGE 1
<PAGE>
EXHIBIT F
to
Lease Agreement
[NW ____ _]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland 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.
EXHIBIT F - PAGE 1
<PAGE>
EXHIBIT G
to
Lease Agreement
[NW ____ _]
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is
intentionally deleted from the FAA filing counterpart as the parties hereto deem
it to contain confidential information.
Unless purchased by Lessee pursuant to Section 19 of the Lease, at
the time of return of the Airframe upon the expiration of the Lease at the end
of the Basic Term or any Renewal Term (unless at the expiration of the Basic
Term or such Renewal Term, as the case may be, Lessor shall have irrevocably
exercised its option to sell the Aircraft, and shall be simultaneously
exercising its rights, pursuant to the Residual Agreement or a Successor
Residual Agreement) or upon the termination of the Lease pursuant to Section
9(c) or 15 of the Lease: (i) in the event that Lessee (or any Sublessee then in
possession of the Aircraft) shall not then be using a continuous maintenance
program with respect to the Airframe, Lessee agrees that during the period of
operation of the Aircraft immediately prior to such return (A) Lessee or such
Sublessee, as the case may be, shall have been using a block overhaul program
with respect to the Airframe which shall have been approved by all necessary
governmental approvals of the country under the laws of which the Aircraft shall
then have been registered and (B) the Airframe shall have remaining until the
next scheduled block overhaul at least 25% of the allowable hours between block
overhauls permitted under the block overhaul program then used by Lessee or such
Sublessee, (ii) in the event that Lessee (or any Sublessee then in possession of
the Aircraft) during the period of operation of the Aircraft immediately prior
to such return shall not have been using an on-condition maintenance program
with respect to the Engines or engines, Lessee agrees that the average number of
hours or cycles of operation (whichever shall be applicable under the
maintenance program then in use with respect to such Engines or engines) on such
Engines or engines remaining until the next scheduled engine refurbishment shall
be at least 25% of the hours or cycles (whichever shall be applicable) between
engine refurbishment allowed under the maintenance program then in use with
respect to such Engines or engines which shall have been approved by all
necessary governmental approvals of the country under the laws of which the
Aircraft shall have then been registered, (iii) 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 British Aerospace Avro 146-RJ85A aircraft in its fleet affected by such
directive.
EXHIBIT G - PAGE 1
<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
<PAGE>
EXHIBIT H
to
Lease Agreement
[NW ____ __]
RETURN CONDITIONS (EBT)
The portion of this Exhibit appearing below this text is
intentionally deleted from the FAA filing counterpart as the parties hereto deem
it to contain confidential information.
Unless purchased by Lessee pursuant to Section 19 of the Lease, the
following return conditions apply to a return of the Airframe upon the
expiration of the Lease at the end of the Basic Term or any Renewal Term but
only if, in any such case, Lessor shall have irrevocably exercised its option to
sell the Aircraft at such expiration, and shall be simultaneously exercising its
rights, pursuant to the Residual Agreement or a Successor Residual Agreement:
1. Definitions. Capitalized terms used in this Exhibit H without
other definition have the respective meanings ascribed thereto in the Lease
Agreement [NW ____ __], dated as of [________], as amended from time to time
(the "Lease"), between First Security Bank, National Association, not in its
individual capacity but solely as Owner Trustee, and Northwest Airlines, Inc. In
addition, the following capitalized terms shall have the respective meanings set
forth below:
"Aircraft Documentation" means all logs, manuals, certificates, data
and inspection, modification, repair, and overhaul records which are required to
be maintained with respect to the Aircraft under the Maintenance Program or by
the Relevant Aviation Authority.
"APU" means the Sundstrand Model APIC 10000 auxiliary power unit
originally installed on the Aircraft on the Delivery Date or any auxiliary power
unit of a comparable or improved model substituted for such originally installed
auxiliary power unit.
"BFE" means the equipment described in Annex II to the Residual
Agreement, or any equivalent replacement equipment that may from time to time be
substituted for any such BFE.
"Country of Registration" means the country in which the Aircraft is
registered on the date the Aircraft is returned under the Lease at the
expiration of the Basic Term or at the expiration of a Renewal Term, as
applicable, which shall be one of the United States, the United Kingdom, Japan,
Canada or the Netherlands.
"HSI" means with respect to an Engine or the APU a hot section
inspection of such Engine or APU in accordance with the Maintenance Program.
<PAGE>
"Maintenance Planning Document" means the Manufacturer's maintenance
planning document for Avro 146-RJ85 aircraft as in effect on the date the
Aircraft is returned under the Lease.
"Maintenance Program" means the maintenance program for the Aircraft
required to be maintained pursuant to Section 7(a)(I) of the Lease, as in effect
on the date the Aircraft is returned under the Lease at the expiration of the
Basic Term or at the expiration of a Renewal Term.
"Manufacturer" means, with respect to the Airframe, British
Aerospace (Operations) Limited, and its successors and assigns, and, with
respect to the Engines, AlliedSignal Engines, a division of AlliedSignal.
"MRB" means the Maintenance Review Board for British Aerospace Avro
146-RJ85 aircraft.
"Operator" means the operator of the Aircraft immediately prior to
the date the Aircraft is returned under the Lease.
"Relevant Aviation Authority" means the civil aviation authority of
the Country of Registration.
"Structural Repair Manual" means the Manufacturer's structural
repair manual for Avro 146-RJ85 aircraft as in effect on the date the Aircraft
is returned under the Lease.
2. Aircraft Return Conditions at the expiration of the Basic Term
or a Renewal Term in the event that Lessor shall have
irrevocably exercised its option to sell the Aircraft at such
expiration, and shall be simultaneously exercising its rights,
pursuant to the Residual Agreement or a Successor Residual
Agreement.
(a) General Conditions. On the date the Aircraft is returned under
the Lease, the Aircraft shall be in compliance with the conditions set forth
below, ordinary wear and tear excepted:
(i) The Aircraft shall be registered in a Country of
Registration.
(ii) The Aircraft shall be airworthy, possess a
currently valid standard certificate of airworthiness, transport
category, issued by the Relevant Aviation Authority and be eligible
for commercial passenger transportation in the Country of
Registration.
(iii) The Aircraft shall be fully equipped with four
Engines and the APU.
(iv) All maintenance required by the Maintenance Program
to have been performed on or prior to the date the Aircraft is
returned under the
EXHIBIT H - PAGE 2
<PAGE>
Lease shall have been accomplished. The Airframe, each Engine, the
APU and the landing gear shall be serviceable and free from all
known defects and discrepancies outside the limits of the
Maintenance Program other than fair wear and tear not affecting
airworthiness. All major dents and abrasions, scab patches and loose
or pulled rivets shall be within the prescribed limits referred to
in the Structural Repair Manual or the Maintenance Program.
(v) All mandatory modifications to the Aircraft required
to be made on or prior to the date the Aircraft is returned under
the Lease by the Relevant Aviation Authority shall have been made,
provided that if an inspection program is permitted as an
alternative to a mandatory modification and the Aircraft is in
compliance with such inspection program, then such mandatory
modification shall not be required. All Manufacturer's Mandatory
Service Bulletins and Airworthiness Directives issued by the
Relevant Aviation Authority and, in either case, applicable to the
Aircraft, which are in force on the date the Aircraft is returned
under the Lease and which require termination within six months of
the date the Aircraft is returned under the Lease shall have been
accomplished on the Aircraft.
(vi) Brakes and tires shall be serviceable and in good
condition. The landing gear and wheel wells shall be clean, free of
leaks and in good repair as required to be serviceable in accordance
with the Maintenance Program. The fuel system shall be in compliance
with the Maintenance Program. Except for BFE, the cockpit, all
calendar lifed emergency equipment, toilets and galley areas and the
interior shall be in serviceable condition and shall meet applicable
fire resistance regulations issued by the Relevant Aviation
Authority in effect on the date the Aircraft is returned under the
Lease.
(vii) The Aircraft shall be clean by the Operator's
normal operating conditions. The Aircraft shall have all of the
Operator's exterior logos removed.
(b) Life Remaining. On the date the Aircraft is returned under the
Lease at the expiration of the Basic Term or a Renewal Term in the event Lessor
shall have irrevocably exercised its option to sell the Aircraft at such
expiration, and shall be simultaneously exercising its rights, pursuant to the
Residual Agreement or a Successor Residual Agreement, the Aircraft shall comply
with the following additional requirements:
(i) The Engines shall have on average a minimum of
one-half HSI period remaining in accordance with MRB limits current
on the date the Aircraft is returned under the Lease, provided that
in the event the Engines do not have an average of at least one-half
HSI period remaining in accordance with such MRB limits, an Engine
HSI Half-Life Adjustment under clause (c)(i) shall be made in lieu
of meeting such condition, provided, however, that in no event shall
any Engine have less than one-quarter HSI period remaining in
accordance with such MRB limits or have any defects or discrepancies
outside of the limits set forth in the Maintenance Planning
Document.
EXHIBIT H - PAGE 3
<PAGE>
(ii) Engine life limited parts shall have on average at
least half-life remaining to their respective scheduled replacement
in accordance with the Engine Manufacturer's published life limited
part replacement schedule current on the date the Aircraft is
returned under the Lease, provided that in the event the Engine life
limited parts do not have an average of at least half-life remaining
to their respective scheduled replacement, an Engine life limited
part Half-Life Adjustment under clause (c)(ii) shall be made in lieu
of meeting such condition, provided, however, that in no event shall
any Engine life limited part have less than one-quarter life
remaining to its scheduled replacement in accordance with the Engine
Manufacturer's published life limited part replacement schedule
current on the date the Aircraft is returned under the Lease.
(iii) The APU shall have remaining at least half of any
applicable HSI period remaining on the date the Aircraft is returned
under the Lease in accordance with the then current MRB standards,
provided that in the event the APU does not have at least half of
any applicable HSI period remaining, an APU Half-Life Adjustment
under clause (c)(iii) shall be made in lieu of meeting such
condition.
(iv) The landing gear shall have at least half-life
remaining to the next landing gear overhaul according to MRB
requirements current on the date the Aircraft is returned under the
Lease, provided that in the event the landing gear does not have at
least half-life remaining to such next landing gear overhaul, a
landing gear Half-Life Adjustment under clause (c)(iv) shall be made
in lieu of meeting such condition.
(v) The Aircraft's next sequential block C check (which
C check shall include full fault rectification) shall have been
completed immediately prior to the date the Aircraft is returned
under the Lease, provided that in the event the Aircraft has at
least 25% of the time remaining until its next scheduled sequential
block C check, a C check Half-Life Adjustment under clause (c)(v)
shall be made in lieu of such block C check. If the Maintenance
Program permits a block C check to be performed in phases, all
phases of such block C check shall have been performed in order to
align such block C check with the BAe/Avro "block type" Maintenance
Planning Document schedule.
(vi) The Airframe shall have a minimum of half-time
remaining until its next scheduled major structural inspections,
provided that in the event the Aircraft has at least 25% of the time
remaining until its next scheduled major structural inspection, but
less than half-time, a structural inspection Half-Life Adjustment
under the first sentence of clause (c)(vi) shall be made in lieu of
meeting such condition and in the event the Aircraft has more than
75% of the time remaining until its next scheduled major structural
inspection, a structural inspection Half-Life Adjustment under the
second sentence of clause (c)(vi) shall be made.
For purposes of determining whether the foregoing requirements have been
satisfied:
EXHIBIT H - PAGE 4
<PAGE>
(x) to the extent the Maintenance Program provides that
a part or component (for purposes of this clause (x) and clause (y)
below, the term "part or component" may include the entire Airframe,
an entire Engine, the APU or the landing gear) is maintained on a
continuous or on condition maintenance program with no fixed
overhaul or major repair required in accordance with the
Manufacturer's requirements, such part or component shall be deemed
to have half-life or half-time (as the case may be) remaining; and
(y) in the event that a part or component is subject to
a power by the hour program, or the equivalent, on terms and
conditions acceptable to Lessor, and provided that such program is
fully assignable with no material buy-in fees and for a sufficient
term remaining to provide the equivalent of half-life remaining on
the affected part or component, such part or component shall be
deemed to have half-life remaining.
(c) Half-Life Adjustment. The Half-Life Adjustment shall equal the
sum of the Engine HSI Half-Life Adjustment, the Engine life limited parts
Half-Life Adjustment, the APU Half-Life Adjustment, the landing gear Half-Life
Adjustment, the C check Half-Life Adjustment and the structural inspection
Half-Life Adjustment (which shall be added if calculated pursuant to the first
sentence of clause (vi) below and subtracted if calculated pursuant to the
second sentence of clause (vi) below), each as calculated as set forth below:
(i) In the event that the Engines do not have an average
of at least a half HSI period remaining in accordance with MRB
limits current on the date the Aircraft is returned under the Lease,
the Engine HSI Half-Life Adjustment shall be an amount computed by
multiplying (A) four by (B) the cost (as evidenced by industry
norms) of performing an HSI for engines of the same type as the
Engines by (C) a fraction, of which (x) the numerator shall be the
excess of 50% of the HSI period in accordance with such MRB limits
over the actual average amount of the HSI period remaining and (y)
the denominator shall be the HSI period.
(ii) In the event the Engine life limited parts do not
have an average of at least half-life remaining to their respective
scheduled replacement, the Engine life limited parts Half-Life
Adjustment shall be an amount computed by multiplying (A) four by
(B) the average cost (as evidenced by industry norms) of scheduled
replacements of life limited parts for engines of the same type as
the Engines by (C) a fraction, of which (x) the numerator shall be
the excess of 50% of the life remaining to scheduled replacement
over the actual average remaining life to scheduled replacement and
(y) the denominator shall be the life between scheduled replacements
of Engine life limited parts.
(iii) In the event the APU does not have at least half
of any applicable HSI period remaining, the APU Half-Life Adjustment
shall be an amount computed by multiplying (A) the average cost (as
evidenced by industry norms) of an HSI for auxiliary power units of
the same type as the APU by (B) a fraction, of which (x) the
numerator shall be the excess of 50% of the HSI period
EXHIBIT H - PAGE 5
<PAGE>
over the actual amount of the HSI period remaining and (y) the
denominator shall be the entire HSI period.
(iv) In the event the landing gear does not have at
least half-life remaining to such next scheduled landing gear
overhaul, the landing gear Half-Life Adjustment shall be an amount
computed by multiplying (A) the average cost (as evidenced by
industry norms) of a landing gear overhaul for landing gear of the
same type as the landing gear installed on the Aircraft by (B) a
fraction, of which (x) the numerator shall be the excess of 50% of
the period between landing gear overhauls over the actual period
remaining to the next scheduled landing gear overhaul and (y) the
denominator shall be the period between scheduled landing gear
overhauls.
(v) In the event the Aircraft's next sequential block C
check (which C check shall include the full fault rectification)
shall not have been completed immediately prior to the date the
Aircraft is returned under the Lease, the C check Half-Life
Adjustment shall be an amount computed by multiplying (A) the
average cost (as evidenced by industry norms) of a block C check
(including full fault rectification) for aircraft of the same type
as the Aircraft by (B) a fraction, of which (x) the numerator shall
be the excess of period between sequential block C checks over the
actual period remaining to the sequential block C check and (y) the
denominator shall be the period between sequential block C checks.
(vi) In the event the Aircraft has less than half-time
remaining until its next scheduled major structural inspection, the
structural inspection Half-Life Adjustment shall be an amount
computed by multiplying (A) the average cost (as evidenced by
industry norms) of a scheduled major structural inspection for
aircraft of the same type as the Aircraft by (B) a fraction, of
which (x) the numerator shall be the excess of 50% of the period
between scheduled major structural inspections over the actual
period remaining to the next scheduled major structural inspection
and (y) the denominator shall be the period between scheduled major
structural inspections. In the event the Aircraft has more than 75%
of the time remaining until its next scheduled major structural
inspection, the structural inspection Half-Life Adjustment shall be
an amount computed by multiplying (A) the average cost (as evidenced
by industry norms) of a scheduled major structural inspection for
aircraft of the same type as the Aircraft by (B) a fraction, of
which (x) the numerator shall be the excess of the actual period
remaining to the next scheduled structural inspection over 75% of
the period between scheduled major structural inspection and (y) the
denominator shall be the period between scheduled major structural
inspections.
(d) Aircraft Documentation. On the expiration of the Basic Term or a
Renewal Term in the event Lessor shall have irrevocably exercised its option to
sell the Aircraft at such expiration, and shall be simultaneously exercising its
rights, pursuant to the Residual Agreement or a Successor Residual Agreement,
the Aircraft shall be returned with all Aircraft Documentation. The Aircraft
Documentation shall be current as of the date the Aircraft is
EXHIBIT H - PAGE 6
<PAGE>
returned under the Lease and in full compliance with the requirements of the
Relevant Aviation Authority. In the event that the Maintenance Program deviates
from the Maintenance Planning Document, the Aircraft Documentation shall include
a document which shall cross-reference all deviations. The Aircraft
Documentation shall document all repairs to the Aircraft with appropriate
references to the Structural Repair Manual and a repair scheme approved by the
Manufacturer or the Relevant Aviation Authority.
EXHIBIT H - PAGE 7
<PAGE>
Exhibit 99(c)
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW ____ _]
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 BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION MARK N[______]
LEASED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.....................................................6
SECTION 1.02. Reference to Other Documents...................................12
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates...................................12
SECTION 2.02. Issuance and Terms of Secured Certificates.....................17
SECTION 2.03. Payments from Trust Indenture Estate Only......................19
SECTION 2.04. Method of Payment..............................................21
SECTION 2.05. Application of Payments........................................23
SECTION 2.06. Termination of Interest in Trust Indenture Estate..............24
SECTION 2.07. Registration, Transfer and Exchange of Secured Certificates....24
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured Certificates......25
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................26
SECTION 2.10. Mandatory Redemptions of Secured Certificates..................26
SECTION 2.11. Voluntary Redemptions of Secured Certificates..................26
SECTION 2.12. Redemptions; Notice of Redemption..............................26
SECTION 2.13. Assumption of Secured Certificates by Lessee...................27
SECTION 2.14. Option to Purchase Secured Certificates........................28
SECTION 2.15. Subordination..................................................29
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution........................................29
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing ...................................................30
SECTION 3.03. Payments After Event of Default................................31
SECTION 3.04. Certain Payments...............................................33
SECTION 3.05. Other Payments.................................................34
SECTION 3.06. Payments to the Owner Trustee..................................34
SECTION 3.07. Application of Payments Under Guarantee........................35
-i-
<PAGE>
ARTICLE IV
COVENANTS OF THE OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Covenants of the Owner Trustee.................................35
SECTION 4.02. Event of Default...............................................36
SECTION 4.03. Certain Rights.................................................38
SECTION 4.04. Remedies.......................................................39
SECTION 4.05. Return of Aircraft, Etc........................................41
SECTION 4.06. Remedies Cumulative............................................42
SECTION 4.07. Discontinuance of Proceedings..................................43
SECTION 4.08. Waiver of Past Defaults........................................43
SECTION 4.09. Appointment of Receiver........................................43
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale, Etc.....43
SECTION 4.11. Rights of Certificate Holders to Receive Payment...............44
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default.....................................44
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.......45
SECTION 5.03. Indemnification................................................47
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions ..................................................47
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions ..................................................48
SECTION 5.06. Replacement Airframes and Replacement Engines..................48
SECTION 5.07. Indenture Supplements for Replacements.........................50
SECTION 5.08. Effect of Replacement..........................................51
SECTION 5.09. Investment of Amounts Held by Indenture Trustee................51
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties................................51
SECTION 6.02. Absence of Duties..............................................52
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents...52
SECTION 6.04. No Segregation of Monies; No Interest..........................53
SECTION 6.05. Reliance; Agreements; Advice of Counsel........................53
SECTION 6.06. Capacity in Which Acting.......................................54
SECTION 6.07. Compensation...................................................54
SECTION 6.08. Instructions from Certificate Holders..........................54
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ARTICLE VII
INDEMNIFICATION OF THE INDENTURE TRUSTEE BY THE OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.......................................55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..............................56
SECTION 8.02. Resignation of Indenture Trustee; Appointment of Successor.....56
SECTION 8.03. Appointment of Additional and Separate Trustees................57
ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations..........................59
SECTION 9.02. Trustees Protected.............................................60
SECTION 9.03. Documents Mailed to Certificate Holders........................61
SECTION 9.04. No Request Necessary for Lease Supplement or Trust Agreement
and Indenture Supplement.......................................61
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.................................61
SECTION 10.02. No Legal Title to Trust Indenture Estate in Certificate
Holders .......................................................62
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding...............62
SECTION 10.04. Trust Indenture for Benefit of the Owner Trustee, the
Indenture Trustee, Owner Participant, Lessee and
Certificate Holders ...........................................62
SECTION 10.05. Notices........................................................62
SECTION 10.06. Severability...................................................63
SECTION 10.07. No Oral Modification or Continuing Waivers.....................63
SECTION 10.08. Successors and Assigns.........................................63
SECTION 10.09. Headings.......................................................63
SECTION 10.10. Normal Commercial Relations....................................63
SECTION 10.11. Governing Law; Counterpart Form................................64
SECTION 10.12. Voting By Certificate Holders..................................64
SECTION 10.13. Bankruptcy.....................................................64
SECTION 10.14. No Action Contrary to Lessee's Rights Under the Lease..........64
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<PAGE>
EXHIBIT A Form of Trust Agreement and Indenture Supplement
SCHEDULE I Secured Certificates Amortization
SCHEDULE II Pass Through Trust Agreements
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<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW ____ _]
TRUST INDENTURE AND SECURITY AGREEMENT [NW ____ _], 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 FSB have entered into the Trust
Agreement whereby, among other things, (i) the Owner Trustee has established a
certain trust for the use and benefit of the Owner Participant subject, however,
to the Trust Indenture Estate created pursuant hereto for the use and benefit
of, and with the priority of payment to, the holders of Secured Certificates
issued hereunder, and (ii) the Owner Trustee has been authorized and directed to
execute and deliver this Trust Indenture;
WHEREAS, the parties desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee to the Pass Through
Trustees (or their designee) of the Secured Certificates evidencing the
participation of the Pass Through Trustees in the payment of Lessor's Cost for
the Aircraft, as provided in the Participation Agreement and (ii) to provide for
the assignment, mortgage and pledge by the Owner Trustee to the Indenture
Trustee, as part of the Trust Indenture Estate hereunder, among other things, of
all of the Owner Trustee's right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of the Owner Trustee's right,
title and interest in, to and under the Lease and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, the Owner Trustee's obligations to the
Indenture Trustee, for the ratable benefit and security of the Certificate
Holders, subject to Section 2.15 and Article III hereof;
WHEREAS, all things have been done to make the Secured Certificates,
when executed by the Owner Trustee and authenticated and delivered by the
Indenture Trustee hereunder, the valid, binding and enforceable obligations of
the Owner Trustee; and
WHEREAS, all things necessary to make this Trust Indenture the
valid, binding and legal obligation of the Owner Trustee for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened:
<PAGE>
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT
WITNESSETH, that, to secure the prompt payment of the Principal Amount of,
interest on, Make-Whole Amount, if any, and all other amounts due with respect
to, all Secured Certificates from time to time outstanding hereunder and the
performance and observance by the Owner Trustee of all the agreements, covenants
and provisions herein and in the Participation Agreement and the Secured
Certificates contained, for the benefit of the Certificate Holders and the
Indenture Indemnitees and the prompt payment of all amounts from time to time
owing hereunder and under the Participation Agreement to the Certificate Holders
and the Indenture Indemnitees by the Owner Trustee or Lessee 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 (excluding any Excluded Payments);
(3) the Purchase Agreement (each to the extent specified in the
Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent
and Agreement and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this Indenture;
(5) all insurance and requisition proceeds with respect to the
Aircraft, including but not limited to the insurance required under Section 11
of the Lease, but excluding insurance proceeds described in clauses (ii) and
(iii) of the definition of Excluded Payments;
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<PAGE>
(6) all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and all rights of
the Owner Trustee to enforce payments of any such amounts thereunder, but
excluding amounts described in clauses (i) and (v) of the definition of Excluded
Payments;
(7) all monies and securities from time to time deposited or
required to be deposited with the Indenture Trustee pursuant to any terms of
this Indenture or the Lease or required hereby or by the Lease to be held by the
Indenture Trustee hereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing.
BUT EXCLUDING from the foregoing and from the Trust Indenture Estate
all Excluded Payments, and the right to enforce and collect the same, and
SUBJECT TO all of the terms and conditions of this Trust Indenture and the
rights of the Owner Trustee and the Owner Participant hereunder.
Concurrently with the delivery hereof, the Owner Trustee is
delivering to the Indenture Trustee the original executed counterpart of the
Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt
is attached), and executed copies of the Participation Agreement, and the
Purchase Agreement Assignment with the Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, and its successors and assigns, in trust for the benefit and
security of the Certificate Holders, except as provided in Section 2.15 and
Article III hereof without any preference, distinction or priority of any one
Secured Certificate over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (8) inclusive above, subject to the terms and
provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Owner Trustee shall remain liable under each of
the Indenture Agreements to which it is a party to perform all of the
obligations assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions thereof, and the
Indenture Trustee and the Certificate Holders shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders
be required or obligated in any manner to perform or fulfill any obligations of
the Owner Trustee under or pursuant to any of the Indenture Agreements to which
it is a party, or, except as herein expressly provided, to make any payment, or
to make any inquiry as to the nature or sufficiency of any payment received by
it, or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
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
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<PAGE>
and coupled with an interest and with full power of substitution, and with full
power (in the name of the Owner Trustee or otherwise) to ask for, require,
demand, receive, compound and give acquittance for any and all monies and claims
for monies (in each case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or arising out of
the Indenture Agreements, and all other property which now or hereafter
constitutes part of the Trust Indenture Estate, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Indenture Trustee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant hereunder, during the continuance of any Event of Default under this
Trust Indenture, the Indenture Trustee shall have the right under such power of
attorney to accept any offer in connection with the exercise of remedies as set
forth herein of any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of the Owner
Trustee an appropriate bill of sale and other instruments of transfer relating
to the Airframe and Engines, when purchased by such purchaser, and to perform
all other necessary or appropriate acts with respect to any such purchase, and
in its discretion to file any claim or take any other action or proceedings,
either in its own name or in the name of the Owner Trustee or otherwise, which
the Indenture Trustee may deem necessary or appropriate to protect and preserve
the right, title and interest of the Indenture Trustee in and to such Rents and
other sums and the security intended to be afforded hereby; provided, however,
that no action of the Indenture Trustee pursuant to this paragraph shall
increase the obligations or liabilities of the Owner Trustee to any Person
beyond those obligations and liabilities specifically set forth in this Trust
Indenture and in the other Operative Documents. Under the Lease, Lessee is
directed, so long as this Trust Indenture shall not have been fully discharged,
to make all payments of Rent (other than Excluded Payments) and all other
amounts which are required to be paid to or deposited with the Owner Trustee
pursuant to the Lease (other than Excluded Payments) directly to, or as directed
by, the Indenture Trustee at such address or addresses as the Indenture Trustee
shall specify, for application as provided in this Trust Indenture. The Owner
Trustee agrees that promptly upon receipt thereof, it will transfer to the
Indenture Trustee any and all monies from time to time received by it
constituting part of the Trust Indenture Estate, for distribution by the
Indenture Trustee pursuant to this Trust Indenture, except that the Owner
Trustee shall accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Indenture Trustee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and delivered
any and all such further instruments and documents as the Indenture Trustee may
reasonably deem necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended to be created
hereby or to obtain for the Indenture Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted. The parties
hereto acknowledge that neither the Owner Trustee nor the Owner Participant
shall have any obligation as to any recording, filing, refiling or re-recording
of any documents or instruments in regard to maintaining the perfection of the
security 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.
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<PAGE>
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 (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, then due or to accrue in the
future under the Lease in respect of the Airframe and Engines;
or
(b) except as contemplated by the Trust Agreement in connection
with the appointment of a successor owner trustee, sell,
mortgage, transfer, assign or hypothecate (other than to the
Indenture Trustee hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be received by
it from the use or disposition of the Airframe and Engines,
other than amounts distributed to it pursuant to Article III
hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall ipso facto, and without any further conveyance, assignment
or act on the part of the Owner Trustee or the Indenture Trustee, become and be
subject to the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this paragraph shall be
deemed to modify or change the obligations of the Owner Trustee contained in the
foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Owner Trustee Documents.
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<PAGE>
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. For all purposes of this Indenture the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Actual Knowledge" shall mean, (i) as it applies to the Owner
Trustee or Indenture Trustee, as the case may be, actual knowledge of a
Responsible Officer in the Trust Office of the Owner Trustee or in the Corporate
Trust Office of the Indenture Trustee, as the case may be, and (ii) as it
applies to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Amortization Amount" shall mean, with respect to any Principal
Amount Repayment Date, the amount set forth opposite such Date on the
Amortization Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 hereof.
"Average Life Date" for each Secured Certificate to be redeemed
shall be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Secured
Certificate. "Remaining Weighted Average Life" of such Secured Certificate, at
the redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Secured Certificate, by
(ii) the number of days from and including the redemption date to but excluding
the scheduled payment date of such principal installment; by (b) the then unpaid
principal amount of such Secured Certificate.
"Cash Equivalents" shall mean the investments specified in Section
22(a) of the Lease.
"Certificate Holder" shall mean any holder from time to time of one
or more Secured Certificates.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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<PAGE>
"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 225 Franklin Street, Boston, Massachusetts 02110,
Attention: Corporate Trust Department, or such other office at which the
Indenture Trustee's corporate trust business shall be administered which the
Indenture Trustee shall have specified by notice in writing to Lessee, the Owner
Trustee, the Loan Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any liability
for the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" shall mean, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate" in Schedule I
to the Trust Indenture.
"Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Event of Default or Lease
Event of Default (excluding Lease Events of Default related to Excluded
Payments).
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Enforcement Date" shall have meaning specified in Section 4.03
hereof.
"Event of Default" shall have the meaning specified in Section 4.02
hereof.
"Excess Amount" shall have the meaning specified in Section 2.03(b)
hereof.
"Excluded Payments" shall mean (i) indemnity payments paid or
payable by Lessee to or in respect of the Owner Participant or the Owner Trustee
in its individual capacity, their respective Affiliates, successors and
permitted assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16 and
17 of the Participation Agreement, (ii) proceeds of public liability insurance
in respect of the Aircraft payable as a result of insurance claims made, or
losses suffered, by the Owner Trustee or the Indenture Trustee in their
respective individual capacities or by any of the Owner Indemnitees, (iii)
proceeds of insurance maintained with respect to the Aircraft by the Owner
Participant (whether directly or through the Owner Trustee) or any other Owner
Indemnitee and permitted under Section 11(e) of the Lease, (iv) all payments
required to be made under the Tax Indemnity Agreement by Lessee and all payments
of Supplemental Rent by
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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.
"FSB" shall mean First Security Bank, National Association, a
national banking association.
"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 Indemnitee" means (i) the Indenture Trustee, (ii) the
Loan Participants and each Certificate Holder, (iii) the Subordination Agent,
(iv) the Liquidity Provider, Morgan Stanley (but only so long as it is the
guarantor of the Liquidity Provider) and the Policy Provider, (v) the Pass
Through Trustee and (vi) the respective directors, officers, employees, agents
and servants of each of the Persons described in clauses (i) through (v),
inclusive.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture 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 ____ _], 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,
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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 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
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"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 ____ _], 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 [April 1 and October 1], commencing
on [April/October 1, ____] (or, if any such day is not a Business Day, the
immediately succeeding Business Day) until the Secured Certificates have been
paid in full.
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with respect
to all Secured Certificates, means the aggregate stated original principal
amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on
which any portion of the Principal Amount is due and payable in accordance with
the Amortization Schedule.
"QIB" shall have the meaning specified in Section 2.08 hereof.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 hereof.
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 hereof.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including, without
limitation, any authorized officer in the Trust Office of the Owner Trustee),
and with respect to the Indenture Trustee, a responsible officer in the
Corporate Trust Office of the Indenture Trustee.
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"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 B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"Series G" or "Series G Secured Certificates" means Secured
Certificates issued and designated as "Series G" hereunder, in the Principal
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series G."
"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 ____ _] as it may from time to time be
supplemented or amended as herein provided, including supplementing by the Trust
Agreement and Indenture Supplement pursuant hereto.
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of this Trust Indenture, excluding Excluded Payments.
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SECTION 1.02. Reference to Other Documents. For all purposes of this
Trust Indenture the terms used but not defined herein are used as defined in the
Lease.
ARTICLE II
THE SECURED CERTIFICATES
SECTION 2.01. Form of Secured Certificates.
The Secured Certificates shall be substantially in the form set
forth below:
THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER
REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT [NW ____ _] DATED AS OF [_______________].
SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [_____] ISSUED IN CONNECTION
WITH THE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N[_____].
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 ____ _], dated as of
[_______________], between the Owner Participant named therein and FSB (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
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[April/October 1, _____], and thereafter on [October 1] and [April 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 ____ _], 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).
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 shall be payable only from the income and proceeds
from the Trust Estate to the extent included in the Trust Indenture Estate and
only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate to enable the Indenture Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture and each holder
hereof, by its acceptance of this Secured Certificate, agrees that it will look
solely to the income and proceeds from the Trust Indenture Estate to the extent
available for distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee or the Indenture Trustee is
personally liable or liable in any manner extending to any assets other than the
Trust Indenture Estate to the holder hereof for any amounts payable or any
liability under this Secured Certificate or, except as provided in the Trust
Indenture or in the Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that nothing herein
contained shall limit, restrict or impair the right of the Indenture Trustee,
subject always to the terms and provisions of the Trust Indenture, to accelerate
the maturity of this Secured Certificate upon occurrence of an Event of Default
under the Trust Indenture in accordance with Section 4.04(b) of the Trust
Indenture, to bring suit and obtain a judgment against the Owner Trustee on this
Secured Certificate for purposes of realizing upon the Trust Indenture Estate
and to exercise all rights and remedies provided under the Trust Indenture or
otherwise realize upon the Trust Indenture Estate.
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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, to the payment of Principal Amount of this Secured
Certificate remaining unpaid in the inverse order of their normal maturity.
This Secured Certificate is one of the Secured Certificates referred
to in the Trust Indenture which have been or are to be issued by the Owner
Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate
is held by the Indenture Trustee as security, in part, for the Secured
Certificates. The provisions of this Secured Certificate are subject to the
Trust Indenture. Reference is hereby made to the Trust Indenture and the
Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Secured
Certificate and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Secured Certificates executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Secured Certificate.
As provided in the Trust Indenture and subject to certain
limitations therein set forth, this Secured Certificate is exchangeable for a
like aggregate Principal Amount of Secured Certificates of different authorized
denominations, as requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this
Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the
person in whose name this Secured Certificate is registered as the owner hereof
for all purposes whether or not this Secured Certificate be overdue, and neither
of the Owner Trustee nor the Indenture Trustee shall be affected by notice to
the contrary.
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This Secured Certificate is subject to redemption as provided in
Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This
Secured Certificate is also subject to assumption by Lessee as provided in
Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner
Participant or the Owner Trustee as provided in Section 2.14 of the Trust
Indenture but not otherwise.
[The indebtedness evidenced by this Secured Certificate is, to the
extent and in the manner provided in the Trust Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series G Secured
Certificates](1) [Series G 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 G
Secured Certificate.
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IN WITNESS WHEREOF, the Owner Trustee has caused this Secured
Certificate to be executed in its corporate name by its officer thereunto duly
authorized on the date hereof.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By
----------------------------------
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Secured Certificates referred to in the
within-mentioned Trust Indenture.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
By
----------------------------------
Name:
Title:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
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 G, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the Delivery Date, 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. 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 [April/October 1, ____], and on each [October 1] and
[April 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 shall be made on the next
succeeding Business Day and
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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), (c) Owner Trustee's pro rata share of all compensation and
reimbursement of fees, expenses and disbursements (including payment of
indemnities) owed to the Policy Provider under the Policy Provider Agreement
other than fees payable to the Policy 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 (d) 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 3.01, Section 3.02,
Section 3.03 or Section 7.07 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
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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 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, 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
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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 in accordance with the provisions hereof.
Nothing in this Section 2.03(a) shall (x) 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 (y) release the Owner Trustee in its individual capacity
from personal liability, or constitute a covenant not to sue the Owner Trustee
in its individual capacity for any breach by it of any representations,
warranties or covenants of the Owner Trustee made in its individual capacity in
the Operative Documents.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Certificate Holder or
the Indenture Trustee, directly or indirectly (other than the recourse liability
of the Owner Trustee (in its individual capacity), to make payment on account of
any amount payable as principal, Make-Whole Amount, if any, interest or other
amounts on the Secured Certificates or under this
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Indenture and (iii) any Certificate Holder or the Indenture Trustee actually
receives any Excess Amount (as hereinafter defined) which reflects any payment
by the Owner Trustee (in its individual capacity) or the Owner Participant on
account of clause (ii) above, then such Certificate Holder or the Indenture
Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its
individual capacity) or the Owner Participant (whichever shall have made such
payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Certificate Holder or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Certificate Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant under
the Participation Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any amount paid by
Owner Participant under Section 2.14 or 4.03 hereof.
SECTION 2.04. Method of Payment.
(a) The Principal Amount of, interest on, Make-Whole Amount, if any,
and other amounts due under each Secured Certificate or hereunder will be
payable in Dollars by wire transfer of immediately available funds not later
than 12:00 noon, New York City time, on the due date of payment to the Indenture
Trustee at the Corporate Trust Office for distribution among the Certificate
Holders in the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Certificate Holder.
Notwithstanding the foregoing or any provision in any Secured Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by any Certificate Holder (with a copy to the
Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such
holder's Secured Certificate or Secured Certificates to such holder or a nominee
therefor (including all amounts distributed pursuant to Article III of this
Trust Indenture) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 2:00 p.m., New York City
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such holder maintained at such bank.
If the Indenture Trustee shall fail to make any such payment as provided in the
immediately preceding sentence after its receipt of funds at the place and prior
to the time specified above, the Indenture Trustee, in its individual capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at the Debt Rate until such payment is made and the Indenture Trustee shall be
entitled to any interest earned on such funds until such payment is made. Any
payment made hereunder shall be made without any presentment or surrender of any
Secured Certificate, except that, in the case of the final payment in respect of
any Secured Certificate, such Secured Certificate shall be surrendered to the
Indenture Trustee for cancellation promptly after such payment. Notwithstanding
any other provision of this Trust Indenture to the contrary, the Indenture
Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Indenture Trustee to do so in view of the time of day when the funds to be so
transferred were
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received by it if such funds were received after 12:00 noon, New York City time,
at the place of payment. Prior to the due presentment for registration of
transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee
shall deem and treat the Person in whose name any Secured Certificate is
registered on the Secured Certificate Register as the absolute owner and holder
of such Secured Certificate for the purpose of receiving payment of all amounts
payable with respect to such Secured Certificate and for all other purposes, and
none of the Owner Trustee or the Indenture Trustee shall be affected by any
notice to the contrary. So long as any signatory to the Participation Agreement
or nominee thereof shall be a registered Certificate Holder, all payments to it
shall be made to the account of such Certificate Holder specified in Schedule I
thereto and otherwise in the manner provided in or pursuant to the Participation
Agreement unless it shall have specified some other account or manner of payment
by notice to the Indenture Trustee consistent with this Section 2.04.
(b) The Indenture Trustee, as agent for the Owner Trustee, shall
exclude and withhold at the appropriate rate from each payment of Principal
Amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Secured Certificate (and such exclusion and withholding
shall constitute payment in respect of such Secured Certificate) any and all
United States withholding taxes applicable thereto as required by Law. The
Indenture Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future United States taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Secured Certificates, to withhold such amounts (and such
withholding shall constitute payment in respect of such Secured Certificate) and
timely pay the same to the appropriate authority in the name of and on behalf of
the Certificate Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as promptly as possible
after the payment thereof it will deliver to each Certificate Holder (with a
copy to the Owner Trustee and Lessee) appropriate receipts showing the payment
thereof, together with such additional documentary evidence as any such
Certificate Holder may reasonably request from time to time.
If a Certificate Holder which is a Non-U.S. Person has furnished to
the Indenture Trustee a properly completed and currently effective U.S. Internal
Revenue Service Form 1001 or W-8 (or such successor form or forms as may be
required by the United States Treasury Department) during the calendar year in
which the payment hereunder or under the Secured Certificate(s) held by such
holder is made (but prior to the making of such payment), or in either of the
two preceding calendar years, and has not notified the Indenture Trustee of the
withdrawal or inaccuracy of such form prior to the date of such payment (and the
Indenture Trustee has no reason to know that any information set forth in such
form is inaccurate), the Indenture Trustee shall withhold only the amount, if
any, required by Law (after taking into account any applicable exemptions
claimed by the Certificate Holder) to be withheld from payments hereunder or
under the Secured Certificates held by such holder in respect of United States
federal income tax (and such withholding shall constitute payment in respect of
such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S.
Person has furnished to the Indenture Trustee a properly completed and currently
effective U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the United States
Treasury Department as necessary in order to avoid withholding of United States
federal income tax), during the 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
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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:
First: to the payment of accrued interest on such Secured
Certificate (as well as any interest on any overdue Principal Amount, any
overdue Make-Whole Amount, if any, and to the extent permitted by Law, any
overdue interest and any other overdue amounts thereunder) to the date of
such payment;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
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SECTION 2.06. Termination of Interest in Trust Indenture Estate.
A Certificate Holder shall not, as such, have any further interest
in, or other right with respect to, the Trust Indenture Estate when and if the
Principal Amount of, Make-Whole Amount, if any, and interest on and other
amounts due under all Secured Certificates held by such Certificate Holder and
all other sums then payable to such Certificate Holder hereunder and under the
other Operative Documents by the Owner Trustee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of Secured
Certificates.
The Indenture Trustee shall keep a register (the "Secured
Certificate Register") in which the Indenture Trustee shall provide for the
registration of Secured Certificates and the registration of transfers of
Secured Certificates. No such transfer shall be given effect unless and until
registration hereunder shall have occurred. The Secured Certificate Register
shall be kept at the Corporate Trust Office of the Indenture Trustee. The
Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the
purpose of registering Secured Certificates and transfers of Secured
Certificates as herein provided. A holder of any Secured Certificate intending
to exchange such Secured Certificate shall surrender such Secured Certificate to
the Indenture Trustee at the Corporate Trust Office, together with a written
request from the registered holder thereof for the issuance of a new Secured
Certificate, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Secured Certificate, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Secured Certificates of a like
aggregate Principal Amount and of the same series. At the option of the
Certificate Holder, Secured Certificates may be exchanged for other Secured
Certificates of any authorized denominations of a like aggregate Principal
Amount, upon surrender of the Secured Certificates to be exchanged to the
Indenture Trustee at the Corporate Trust Office. Whenever any Secured
Certificates are so surrendered for exchange, the Owner Trustee shall execute,
and the Indenture Trustee shall authenticate and deliver, the Secured
Certificates which the Certificate Holder making the exchange is entitled to
receive. All Secured Certificates issued upon any registration of transfer or
exchange of Secured Certificates (whether under this Section 2.07 or under
Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid
obligations of the Owner Trustee evidencing the same respective obligations, and
entitled to the same security and benefits under this Trust Indenture, as the
Secured Certificates surrendered upon such registration of transfer or exchange.
Every Secured Certificate presented or surrendered for registration of transfer,
shall (if so required by the Indenture Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Certificate Holder or such holder's
attorney duly authorized in writing, and the Indenture Trustee shall require
evidence satisfactory to it as to the compliance of any such transfer with the
Securities Act, and the securities Laws of any applicable state. The Indenture
Trustee shall make a notation on each new Secured Certificate of the amount of
all payments of Principal Amount previously made on the old Secured Certificate
or Secured Certificates with respect to which such new Secured Certificate is
issued and the date to which interest on such old Secured Certificate or Secured
Certificates has been paid. Interest shall be deemed to have been paid on such
new Secured
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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.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Secured
Certificates.
If any Secured Certificate shall become mutilated, destroyed, lost
or stolen, the Owner Trustee shall, upon the written request of the holder of
such Secured Certificate, execute and the Indenture Trustee shall authenticate
and deliver in replacement thereof a new Secured Certificate, payable in the
same Principal Amount dated the same date and captioned as issued in connection
with the Aircraft. If the Secured Certificate being replaced has become
mutilated, such Secured Certificate shall be surrendered to the Indenture
Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the
Secured Certificate being replaced has been destroyed, lost or stolen, the
holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner
Participant and the Indenture Trustee such security or indemnity as may be
required by them to save the Owner Trustee, the Owner Participant and the
Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the
Owner Participant and the Indenture Trustee of the destruction, loss or theft of
such Secured Certificate and of the ownership thereof. If a "qualified
institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D)
or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Secured Certificate, then the written indemnity of
such QIB, signed by an authorized officer thereof, in favor of, delivered to and
in form reasonably satisfactory to Lessee, the Owner Participant, the Owner
Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity
and security and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Secured Certificate. Subject
to compliance by the Certificate Holder of the requirements set forth in this
Section 2.08, the Indenture Trustee and the Owner Trustee shall use all
reasonable efforts to issue new Secured Certificates within 10 Business Days of
the date of the written request therefor from the Certificate Holder.
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SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. Mandatory Redemptions of Secured Certificates.
(a) On the date on which Lessee is required pursuant to Section
10(a)(i) of the Lease to make payment for an Event of Loss with respect to the
Aircraft, all of the Secured Certificates shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Principal Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders but without Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the
Lease is so terminated all the Secured Certificates shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Principal Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts payable hereunder or under the Participation Agreement to the
Certificate Holders plus Make-Whole Amount, if any.
SECTION 2.11. Voluntary Redemptions of Secured Certificates.
Any or all of the Secured Certificates may be redeemed by the Owner
Trustee in connection with a transaction described in, and subject to the terms
and conditions of, Section 17 of the Participation Agreement upon at least 30
days' revocable prior written notice to the Indenture Trustee and the
Certificate Holders, and the Secured Certificates shall, as provided in Section
17 of the Participation Agreement, be redeemed in whole at a redemption price
equal to 100% of the unpaid Principal Amount thereof, together with accrued
interest thereon to the date of redemption and all other amounts payable
hereunder or under the Participation Agreement to the Certificate Holders plus
Make-Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption.
(a) Neither any redemption of any Secured Certificate nor any
purchase by the Owner Trustee of any Secured Certificate may be made except to
the extent and in the manner expressly permitted by this Trust Indenture. No
purchase of any Secured Certificate may be made by the Indenture Trustee.
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(b) Notice of redemption or purchase with respect to the Secured
Certificates shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
applicable redemption date, to each Certificate Holder of such Secured
Certificates to be redeemed or purchased, at such Certificate Holder's address
appearing in the Secured Certificate Register; provided that, in the case of a
redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed revoked in the event that the Lease does
not in fact terminate on the specified termination date or if notice of such
redemption shall have been given in connection with a refinancing of Secured
Certificates and the Indenture Trustee receives written notice of such
revocation from Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1) the redemption
date, (2) the applicable basis for determining the redemption price, (3) that on
the redemption date, the redemption price will become due and payable upon each
such Secured Certificate, and that, if any such Secured Certificates are then
outstanding, interest on such Secured Certificates shall cease to accrue on and
after such redemption date, and (4) the place or places where such Secured
Certificates are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any
person on behalf of the Owner Trustee) shall, to the extent an amount equal to
the redemption price for the Secured Certificates to be redeemed or purchased on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Secured Certificates to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the
Secured Certificates to be redeemed or purchased shall, on the redemption date,
become due and payable at the Corporate Trust Office of the Indenture Trustee or
at any office or agency maintained for such purposes pursuant to Section 2.07,
and from and after such redemption date (unless there shall be a default in the
payment of the redemption price) any such Secured Certificates then outstanding
shall cease to bear interest. Upon surrender of any such Secured Certificate for
redemption or purchase in accordance with said notice, such Secured Certificate
shall be redeemed at the redemption price. If any Secured Certificate called for
redemption or purchase shall not be so paid upon surrender thereof for
redemption, the principal amount thereof shall, until paid, continue to bear
interest from the applicable redemption date at the interest rate in effect for
such Secured Certificate as of such redemption date.
SECTION 2.13. Assumption of Secured Certificates by Lessee.
If, in accordance with Section 8(x) of the Participation Agreement,
and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a
full recourse basis) all of the obligations of the Owner Trustee hereunder,
under the Secured Certificates and all other Operative Documents by supplemental
indenture satisfactory to the Indenture Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for the Owner
Trustee and the Owner Participant,
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delivery by the Guarantor of a guarantee of the Secured Certificates and other
amounts owing to the Certificate Holders substantially in the form of the
Guarantee, and delivery of an opinion of counsel for Lessee that such assumption
has been duly and validly effected, the Owner Trustee shall be released and
discharged from any further obligations hereunder and under the Secured
Certificates and all other Operative Documents and the Owner Participant shall
be released and discharged from any further obligations under the Participation
Agreement and any other Operative Document to which it is a party, except with
respect to any such obligations that accrued prior thereto.
SECTION 2.14. Option to Purchase Secured Certificates.
Either the Owner Trustee or the Owner Participant may, upon the
events and subject to the terms and conditions and for the price set forth in
this Section 2.14, purchase all but not less than all of the Secured
Certificates outstanding hereunder, and each Certificate Holder agrees that it
will, upon such events and subject to such terms and conditions and upon receipt
of such price, sell, assign, transfer and convey to such purchaser or its
nominee (without recourse or warranty of any kind except as to its title to the
Secured Certificates and except against Liens on such Secured Certificates
arising by, through or under such holder), all of the right, title and interest
of such Certificate Holder in and to the Trust Indenture Estate, this Trust
Indenture and the Secured Certificates held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant upon any of the following events,
and, in any such event, the purchase price thereof shall equal for each Secured
Certificate the aggregate unpaid Principal Amount thereof, plus accrued and
unpaid interest thereon to the date of purchase and all other amounts (other
than the Make-Whole Amount, except as provided in the next sentence) then
payable hereunder or under the Participation Agreement to the holder thereof.
Such option to purchase the Secured Certificates may be exercised: (i) upon an
Indenture Trustee Event or (ii) in the event there shall have occurred and be
continuing a Lease Event of Default, provided that if such option is exercised
pursuant to this clause (ii) at a time when there shall have occurred and be
continuing for less than 180 days a Lease Event of Default, the purchase price
thereof shall equal the price provided in the preceding sentence plus the
Make-Whole Amount, if any.
Such option to purchase the Secured Certificates may be exercised by
the Owner Trustee or the Owner Participant giving written notice of its election
of such option to the Indenture Trustee, which notice shall specify a date for
such purchase not more than thirty (30) days or less than fifteen (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
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2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the
Owner Participant or its nominee in such denominations as the Owner Trustee or
the Owner Participant shall request. All taxes, charges and expenses required
pursuant to Section 2.09 in connection with the issuance of such new Secured
Certificate shall be borne by the Owner Participant.
SECTION 2.15. Subordination.
(a) The Owner Trustee and, by acceptance of its Secured Certificates
of any Series, each Certificate Holder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Secured Certificates of any Series
(other than Series G), 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 G until the Secured Obligations in
respect of Series G Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series G 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 G
Secured Certificates shall be distributed to the Certificate
Holders of Series G ratably, without priority of one over the
other, in the proportion
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that the amount of such payment or payments then due under
each Series G Secured Certificate bears to the aggregate
amount of the payments then due under all Series G Secured
Certificates;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series B
Secured Certificates shall be distributed to the Certificate
Holders of Series B ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series B Secured Certificate
bears to the aggregate amount of the payments then due under
all Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay
in full the aggregate amount of the payment or payments of
Principal Amount and interest and other amounts (as well as
any interest on any overdue Principal Amount and, to the
extent permitted by applicable law, on any overdue interest
and any other overdue amounts) then due under all Series C
Secured Certificates shall be distributed to the Certificate
Holders of Series C ratably, without priority of one over the
other, in the proportion that the amount of such payment or
payments then due under each Series C Secured Certificate
bears to the aggregate amount of the payments then due under
all Series C Secured Certificates; and
Second, the balance, if any, of such installment remaining thereafter shall
be distributed to the Owner Trustee; provided, however, that if an
Event of Default shall have occurred and be continuing, then such
balance shall not be distributed as provided in this clause "Second"
but shall be held by the Indenture Trustee as part of the Trust
Indenture Estate and invested in accordance with Section 5.09 hereof
until whichever of the following shall first occur: (i) all Events
of Default shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "Second"
without reference to this proviso, (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be distributed in
accordance with the provisions of such Section 3.03, or (iii) the
120th day after the receipt of such payment in which case such
payment shall be distributed as provided in this clause "Second"
without reference to this proviso.
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Refinancing.
Except as otherwise provided in Section 3.03 hereof, any payments
received by the Indenture Trustee (i) with respect to the Aircraft as the result
of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease
pursuant to Section 9 or 19(d) thereof, or (iii) in
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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 (other than amounts specified
in clause Second below);
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 G Secured
Certificates;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Secured Certificates; and
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "Third" of
Section 3.03 hereof plus Make-Whole Amount, if any, then due
and payable in respect of the Series C Secured Certificates;
and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Indenture Trustee shall be held by the Indenture
Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be
invested as provided in Section 5.09 hereof) as additional security for the
obligations of Lessee under the Lessee Operative Documents and, unless otherwise
applied pursuant to the Lease, such proceeds (and such investment earnings)
shall be released to Lessee at Lessee's written request upon the release of such
damaged Airframe or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. Payments After Event of Default.
Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Indenture Trustee (including any
amounts realized by the Indenture Trustee from the exercise of any remedies
pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of
Default shall have occurred and be continuing and the Secured Certificates shall
have become due and payable pursuant to Section 4.04(b) hereof, as
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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 G Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series G Secured
Certificates to the date of distribution, shall be distributed
to the Certificate Holders of Series G, 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 G 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 G 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
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Principal Amount of all Series B Secured Certificates, and the
accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations in respect of the Series B
Secured Certificates to the date of distribution, shall be
distributed to the Certificate Holders of Series B, and in
case the aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, in the proportion that
the aggregate unpaid Principal Amount of all Series B Secured
Certificates held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the
date of distribution, bears to the aggregate unpaid Principal
Amount of all Series B Secured Certificates held by all such
holders plus the accrued but unpaid interest and other amounts
due thereon to the date of distribution; and
(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in
full the aggregate unpaid Principal Amount of all Series C
Secured Certificates, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations in
respect of the Series C Secured Certificates to the date of
distribution, shall be distributed to the Certificate Holders
of Series C, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Principal Amount of all
Series C Secured Certificates held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution, bears to the aggregate
unpaid Principal Amount of all Series C Secured Certificates
held by all such holders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
Fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Secured
Certificates as a consequence of the acceleration of the Secured Certificates.
SECTION 3.04. Certain Payments.
(a) Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in this Trust Indenture and for
which such provision is made in the Lease, the Participation Agreement or any
other Operative Document shall be applied forthwith to the purpose for which
such 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
the Indenture Trustee in its individual capacity, any Certificate Holder or any
other Indenture Indemnitee , 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)
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of the third paragraph of Section 2.02 shall be distributed to the Subordination
Agent to be distributed in accordance with the terms of the Intercreditor
Agreement, and any payment received by the Indenture Trustee under clause (c) of
the third paragraph of Section 2.02 shall be distributed directly to the Persons
entitled thereto.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by the Indenture Trustee which constitute
Excluded Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or Persons entitled thereto.
(e) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by the Indenture Trustee that would, but for the
provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall,
notwithstanding the provisions of said Section, be distributed to Lessee unless
and until a Lease Event of Default shall have occurred and be continuing.
SECTION 3.05. Other Payments.
Any payments received by the Indenture Trustee for which no
provision as to the application thereof is made in the Lease, the Participation
Agreement, elsewhere in this Trust Indenture or in any other Operative Document
shall be distributed by the Indenture Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due the
Certificate Holders, in the order of priority specified in Section 3.01 hereof
subject to the proviso thereto, and (ii) after payment in full of all Secured
Obligations due the Certificate Holders, in the following order of priority:
First, to the extent payments or amounts described in clause "First" of
Section 3.03 hereof are otherwise obligations of Lessee under the
Operative Documents or for which Lessee is obligated to indemnify
against thereunder, in the manner provided in clause "First" of
Section 3.03 hereof, and
Second, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the
Indenture Trustee under the Lease or otherwise with respect to the
Aircraft (including, without limitation, all amounts realized upon
the sale or release of the Aircraft after the termination of the
Lease with respect thereto), to the extent received or realized at
any time after payment in full of all Secured Obligations due the
Certificate Holders, shall be distributed by the Indenture Trustee
in the order of priority specified in clause (ii) of the immediately
preceding sentence of this Section 3.05.
SECTION 3.06. Payments to 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
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wire transfer of funds of the type received by the Indenture Trustee at such
office and to such account or accounts of such entity or entities as shall be
designated by notice from the Owner Trustee to the Indenture Trustee from time
to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and
until the Indenture Trustee receives notice to the contrary from the Owner
Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause
"Second" of Section 3.01 hereof shall be distributed by wire transfer of funds
of the type received by the Indenture Trustee to the Owner Participant's account
(within the time limits contemplated by Section 2.04(a)) specified in Schedule I
to the Participation Agreement.
SECTION 3.07. Application of Payments Under Guarantee.
All payments received by the Indenture Trustee pursuant to the
Guarantee shall be distributed forthwith by the Indenture Trustee in the same
order of priority, and in the same manner, as it would have distributed the
payment in respect of which such payment under the Guarantee was received.
ARTICLE IV
COVENANTS OF 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;
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(d) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates and other instruments
furnished to the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of each
report or notice received pursuant to Section 9(a) and 11(c) of the
Lease to the extent that the same shall not have been furnished to
the Indenture Trustee pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the
consent of the Indenture Trustee (acting pursuant to instructions
given in accordance with Section 9.01 hereof), the Owner Trustee
will not contract for, create, incur, assume or suffer to exist any
Debt, and will not guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing, or
otherwise), endorse or otherwise be or become contingently liable,
directly or indirectly, in connection with the Debt of any other
person; and
(f) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the
leasing thereof to Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement,
the Trust Agreement and the other Operative Documents.
SECTION 4.02. Event of Default.
"Event of Default" means any of the following events (whatever the
reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event
of Default caused solely by a failure of Lessee to pay to the Owner Trustee or
the Owner Participant when due any amount that is included in the definition of
Excluded Payments shall not constitute an Event of Default unless notice is
given by the Owner Trustee to the Indenture Trustee that such failure shall
constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due
and payable under any Secured Certificate or hereunder (other than any such
failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof
or as a result of a Lease Event of Default or a Lease Default) and such failure
shall have continued unremedied for ten (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
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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 the Operative Documents shall prove to have been false or
incorrect when made in any material respect and continues to be material and
adverse to the interests of the Indenture Trustee or the Certificate Holders;
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
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Owner Trustee or the Trust Estate to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Owner Participant, the Owner Trustee or the Trust
Estate or for all or substantially all of its property, or the making by the
Owner Participant, the Owner Trustee or the Trust Estate of any assignment for
the benefit of creditors or the Owner Participant or the Owner Trustee shall
take any action to authorize any of the foregoing; provided, however, that an
event referred to in this Section 4.02(g) with respect to the Owner Participant
shall not constitute an Event of Default if within 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 may, but shall not be obligated to, cure such Event of Default
by taking such action prior to the
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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; provided, further, that in the event the
Indenture Trustee shall have validly terminated the Lease (or, in the event of a
reorganization proceeding involving Lessee instituted under Chapter 11 of the
Bankruptcy Code, such Lease is rejected), the Indenture Trustee shall not,
without the consent of the Owner Participant (which consent shall not be
unreasonably withheld), sell or lease, or otherwise afford
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the use of, the Aircraft or any portion thereof to Lessee or any Affiliate
thereof. Unless an Event of Default not resulting from or relating to a Lease
Event of Default has occurred and is continuing, the Owner Participant may bid
at any public sale and become the purchaser. Without limiting any of the
foregoing, 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, both
the Indenture Trustee and the Owner Trustee (without affecting in any way any
right or remedy of the Indenture Trustee hereunder) shall have the right to
participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
the Indenture Trustee to exercise any right or remedy under the Lease shall in
no event and under no circumstances prevent the Indenture Trustee from
exercising any or all of its rights, powers and remedies under this Trust
Indenture, including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing,
then and in every such case the Indenture Trustee may (and shall, upon receipt
of a written demand therefor from a Majority in Interest of Certificate
Holders), subject to Section 4.03 hereof, at any time, by delivery of written
notice or notices to the Owner Trustee and the Owner Participant, declare all
the Secured Certificates to be due and payable, whereupon the unpaid Principal
Amount of all Secured Certificates then outstanding, together with accrued but
unpaid interest thereon (without
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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 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
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and deliver such instruments and documents after such request by the Indenture
Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the
Indenture Trustee the right to immediate possession and requiring the Owner
Trustee to execute and deliver such instruments and documents to the Indenture
Trustee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by applicable law, and (ii) pursue all
or part of such Mortgaged Property wherever it may be found and, in the event
that a Lease Event of Default has occurred and is continuing, may enter any of
the premises of Lessee wherever such Mortgaged Property may be or be supposed to
be and search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
from time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, the Indenture
Trustee shall have the right to maintain, use, operate, store, insure, lease,
control, manage, dispose of, modify or alter the Mortgaged Property and to carry
on the business and to exercise all rights and powers of the Owner Participant
and the Owner Trustee relating to the Mortgaged Property, as the Indenture
Trustee shall deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, modification or alteration of the
Mortgaged Property or any part thereof as the Indenture Trustee may determine,
and the Indenture Trustee shall be entitled to collect and receive directly all
tolls, rents (including Rent), revenues, issues, income, products and profits of
the Mortgaged Property and every part thereof, except Excluded Payments, without
prejudice, however, to the right of the Indenture Trustee under any provision of
this Trust Indenture to collect and receive all cash held by, or required to be
deposited with, the Indenture Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be applied to pay
the expenses of the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, improvement, modification or alteration of the
Mortgaged Property and of conducting the business thereof, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Mortgaged Property or any part thereof (including the employment of engineers
and accountants to examine, inspect and make reports upon the properties and
books and records of the Owner Trustee), and all other payments which the
Indenture Trustee may be required or authorized to make under any provision of
this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and
employed by the Indenture Trustee with respect hereto.
SECTION 4.06. Remedies Cumulative.
Each and every right, power and remedy given to the Indenture
Trustee specifically or otherwise in this Trust Indenture shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Indenture Trustee, and the exercise or
the beginning of the
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exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Indenture Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any default on the part
of the Owner Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings.
In case the Indenture Trustee shall have instituted any proceeding
to enforce any right, power or remedy under this Trust Indenture by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Indenture Trustee, then and in every such case the Owner Trustee, the Indenture
Trustee and Lessee shall, subject to any determination in such proceedings, be
restored to their former positions and rights hereunder with respect to the
Mortgaged Property, and all rights, remedies and powers of the Owner Trustee,
the Indenture Trustee or Lessee shall continue as if no such proceedings had
been instituted.
SECTION 4.08. Waiver of Past Defaults.
Upon written instruction from a Majority in Interest of Certificate
Holders, the Indenture Trustee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; provided,
that in the absence of written instructions from all the Certificate Holders,
the Indenture Trustee shall not waive any Default (i) in the payment of the
Principal Amount, Make-Whole Amount, if any, and interest and other amounts due
under any Secured Certificate then outstanding, or (ii) in respect of a covenant
or provision hereof which, under Article IX hereof, cannot be modified or
amended without the consent of each Certificate Holder.
SECTION 4.09. Appointment of Receiver.
The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such appointment.
Any receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Indenture Trustee with
respect to the Mortgaged Property.
SECTION 4.10. Indenture Trustee Authorized to Execute Bills of Sale,
Etc..
The Owner Trustee irrevocably appoints the Indenture Trustee the
true and lawful attorney-in-fact of the Owner Trustee in its name and stead and
on its behalf, for the purpose, 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
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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 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,
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which failure shall constitute knowledge of a Default) unless notified in
writing by Lessee, the Owner Trustee, the Owner Participant or one or more
Certificate Holders.
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations.
(a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01
and 5.03 hereof, upon the written instructions at any time and from time to time
of a Majority in Interest of Certificate Holders, the Indenture Trustee shall,
subject to the terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
or any other part of the Trust Indenture Estate as shall be specified in such
instructions; and (iii) after the occurrence and during the continuance of an
Event of Default, approve as satisfactory to the Indenture Trustee all matters
required by the terms of the Lease to be satisfactory to the Owner Trustee, it
being understood that without the written instructions of a Majority in Interest
of Certificate Holders, the Indenture Trustee shall not approve any such matter
as satisfactory to the Indenture Trustee; provided, that anything contained in
this Trust Indenture, the Lease or the other Operative Documents to the contrary
notwithstanding:
(1) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excluded Payments from Lessee or the
Guarantor, exercise any election or option or make any decision or
determination or to give or receive any notice, consent, waiver or
approval in respect of any Excluded Payment and seek legal or equitable
remedies to require Lessee or the Guarantor to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the rights
referred to in this clause (1) shall not be deemed to include the exercise
of any remedies provided for in Section 15 of the Lease other than the
right to proceed by appropriate court action, either at law or in equity,
to enforce payment by Lessee or the Guarantor of such amounts included in
Excluded Payments or performance by Lessee or the Guarantor of such
insurance covenant, or to recover damages for the breach thereof or for
specific performance of any covenant of Lessee or the Guarantor;
(2) (A) the Indenture Trustee shall not, without the consent of the
Owner Trustee, execute or deliver amendments or modifications in respect
of any provisions of the Lease, and (B) 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 or deliver
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;
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(3) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee, (i)
to receive from Lessee all notices, certificates, reports, filings,
opinions of counsel and other documents and all information which any
thereof is permitted or required to give or furnish to the Owner Trustee
or Lessor pursuant to any Operative Document (including pursuant to
Section 7(b) of the Participation Agreement), (ii) to exercise inspection
rights pursuant to Section 12 of the Lease, (iii) to retain all rights
with respect to insurance maintained for its own account which Section
11(e) of the Lease specifically confers on Lessor or the Owner
Participant, (iv) to exercise, to the extent necessary to enable it to
exercise its rights under Section 4.03 hereof, the rights of Lessor under
Section 21 of the Lease and (v) to give notices of default under Section
14 of the Lease;
(4) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the
right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated
Loss Values and Termination Values as provided in Section 3(d) of the
Lease and to select counsel with respect to any opinion relating to tax
matters to be delivered solely to the Owner Participant;
(5) whether or not a Default or Event of Default under the Trust
Indenture has occurred and is continuing, the Owner Trustee may, without
the consent of the Indenture Trustee, (i) solicit and make bids with
respect to the Aircraft under Section 9 of the Lease in respect of a
termination of the Lease by Lessee pursuant to Section 9 thereof, (ii)
determine "fair market sales value" and "fair market rental value" under
Section 19 of the Lease for all purposes except following an Event of
Default pursuant to Section 15 of the Lease, and (iii) make an election
pursuant to and in accordance with the provisions of Section 9(c) of the
Lease; and
(6) so long as no Event of Default shall have occurred and be
continuing, except as provided in clauses (2) and (3) above, all rights of
the "Lessor" under the Lease shall be exercised by the Owner Trustee to
the exclusion of the Indenture Trustee including, without limitation, the
right to (i) exercise all rights with respect to Lessee's use and
operation, modification or maintenance of the Aircraft and any Engine
which the Lease specifically confers on Lessor, and (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease; provided that
the foregoing shall not limit (A) any rights separately granted to the
Indenture Trustee under the Operative Documents or (B) the right of the
Indenture Trustee to receive any funds to be delivered to the "Lessor"
under the Lease (except with respect to Excluded Payments) and under the
Purchase Agreement.
Notwithstanding anything to the contrary contained herein, the
Indenture Trustee shall have the right, to the exclusion of the Owner Trustee
and the Owner Participant, 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.
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The Indenture Trustee will execute and the Owner Trustee will file
or cause to be filed such continuation statements with respect to financing
statements relating to the security interest created hereunder in the Trust
Indenture Estate as specified by Lessee pursuant to Section 8(e) of the
Participation Agreement or as may be specified from time to time in written
instructions of a Majority in Interest of Certificate Holders (which
instructions may, by their terms, be operative only at a future date and which
shall be accompanied by the form of such continuation statement so to be filed).
The Indenture Trustee will furnish to each Certificate Holder (and, during the
continuation of an Indenture Trustee Event, to the Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder, including,
without limitation, a copy of any Termination Notice (as defined in the Lease)
and a copy of each report or notice received pursuant to Sections 9(a) and 11(c)
of the Lease, respectively, to the extent that the same shall not have been
furnished to such Certificate Holder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and the Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Certificate Holders, the Indenture Trustee shall declare
the Lease to be in default pursuant to Section 15 thereof and exercise those
remedies specified by such Certificate Holders. The Indenture Trustee agrees to
provide to the Certificate Holders, the Owner Trustee, the Owner Participant and
Lessee concurrently with such declaration by the Indenture Trustee, notice of
such declaration by the Indenture Trustee.
SECTION 5.03. Indemnification.
The Indenture Trustee shall not be under any obligation to take any
action under this Trust Indenture and nothing herein or therein shall require
the Indenture Trustee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Certificate Holder who is a QIB,
signed by an authorized officer thereof, in favor of, delivered to and in form
reasonably satisfactory to Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to
take any action under Section 5.01 (other than the first sentence thereof) or
5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Document be deemed to impose a duty on the Indenture
Trustee to take any action, if the Indenture Trustee shall have been advised by
counsel that such action is contrary to the terms hereof or of the Lease or is
otherwise contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions.
The Indenture Trustee shall not have any duty or obligation to use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate, or to otherwise
take or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as
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expressly provided by the terms of this Trust Indenture or as expressly provided
in written instructions from Certificate Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it
will in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Trust Indenture Estate which result
from claims against it in its individual capacity not related to the ownership
of the Aircraft or the administration of the Trust Indenture Estate or any other
transaction pursuant to this Trust Indenture or any document included in the
Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions.
The Owner Trustee and the Indenture Trustee agree that they will not
use, operate, store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.
SECTION 5.06. Replacement Airframes and Replacement Engines.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, 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
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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 value,
utility and remaining useful life (without regard to
hours or cycles) of the Airframe requested to be
released (assuming no Event of Loss and that 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, 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 value, utility and remaining useful
life (without regard to hours or cycles) of the Engine
to be released (assuming no Event of Loss and that such
Engine was in the condition and repair required to be
maintained under the Lease));
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(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.
(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.
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SECTION 5.08. Effect of Replacement.
In the event of the substitution of an Airframe or of a Replacement
Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust
Indenture relating to the Airframe or Engine or Engines being replaced shall be
applicable to such Replacement Airframe or Replacement Engine or Engines with
the same force and effect as if such Replacement Airframe or Replacement Engine
or Engines were the same airframe or engine or engines, as the case may be, as
the Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced, and (b) the
provisions of this Trust Indenture shall no longer be applicable to the Airframe
or Engine or Engines being replaced, which shall be released from the Lien of
this Indenture.
SECTION 5.09. Investment of Amounts Held by Indenture Trustee.
Any amounts held by the Indenture Trustee as assignee of the Owner
Trustee's rights to hold monies for security pursuant to Section 22(a) of the
Lease shall be held in accordance with the terms of such Section and the
Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of
the Owner Trustee under such Section. Any amounts held by the Indenture Trustee
pursuant to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative Document
providing for amounts to be held by the Indenture Trustee which are not
distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as
directed by the Owner Trustee in the case of amounts held pursuant to the
proviso to the first sentence of Section 3.01 and otherwise 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.
Any investment permitted under Section 22(a) of the Lease or hereunder may be
made through or with, as applicable, the entity acting as Indenture Trustee or
its Affiliates.
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
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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
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
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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.
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
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or matter relating to Lessee the manner of ascertainment of which is not
specifically described herein, the Owner Trustee and the Indenture Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee and the Indenture Trustee for
any action taken or omitted to be taken by them in good faith in reliance
thereon. The Indenture Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust Agreement to enter
into this Trust Indenture and to take all action to be taken by it pursuant to
the provisions hereof, and shall not inquire into the authorization of the Owner
Trustee with respect thereto. In the administration of the trusts hereunder, the
Owner Trustee and the Indenture Trustee each may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents or attorneys and may at the expense of the Trust Indenture Estate,
consult with counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Indenture Trustee shall not be
liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting.
The Owner Trustee acts hereunder solely as trustee as herein and in
the Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. Compensation.
The Indenture Trustee shall be entitled to reasonable compensation,
including expenses and disbursements (including the reasonable fees and expenses
of counsel), for all services rendered hereunder and shall, on and subsequent to
an Event of Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Event of Default hereunder, to use or apply any monies held by
it hereunder in the Trust Indenture Estate toward such payments. The Indenture
Trustee agrees that it shall have no right against the Loan Participants, the
Certificate Holders, the Owner Trustee or the Owner Participant for any fee as
compensation for its services as trustee under this Trust Indenture.
SECTION 6.08. Instructions from Certificate Holders.
In the administration of the trusts created hereunder, the Indenture
Trustee shall have the right to seek instructions from a Majority in Interest of
Certificate Holders should any provision of this Trust Indenture appear to
conflict with any other provision herein or should the Indenture Trustee's
duties or obligations hereunder be unclear, and the Indenture Trustee shall
incur no liability in refraining from acting until it receives such
instructions. The Indenture Trustee shall be fully protected for acting in
accordance with any instructions received under this Section 6.08.
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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
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. The Owner Trustee
shall be subrogated to the Indenture Trustee's rights, if any, to any indemnity
payment from Lessee for the amounts paid by the Owner Trustee under this Section
7.01.
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ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee.
In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee, Lessee and
the Certificate Holders.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
Successor.
(a) The Indenture Trustee or any successor thereto may resign at any
time without cause by giving at least 30 days' prior written notice to Lessee,
the Owner Trustee, the Owner Participant and each Certificate Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, a Majority in Interest of Certificate
Holders may at any time (but only with the consent of Lessee, which consent
shall not be unreasonably withheld, except that such consent shall not be
necessary if a Lease Event of Default is continuing) remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Certificate Holder thereof in
writing, such removal to be effective upon the acceptance of the trusteeship by
a successor Indenture Trustee. In the case of the resignation or removal of the
Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a
successor Indenture Trustee by an instrument signed by such holders, which
successor, so long as no Lease Event of Default shall have occurred and be
continuing, shall be subject to Lessee's reasonable approval. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner
Participant or any Certificate Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as above
provided.
(b) Any successor Indenture Trustee, however appointed, shall
execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and
Lessee an instrument accepting such appointment and assuming the obligations of
the Indenture Trustee under the Participation Agreement arising from and after
the time of such appointment, and thereupon such successor Indenture Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Indenture Trustee hereunder in the
trust hereunder applicable to it with like effect as if originally named the
Indenture Trustee herein; but nevertheless upon the written request of such
successor Indenture Trustee, such predecessor Indenture Trustee shall execute
and deliver an instrument transferring to such successor Indenture Trustee, upon
the trusts herein expressed applicable to it, all the estates, properties,
rights and powers of such predecessor Indenture Trustee, and such predecessor
Indenture Trustee
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shall duly assign, transfer, deliver and pay over to such successor Indenture
Trustee all monies or other property then held by such predecessor Indenture
Trustee hereunder.
(c) Any successor Indenture Trustee, however appointed, shall be a
bank or trust company having its principal place of business in the Borough of
Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago,
Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts
and having (or whose obligations under the Operative Documents are guaranteed by
an affiliated entity having) a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred, shall, subject to
the terms of paragraph (c) of this Section 8.02, be a successor Indenture
Trustee and the Indenture Trustee under this Trust Indenture without further
act.
SECTION 8.03. Appointment of Additional and Separate Trustees.
(a) Whenever (i) the Indenture Trustee shall deem it necessary or
desirable in order to conform to any law of any jurisdiction in which all or any
part of the Trust Indenture Estate shall be situated or to make any claim or
bring any suit with respect to or in connection with the Trust Indenture Estate,
this Trust Indenture, any other Indenture Agreement, the Secured Certificates or
any of the transactions contemplated by the Participation Agreement, (ii) the
Indenture Trustee shall be advised by counsel satisfactory to it that it is so
necessary or prudent in the interests of the Certificate Holders (and the
Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the
Indenture Trustee shall have been requested to do so by a Majority in Interest
of Certificate Holders, then in any such case, the Indenture Trustee and, upon
the written request of the Indenture Trustee, the Owner Trustee, shall execute
and deliver an indenture supplemental hereto and such other instruments as may
from time to time be necessary or advisable either (1) to constitute one or more
bank or trust companies or one or more persons approved by the Indenture
Trustee, either to act jointly with the Indenture Trustee as additional trustee
or trustees of all or any part of the Trust Indenture Estate, or to act as
separate trustee or trustees of all or any part of the Trust Indenture Estate,
in each case with such rights, powers, duties and obligations consistent with
this Trust Indenture as may be provided in such supplemental indenture or other
instruments as the Indenture Trustee or a Majority in Interest of Certificate
Holders may deem necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional and separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not have taken any
action requested of it under this Section 8.03(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
Indenture Trustee so to do, or if an Event of Default shall have occurred and be
continuing, the Indenture Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner
Trustee hereby irrevocably appoints (which appointment is coupled with an
interest) the Indenture Trustee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Indenture
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Trustee may, in such capacity, execute, deliver and perform any such
supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification
of, addition to or subtraction from the rights, powers, duties or obligations
theretofore granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section 8.03(a) shall die,
become incapable of acting, resign or be removed, all the assets, property,
rights, powers, trusts, duties and obligations of such additional or separate
trustee shall revert to the Indenture Trustee until a successor additional or
separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon the Indenture
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any Operative
Document to the Indenture Trustee shall be promptly paid over by it to the
Indenture Trustee. All other rights, powers, duties and obligations conferred or
imposed upon any additional or separate trustee shall be exercised or performed
by the Indenture Trustee and such additional or separate trustee jointly except
to the extent that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Indenture Trustee incompetent or unqualified
to perform such act, in which event such rights, powers, duties and obligations
(including the holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary
action except on the instructions of the Indenture Trustee or a Majority in
Interest of Certificate Holders. No trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder, except that the
Indenture Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Indenture Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed
pursuant to this Section 8.03 shall be subject to, and shall have the benefit of
Articles IV through VIII and Article X hereof insofar as they apply to the
Indenture Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Indenture Trustee hereunder.
(c) If at any time the Indenture Trustee shall deem it no longer
necessary or desirable in order to conform to any such law or take any such
action or shall be advised by such counsel that it is no longer so necessary or
desirable in the interest of the Certificate Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in
Interest of Certificate Holders, the Indenture Trustee and, upon the written
request of the Indenture Trustee, the Owner Trustee, shall execute and deliver
an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture
Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when
and to the extent it could so act under Section 8.03(a) hereof.
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ARTICLE IX
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations.
(a) Except as provided in Section 5.02 hereof, and except with
respect to Excluded Payments, the Owner Trustee agrees it shall not enter into
any amendment of or supplement to the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or
execute and deliver any written waiver or modification of, or consent under, the
terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement or the Guarantee, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by the Indenture
Trustee and a Majority in Interest of Certificate Holders. Anything to the
contrary contained herein notwithstanding, without the necessity of the consent
of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified, amended, changed or
waived in such manner as shall be agreed to by the Owner Participant and Lessee
and (ii) the Owner Trustee and Lessee may enter into amendments of or additions
to the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments, modifications
and changes do not and would not affect the time of, or reduce the amount of,
Rent payments until after the payment in full of all Secured Obligations or
otherwise adversely affect the Certificate Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof and
subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the
Certificate Holders that it shall not enter into any amendment, waiver or
modification of, supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee or the Participation Agreement, or any other agreement
included in the Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a Majority in
Interest of Certificate Holders, or does not adversely 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
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change the time of payment or method of calculation of any amount, of Principal
Amount, Make-Whole Amount, if any, or interest with respect to any Secured
Certificate, or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution thereunder shall be
made as among the Certificate Holders, the Owner Trustee and Lessee, (iii)
reduce, modify or amend any indemnities in favor of the Certificate Holders,
(iv) consent to any change in the Trust Indenture or the Lease which would
permit redemption of Secured Certificates earlier than permitted under Section
2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as
permitted by Section 2.14 hereof, (v) modify any of the provisions of Section
3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any
assignment of the Lease, in either case releasing Lessee from its obligations in
respect of the payment of Basic Rent, Stipulated Loss Value or Termination Value
for the Aircraft or altering the absolute and unconditional character of the
obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease
or (vi) permit the creation of any Lien on the Trust Indenture Estate or any
part thereof other than Permitted Liens or deprive any Certificate Holder of the
benefit of the Lien of this Trust Indenture on the Trust Indenture Estate,
except as provided in connection with the exercise of remedies under Article IV
hereof. So long as no Lease Event of Default has occurred and is continuing,
without the consent of Lessee no amendment or supplement to this Trust Indenture
or waiver or modification of the terms hereof shall adversely affect Lessee.
(c) At any time after the date hereof, the Owner Trustee and the
Indenture Trustee may enter into one or more agreements supplemental hereto
without the consent of any Certificate Holder for any of the following purposes:
(i) (a) to cure any defect or inconsistency herein or in the Secured
Certificates, or to make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the interests of any
Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure
any ambiguity or correct any mistake; (ii) to evidence the succession of another
party as the Owner Trustee in accordance with the 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,
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<PAGE>
immunity or indemnity with respect to such institution under this Trust
Indenture or the Lease, such institution may in its discretion decline to
execute such document.
SECTION 9.03. Documents Mailed to Certificate Holders.
Promptly after the execution by the Owner Trustee or the Indenture
Trustee of any document entered into pursuant to Section 9.01 hereof, the
Indenture Trustee shall mail, by first class mail, postage prepaid, a copy
thereof to Lessee and to each Certificate Holder at its address last set forth
in the Secured Certificate Register, but the failure of the Indenture Trustee to
mail such copies shall not impair or affect the validity of such document.
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Agreement and Indenture Supplement.
No written request or consent of the Indenture Trustee, the
Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof
shall be required to enable the Owner Trustee to enter into any Lease Supplement
specifically required by the terms of the Lease or to execute and deliver a
Trust Agreement and Indenture Supplement specifically required by the terms
hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture.
Upon (or at any time after) payment in full of the Principal Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Secured Certificates and provided that there shall then be no other Secured
Obligations due to the Certificate Holders and the Indenture Trustee hereunder
or under the Participation Agreement, the Owner Trustee shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the
Owner Trustee an appropriate instrument releasing the Aircraft and the Engines
from the Lien of this Trust Indenture and releasing the Lease, the Guarantee,
the Purchase Agreement, and the Purchase Agreement Assignment with the Consent
and Agreement attached thereto from the assignment and pledge thereof hereunder
and the Indenture Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however, that this Trust
Indenture and the trusts created hereby shall earlier terminate and this Trust
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property constituting part of the
Trust Indenture Estate and the final distribution by the Indenture Trustee of
all monies or other property or proceeds constituting part of the Trust
Indenture Estate in accordance with the terms hereof. Except as aforesaid
otherwise provided, this Trust Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
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<PAGE>
SECTION 10.02. No Legal Title to Trust Indenture Estate in
Certificate Holders.
No holder of a Secured Certificate shall have legal title to any
part of the Trust Indenture Estate. No transfer, by operation of law or
otherwise, of any Secured Certificate or other right, title and interest of any
Certificate Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Trust Indenture or entitle such holder or any
successor or transferee of such holder to an accounting or to the transfer to it
of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee Is Binding.
Any sale or other conveyance of the Trust Indenture Estate, or any
part thereof (including any part thereof or interest therein), by the Indenture
Trustee made pursuant to the terms of this Trust Indenture shall bind the
Certificate Holders and shall be effective to transfer or convey all right,
title and interest of the Indenture Trustee, the Owner Trustee, the Owner
Participant and such holders in and to such Trust Indenture Estate or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance or
as to the application of any sale or other proceeds with respect thereto by the
Indenture Trustee.
SECTION 10.04. Trust Indenture for Benefit of the Owner Trustee, the
Indenture Trustee, Owner Participant, Lessee and Certificate Holders.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner Trustee, the Indenture
Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or
equitable right, remedy or claim under or in respect of this Trust Indenture.
SECTION 10.05. Notices.
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at its office at 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No.
(801) 246-5053), with a copy to the Owner Participant addressed as provided in
clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its
office at, for U.S. mail at Corporate Trust Department, P.O. Box 778, Boston,
Massachusetts 02102-0778, and for overnight courier at Corporate Trust
Department, 2 Avenue de Lafayette, Boston, Massachusetts 02111-1724 (Telecopy
No. (617) 662-1462), (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
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<PAGE>
them, such notice shall be deemed given and such requirement satisfied when such
notice is received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this Trust
Indenture.
SECTION 10.06. Severability.
Any provision of this Trust Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers.
No term or provision of this Trust Indenture or the Secured
Certificates may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Owner Trustee and the Indenture
Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof
or of any Secured Certificate shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.08. Successors and Assigns.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Certificate
Holder shall bind the successors and assigns of such holder. This Trust
Indenture and the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken under or in
respect of the Trust Agreement, except that each reference in this Trust
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby, thereby and by
the Participation Agreement. Each Certificate Holder by its acceptance of a
Secured Certificate agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan Participant or a
Certificate Holder.
SECTION 10.09. Headings.
The headings of the various Articles and sections herein and in the
table of contents hereto are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 10.10. Normal Commercial Relations.
Anything contained in this Trust Indenture to the contrary
notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or
any bank or other Affiliate of such Participant may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Lessee, fully to the same extent as if this Trust Indenture were
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<PAGE>
not in effect, including without limitation the making of loans or other
extensions of credit to Lessee for any purpose whatsoever, whether related to
any of the transactions contemplated hereby or otherwise.
SECTION 10.11. Governing Law; Counterpart Form.
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST
INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may
be executed by the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts), each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 10.12. Voting By Certificate Holders.
All votes of the Certificate Holders shall be governed by a vote of
a Majority in Interest of Certificate Holders, except as otherwise provided
herein.
SECTION 10.13. Bankruptcy.
It is the intention of the parties that the Owner Trustee, as lessor
under the Lease (and the Indenture Trustee as assignee of the Owner Trustee
hereunder), shall be entitled to the benefits of Section 1110 with respect to
the right to take possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy
Code in which Lessee is a debtor, and in any instance where more than one
construction is possible of the terms and conditions hereof or any other
pertinent Operative Document, each such party agrees that a construction which
would preserve such benefits shall control over any construction which would not
preserve such benefits.
SECTION 10.14. No Action Contrary to Lessee's Rights Under the
Lease.
Notwithstanding any of the provisions of this Trust Indenture or the
Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner
Trustee will take any action contrary to Lessee's rights under the Lease,
including the right to possession and use of, and the quiet enjoyment of, the
Aircraft, except in accordance with provisions of the Lease.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee, Owner
Trustee
By:
----------------------------------------
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:
-Signature page-
<PAGE>
-------------------------------
EXHIBIT A
TO
TRUST INDENTURE
AND SECURITY AGREEMENT
-------------------------------
TRUST INDENTURE SUPPLEMENT
[NW ____ _]
This TRUST INDENTURE SUPPLEMENT [NW ____ _], 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 ____ _] 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 ____ _],
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, 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
EXHIBIT A-2
<PAGE>
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 G ....... $[_________] 7.935%
Series B ....... $[_________] 9.485%
Series C ....... $[_________] 9.152%
SCHEDULE I-1
<PAGE>
Secured Certificates Amortization
SERIES G
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, 1999 among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3G, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3B, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
3. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3C, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
SCHEDULE II-1
<PAGE>
Exhibit 99.(d)
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
[NW ____ __]
Dated as of [__________________]
between
NORTHWEST AIRLINES, INC.,
Assignor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Assignee
---------------
One British Aerospace Avro 146-RJ85A
Aircraft
================================================================================
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT
[NW ____ __]
This PURCHASE AGREEMENT ASSIGNMENT [NW ____ __], 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") (the "Assignment").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has
agreed to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement
[NW ____ __], 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 executed by the Manufacturer attached hereto, desires to
assign to Assignee certain of Assignor's rights and interests in and under the
Purchase Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) Notwithstanding the foregoing, if and so long as (A) the
Aircraft shall be subject to the Lease and (B) the Manufacturer shall not have
received notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
<PAGE>
the Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "Manufacturer Payment"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to Assignee in accordance with the terms of the
Lease, be returned to Assignor promptly after all Events of Default under the
Lease have been cured or waived.
-2-
<PAGE>
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at British Aerospace Regional Aircraft SA, 3, allee Pierre Nadot,
B.P. 16, 31701 Blagnac Cedex, France, Attn: SVP Sales & Marketing (telecopy 011
33 5 3460 7300) with a copy to British Aerospace Regional Aircraft, Inc., 13850
McLearen Road, Herndon, Virginia 20171-3211, Attn.: Contracts Director (telecopy
(703) 736-4255) and three Business Days shall have elapsed from the date of
actual receipt by the Manufacturer and, in acting in accordance with the terms
and conditions of the Purchase Agreement and this Assignment, the Manufacturer
may rely conclusively upon any such notice.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding: (i)
Assignor shall at all times remain liable to the Manufacturer under the Purchase
Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any respect the Manufacturer's contract rights
thereunder, except as provided in the Consent and Agreement attached hereto.
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and
-3-
<PAGE>
agreements made by Assignee as Owner Trustee (when made in such capacity)
contained in this Assignment and any agreement referred to herein or in the
Participation Agreement other than the Trust Agreement, unless expressly
otherwise stated, are made and intended only for the purpose of binding the
Trust Estate and establishing the existence of rights and remedies which can be
exercised and enforced against the Trust Estate. Therefore, anything contained
in this Assignment or such other agreements to the contrary notwithstanding
(except for any express provisions that Assignee is responsible for in its
individual capacity), no recourse shall be had with respect to this Assignment
or such other agreements against Assignee in its individual capacity or against
any institution or person which becomes a successor trustee or co-trustee or any
officer, director, trustee, servant or direct or indirect parent or controlling
person or persons of any of them; provided, however, that this Section 4(d)
shall not be construed to prohibit any action or proceeding against First
Security Bank, National Association, for its own willful misconduct or grossly
negligent conduct for which it would otherwise be liable; and provided, further,
that nothing contained in this Section 4(d) shall be construed to limit the
exercise and enforcement in accordance with the terms of this Assignment or such
other agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 4(d) shall survive the termination of this Assignment
and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. No Amendment of Manufacturer Support Agreement. Assignee agrees
that it will not enter into any amendment, modification, supplement, rescission,
cancellation or termination of the Manufacturer Support Agreement in respect of
the Contract Rights, as and to the extent the same relate to the Aircraft,
without the prior written consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
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
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<PAGE>
PERFORMANCE. THIS ASSIGNMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for all purposes of this
Assignment and shall be equally applicable to both the singular and the plural
forms of the terms herein defined:
"Aircraft" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"Contract Rights" means all of Assignor's right, title and interest
in and to Clause 7, paragraphs F.5. and F.7. of Part F, and Part H and Part J of
the Manufacturer Support Agreement as and to the extent that the same relate to
the warranties with respect to the Aircraft, including, without limitation, (a)
all claims for damages in respect of the Aircraft arising as a result of any
default by the Manufacturer under Clause 7, paragraphs F.5. and F.7. of Part F,
Part H or Part J of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity provisions in Clause
7, Part H and Part J of the Manufacturer Support Agreement in respect of the
Aircraft and all claims thereunder and (b) any and all rights of Assignor to
compel performance of the terms of Clause 7, paragraphs F.5. and F.7. of Part F,
Part H and Part J of the Manufacturer Support Agreement in support thereof.
"Engine" means each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the Lease Supplement.
"Lease" means the Lease Agreement [NW ____ __], dated as of
[__________________], between Assignor and Assignee.
"Lease Supplement" means a Lease Supplement substantially in the
form of Exhibit A to the Lease, entered into between Assignor and Assignee on
the date the Aircraft is leased by Assignee to Assignor and accepted by Assignor
under the Lease.
"Manufacturer" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and its
successors and assigns.
"Manufacturer Support Agreement" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Assignor, 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.
"Operative Documents" shall have the meaning specified in the Lease.
"Participation Agreement" shall have the meaning specified in the
Lease.
"Purchase Agreement" means the Sale and Purchase Agreement, dated as
of February 5, 1997, between the Manufacturer and Assignor relating to the
purchase by Assignor of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates to
the Aircraft.
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<PAGE>
"Sublessee" shall have the meaning specified in the Lease.
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By:
------------------------------------
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 and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------
Name:
Title:
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<PAGE>
Exhibit 99(e)
==============================================================================
TRUST AGREEMENT
[NW ____ _]
Dated as of [____________]
between
[_______________________________________],
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A Aircraft
==============================================================================
<PAGE>
TRUST AGREEMENT
[NW ____ _]
This TRUST AGREEMENT [NW ____ _] 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 ____ _], to be dated
as of the date hereof, and to be entered into by the Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation,
and its permitted successors and assigns.
"Owner Participant" means the Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
<PAGE>
"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 Guaranty, the Purchase Agreement Assignment, the
Residual Agreement, the Bill of Sale and the FAA Bill of Sale, including,
without limitation, all amounts of Basic Rent and Supplemental Rent including
without limitation insurance proceeds (other than insurance proceeds payable to
or for the benefit of the Owner Trustee, for its own account or in its
individual capacity, the Owner Participant, the Loan Participants or the
Indenture Trustee) and requisition, indemnity or other payments of any kind for
or with respect to the Aircraft (except amounts owing to the Owner Participant,
to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or
to the Loan Participants or any other holder of a Secured Certificate, or to any
of their respective directors, officers, employees, servants and agents,
pursuant to Section 7 of the Participation Agreement). Notwithstanding the
foregoing, "Trust Estate" shall not include any Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in
the Trust Indenture.
"Trust Office" shall mean the principal corporate trust office of
the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111,
Attention: Corporate Trust Department, or the principal corporate trust office
of any successor Owner Trustee.
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<PAGE>
"Trust Supplement" means a supplement to the Trust Indenture and to
this Trust Agreement in substantially the form of Exhibit A to the Trust
Indenture which shall particularly describe the Aircraft, and any Replacement
Airframe and Replacement Engine included in the property of the Owner Trustee
covered by this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. Authority to Execute Documents. The Owner Participant
hereby authorizes and directs the Owner Trustee to execute and deliver the
Operative Documents and any other agreements, instruments or documents to which
the Owner Trustee is a party in the respective forms thereof in which delivered
from time to time by the Owner Participant to the Owner Trustee for execution
and delivery and, subject to the terms hereof, to perform its duties and, upon
instructions from the Owner Participant, exercise its rights under said
Operative Documents in accordance with the terms thereof.
SECTION 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and benefit of the Owner Participant, subject, however, to the
provisions of and the Lien created by the Trust Indenture and to the provisions
of the Lease.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF SECURED CERTIFICATES
SECTION 3.01. Acceptance of Aircraft. The Original Owner Participant
hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees
for the benefit of the Owner Participant that it will, on the Delivery Date,
subject to due compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering the
Aircraft;
(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;
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<PAGE>
(f) execute and deliver the financing statements referred to in
Section 4(a)(vi) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 4 of the
Participation Agreement to which the Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of the Owner
Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of
Sale; (ii) an application for registration of the Aircraft in the name of
the Owner Trustee (including without limitation an affidavit from the
Owner Trustee in compliance with the provisions of 14 C.F.R. ss.
47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement.
SECTION 3.02. Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) the Original Owner Participant shall have made the full amount
of its Commitment set forth in Schedule II of the Participation Agreement
available to the Owner Trustee, in immediately available funds, in
accordance with Section 1 of the Participation Agreement; and
(b) the terms and conditions of Section 4 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to the Original Owner Participant
and the Owner Trustee.
SECTION 3.03. Authorization in Respect of a Termination of the Lease
and Assumption of the Secured Certificates. The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that it will, take the actions specified to
be taken by the Owner Trustee in Section 8(x) of the Participation Agreement
upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and
upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in
accordance with the provisions of such Section 8(x).
SECTION 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will, in the event of a Replacement Airframe and Replacement
Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a
Replacement Engine being substituted pursuant to Section 10(b) of the Lease,
subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease,
as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee (who shall be an 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
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<PAGE>
Replacement Engines, if any, or the Replacement Engine being furnished
pursuant to Section 10(a) or (b) of the Lease;
(c) in the case of a Replacement Airframe, make application to the
Federal Aviation Administration for the registration in the name of the
Owner Trustee of the Aircraft of which such Replacement Airframe is a
part;
(d) execute and deliver a Lease Supplement and a Trust Supplement
covering (i) the Aircraft of which such Replacement Airframe is part or
(ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe and
Engines or engines (if any) or the Engine or engine being replaced from
the lien created under the Trust Indenture and release the Purchase
Agreement and the Purchase Agreement Assignment (solely with respect to
such replaced Airframe and Engines, if any, or Engine) from the assignment
and pledge under the Trust Indenture; and
(g) upon instructions from the Owner Participant, take such further
action as may be contemplated by clauses (A) and (B) of the third
paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of
Section 10(b) of the Lease, as the case may be.
SECTION 3.05. Trust Agreement Remaining in Full Force and Effect. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe or engine as the Airframe or Engine being replaced but for the
Event of Loss with respect to such Airframe or Engine.
SECTION 3.06. Authorization in Respect of a Return of an Engine. The
Owner Participant hereby authorizes and directs the Owner Trustee to, and the
Owner Trustee agrees for the benefit of the Owner Participant that it will, in
the event of an engine being transferred to the Owner Trustee pursuant to
Section 5(b) of the Lease, subject to due compliance with the terms of such
Section 5(b):
(a) accept from Lessee the bill of sale with respect to such engine
contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to an Engine to Lessee as contemplated by such Section 5(b);
and
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<PAGE>
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 5(b) from the lien of the
Trust Indenture and to release the Purchase Agreement and the Purchase
Agreement Assignment (solely with respect to such Engine) from the
assignment and pledge under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. Distribution of Payments. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust
Indenture shall have been discharged pursuant to Section 10.01 thereof, any
payment of the type referred to in Section 4.01(a) hereof (other than Excluded
Payments) received by the Owner Trustee, any payments received from the
Indenture Trustee other than as specified in Section 4.01(d) hereof and any
other amount received as part of the Trust Estate and for the application or
distribution of which no provision is made herein, shall be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the balance,
if any, shall be paid to the Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be
distributed by the Owner Trustee to the Owner Participant in accordance with the
provisions of Article III of the Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
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
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<PAGE>
the Owner Participant as the Owner Participant may designate from time to time
in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner
Trustee will, if so requested by the Owner Participant in writing, pay any or
all amounts payable to the Owner Participant pursuant to this Article IV either
(i) by crediting such amount or amounts to an account or accounts maintained by
the Owner Participant with the Owner Trustee in its individual capacity in
immediately available funds, (ii) by payment at the Trust Office of the Owner
Trustee, in immediately available funds, or (iii) by mailing an official bank
check or checks in such amount or amounts payable to the Owner Participant at
such address as the Owner Participant shall have designated in writing to the
Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Owner Trustee shall
have knowledge of a Lease Event of Default or an Indenture Event of Default (or
an event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) the Owner
Trustee shall give to the Owner Participant prompt telephonic or telecopy notice
thereof followed by prompt confirmation thereof by certified mail, postage
prepaid, provided that (i) in the case of an event which with the passage of
time would constitute an Indenture Event of Default referred to in paragraph (c)
of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten (10) days after the Owner Trustee shall first have
knowledge of such event and (ii) in the case of a misrepresentation by the Owner
Trustee which with the passage of time would constitute an Indenture Event of
Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture,
such notice shall in no event be furnished later than ten (10) days after the
Owner Trustee shall first have knowledge of such event. Subject to the terms of
Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain
from taking such action, not inconsistent with the provisions of the Trust
Indenture, with respect to such Lease Event of Default, Indenture Event of
Default or other event as the Owner Trustee shall be directed in writing by the
Owner Participant. If the Owner Trustee shall not have received instructions as
above provided within twenty (20) days after the mailing of such notice to the
Owner Participant, the Owner Trustee until instructed otherwise in accordance
with the preceding sentence may, but shall be under no duty to, take or refrain
from taking such action with respect to such Lease Event of Default, Indenture
Event of Default or other event, not inconsistent with the provisions of the
Trust Indenture, as it shall deem advisable in the best interests of the Owner
Participant. For all purposes of this Trust Agreement, the Lease and the other
Operative Documents, in the absence of actual knowledge by an officer of FSB in
the Corporate Trust Department, the Owner Trustee shall not be deemed to have
knowledge of a Lease Event of Default, an Indenture Event of Default or other
event referred to in this Section 5.01 unless notified in writing by the
Indenture Trustee, the Owner Participant or Lessee.
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
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<PAGE>
Operative Documents to which the Owner Trustee is a party or in respect of all
or any part of the Trust Estate as shall be specified in such instructions
(including entering into agreements referred to in clause (i) of the definition
of "Subsequent Owner Participant"); (ii) take such action to preserve or protect
the Trust Estate (including the discharge of Liens) as may be specified in such
instructions; (iii) approve as satisfactory to it all matters required by the
terms of the Lease or the other Operative Documents to be satisfactory to the
Owner Trustee, it being understood that without written instructions of the
Owner Participant, the Owner Trustee shall not approve any such matter as
satisfactory to it (it being understood that the provisions of Sections 3.03,
3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for
the Owner Trustee to approve of or consent to the matters to be approved of or
consented to by the Owner Trustee in the sections of the Lease referred to in
Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee
under the Operative Documents, after the expiration or earlier termination of
the Lease, deliver the Aircraft to the Owner Participant in accordance with such
instructions, convey all of the Owner Trustee's right, title and interest in and
to the Aircraft for such amount, on such terms and to such purchaser or
purchasers as shall be designated in such instructions, or net lease the
Aircraft on such terms and to such lessee or lessees as shall be designated in
such instructions.
SECTION 5.03. Indemnification. The Owner Trustee shall not be
required to take any action under Section 5.01 (other than the giving of the
notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have
been indemnified by the Owner Participant, in manner and form satisfactory to
the Owner Trustee, against any liability, cost or expense (including reasonable
counsel fees and disbursements) which may be incurred in connection therewith;
and, if the Owner Participant shall have directed the Owner Trustee to take any
such action or refrain from taking any action, the Owner Participant agrees to
furnish such indemnity as shall be required and, in addition, to the extent not
otherwise paid pursuant to the provisions of the Lease or the Participation
Agreement, to pay the reasonable compensation of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction and any
fees and disbursements of counsel or agents employed by the Owner Trustee in
connection therewith. The Owner Trustee shall not be required to take any action
under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably
determine, or shall have been advised by counsel, that such action is contrary
to the terms of any of the Operative Documents to which the Owner Trustee is a
party, or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with any of the Operative Documents to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Documents to which the Owner Trustee is a party, or (to the 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
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<PAGE>
in full all Lessor Liens which it is required to discharge pursuant to Section
8(h) of the Participation Agreement and otherwise comply with the terms of said
Section binding on it.
SECTION 5.05. Satisfaction of Conditions Precedent. Anything herein
to the contrary notwithstanding, the Owner Trustee shall comply with the
provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of
special counsel for the Owner Trustee, of all the applicable conditions
precedent specified in Section 3.02 hereof and in Section 4 of the Participation
Agreement.
SECTION 5.06. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not have any power, right or authority to,
and the Owner Trustee agrees that it will not, manage, control, use, sell,
dispose of or otherwise deal with the Aircraft or any other part of the Trust
Estate except (i) as expressly required by the terms of any of the Operative
Documents to which the Owner Trustee is a party, (ii) as expressly provided by
the terms hereof, or (iii) as expressly provided in written instructions from
the Owner Participant pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. FSB accepts the
trusts hereby created and agrees to perform the same but only upon the terms
hereof applicable to it. The Owner Trustee also agrees to receive and disburse
all monies received by it constituting part of the Trust Estate upon the terms
hereof. FSB shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof, (c) for
its or the Owner Trustee's failure to use ordinary care to disburse funds and
(d) for liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease
or in Section 8(c), 8(d) and 8(v) of the Participation Agreement.
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, or (ii) to see
to any insurance on the Aircraft or to effect or maintain any such insurance,
whether or not Lessee shall be in default with respect thereto, other than to
forward to the Owner Participant copies of all reports and other written
information which the
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Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, or
(iii) to see to the payment or discharge of any tax, assessment or other
governmental charge or any lien or encumbrance of any kind owing with respect
to, assessed or levied against any part of the Trust Indenture Estate or the
Trust Estate, except as provided in Section 8 of the Participation Agreement, or
(iv) to inspect Lessee's books and records with respect to the Aircraft at any
time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner
Trustee will furnish to the Indenture Trustee and the Owner Participant,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to the Owner Trustee under the Lease or any other Operative Document.
SECTION 6.03. No Representations or Warranties as to Certain
Matters. NEITHER THE OWNER TRUSTEE NOR FSB MAKES OR SHALL BE DEEMED TO HAVE MADE
(a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT WHATSOEVER, except that FSB in its individual capacity warrants that on
the Delivery Date the Owner Trustee shall have received whatever title was
conveyed to it by Lessee and that the Aircraft shall during the Term be free of
Lessor Liens attributable to it, or (b) any representation or warranty as to the
validity, legality or enforceability of this Trust Agreement or any Operative
Document to which the Owner Trustee is a party, or any other document or
instrument, or as to the correctness of any statement contained in any thereof
except to the extent that any such statement is expressly made herein or therein
as a representation by FSB in its individual capacity or by the Owner Trustee
and except that FSB in its individual capacity hereby represents and warrants
that this Trust Agreement has been, and (assuming due authorization, execution
and delivery by the Original Owner Participant of this Trust Agreement) the
Operative Documents to which it or the Owner Trustee is a party have been (or at
the time of execution and delivery of any such instrument by it or the Owner
Trustee hereunder or pursuant to the terms of the Participation Agreement that
such an instrument will be) duly executed and 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
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managing director and in the name of the Owner Participant or Lessee, as the
case may be. The Owner Trustee may accept a copy of a resolution of the Board of
Directors or Executive Committee of Lessee, certified by the secretary or any
assistant secretary of Lessee as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted by said Board or
Committee and that the same is in full force and effect. As to any fact or
matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee may for all purposes hereof rely on a certificate
signed by a person purporting to be the chairman of the board, the president,
any executive vice president, any senior vice president or any vice president or
a managing director of Lessee, as to such fact or matter, and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon. In the
administration of trusts hereunder, the Owner Trustee may execute any of the
trusts or powers hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons and the Owner Trustee shall not be
liable for the negligence of any such agent, attorney, counsel, accountant or
other skilled person appointed by it with due care hereunder.
SECTION 6.06. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Trust Indenture, all persons, other
than the Owner Participant, as provided herein, having any claim against the
Owner Trustee by reason of the transactions contemplated hereby shall look only
to the Trust Estate for payment or satisfaction thereof.
SECTION 6.07. Fees; Compensation. Except as provided in Section 5.03
or 7.01 hereof and Section 16 of the Participation Agreement, 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.
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ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. Owner Participant to Indemnify Owner Trustee. The
Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and hereby
indemnify, protect, save and keep harmless 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
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Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior
to any interest therein of the Owner Participant. The payor of any indemnity
under this Article VII shall be subrogated to any right of the person
indemnified in respect of the matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE OWNER PARTICIPANT'S INTEREST
SECTION 8.01. Transfer of Interests. All provisions of Section 8(n)
of the Participation Agreement shall (with the same force and effect as if set
forth in full, mutatis mutandis, in this Section 8.01) be applicable to any
assignment, conveyance or other transfer by any Owner Participant of its right,
title or interest in and to the Participation Agreement, the Trust Estate or
this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. Resignation of Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to the Owner Participant, the
Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such resignation to
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b) hereof. In addition, the Owner Participant may at any time
remove the Owner Trustee without cause by a notice in writing delivered to the
Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture
has not been fully discharged) and Lessee (so long as the Lease is in effect),
such removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or
removal of the Owner Trustee, the Owner Participant may appoint a successor
Owner Trustee by an instrument signed by the Owner Participant. If a successor
Owner Trustee shall not have been appointed within thirty (30) days after such
notice of resignation or removal, the Owner Trustee, the Owner Participant,
Lessee or the Indenture Trustee may apply to any court of competent jurisdiction
to appoint a successor Owner Trustee to act until such time, if any, as a
successor shall have been appointed as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Owner Trustee appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Owner Participant an instrument accepting such appointment, and
thereupon such successor Owner Trustee, without further act, shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named the Owner Trustee herein; but nevertheless, upon the written
request of such
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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.
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
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(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by the Owner
Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations shall be exercised and
performed by such additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee unless such additional trustee was
appointed by the Owner Trustee without the concurrence of the Owner
Participant during the occurrence of an Indenture Event of Default not
arising from a Lease Event of Default, in which case the Owner Trustee
shall have the power to remove any such additional trustee without the
concurrence of the Owner Participant; and the Owner Participant hereby
appoints the Owner Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of, the Trust Indenture or affect the interests of
the Indenture Trustee or the holders of the Secured Certificates in the
Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Owner Participant. Subject to Section 10.02 hereof and the first sentence of
Section 10 of the Participation Agreement, the Owner Trustee will execute any
amendment, supplement or other 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
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provisions of any of the above documents, requires the consent of any other
party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A
signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each
holder of a Secured Certificate.
SECTION 10.02. Discretion as to Execution of Documents. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion
of its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid,
a conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
SECTION 10.05. No Request Needed as to Lease Supplement and Trust
Supplement. No written request pursuant to Section 10.01 hereof shall be
required to enable the Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01
hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and
Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David Rockefeller living on the date of the earliest execution
of this Trust Agreement by any party hereto; otherwise this Trust Agreement and
the trusts created hereby shall continue in full force and effect in accordance
with the terms hereof.
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SECTION 11.02. Owner Participant Has No Legal Title in Trust Estate.
The Owner Participant shall not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by the Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind the Owner Participant and shall be effective to transfer or
convey all right, title and interest of the Owner Trustee and the Owner
Participant in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or regularity
of such assignment, sale, transfer or conveyance or as to the application of any
sale or other proceeds with respect thereto by the Owner Trustee.
SECTION 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 8(n) of the Participation Agreement incorporated
in Article VIII hereof and except as otherwise provided in Articles IX and X
hereof, nothing herein, whether expressed or implied, shall be construed to give
any Person other than the Owner Trustee and the Owner Participant any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement;
but this Trust Agreement shall be held to be for the sole and exclusive benefit
of the Owner Trustee and the Owner Participant.
SECTION 11.05. Notices; Consent to Jurisdiction. (a) All notices,
demands, instructions and other communications required or permitted to be given
to or made upon any party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this 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
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Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that the Participation Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of any
thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
SECTION 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
SECTION 11.08. Counterparts. This Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.09. Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII hereof, its assigns. Any
request, notice, direction, consent, waiver or other instrument or action by the
Owner Participant shall bind its successors and assigns. Any Owner Participant
which shall cease to have any Ownership Interest shall thereupon cease to be a
party hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
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.
-18-
<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:
-19-
<PAGE>
Exhibit 99(f)
================================================================================
GUARANTEE
[NW ____ __]
Dated as of [_____________]
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee................................................................1
2. No Implied Third Party Beneficiaries.....................................3
3. Waiver; No Set-off; Reinstatement; Subrogation...........................4
4. Amendments, Etc..........................................................4
5. Payments.................................................................4
6. Assignment of Guarantee..................................................4
7. Jurisdictional Matters...................................................5
8. Integration; Counterparts; Successors and Assigns; Headings..............5
9. Notices..................................................................5
10. No Waivers...............................................................5
11. Survival.................................................................6
12. Severability.............................................................6
13. GOVERNING LAW............................................................6
14. Enforcement Expenses.....................................................6
15. Termination..............................................................6
16. No Guarantee of Secured Certificates.....................................6
-i-
<PAGE>
GUARANTEE
[NW ____ __]
This GUARANTEE [NW ____ __], 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 ____ __], dated as of the date hereof (as amended,
modified or supplemented from time to time, the "Lease"), between the Lessee and
First Security Bank, National Association, not in its individual capacity but
solely as Owner Trustee (as defined therein), except as expressly provided
therein (the "Lessor"), initially relating to one (1) British Aerospace Avro
146-RJ85A aircraft, together with four (4) Allied Signal LF507 type engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Lease, being collectively referred to herein as the "Aircraft"), pursuant to a
Participation Agreement [NW ____ __], 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 ____
__], dated as of the date hereof, between the Lessor and the Indenture Trustee
(as amended, modified or supplemented from time to time, the "Trust Indenture"),
as security for the obligations of the Lessor referred to therein; and
WHEREAS, the capitalized terms used herein that are not defined
herein are used herein as defined in the Lease;
NOW, THEREFORE, in order to induce the Lessor to enter into the
Lease and to induce the other Parties referred to above to enter into the
Participation Agreement and for other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Guarantee.
(a) The Guarantor does hereby acknowledge that it is fully aware of
the terms and conditions of the Lease, the Participation Agreement and the other
Operative Documents and the transactions and the other documents contemplated
thereby, and does hereby irrevocably and 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
<PAGE>
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, 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
-2-
<PAGE>
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 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-
<PAGE>
3. Waiver; No Set-off; Reinstatement; Subrogation. The Guarantor
waives notice of the acceptance of this Guarantee and of the performance or
nonperformance by the Lessee, demand for payment from the Lessee or any other
Person, notice of nonpayment or failure to perform on the part of the Lessee,
diligence, presentment, protest, dishonor and, to the fullest extent permitted
by law, all other demands or notices whatsoever, other than the request for
payment hereunder and notice provided for in Section 1 hereof. The obligations
of the Guarantor shall be absolute and unconditional and shall remain in full
force and effect until satisfaction of all Obligations hereunder and, without
limiting the generality of the foregoing, to the extent not prohibited by
applicable law, shall not be released, discharged or otherwise affected by the
existence of any claims, set-off, defense or other rights that the Guarantor may
have at any time and from time to time against any Party, whether in connection
herewith or any unrelated transactions. This Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any Financial Obligation is rescinded or must otherwise be returned by any Party
upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding with respect to the Lessee
or otherwise, all as though such payment had not been made. The Guarantor, by
virtue of any payment or performance hereunder to a Party, shall be subrogated
to such Party's claim against the Lessee or any other Person relating thereto;
provided, however, that the Guarantor shall not be entitled to receive payment
from the Lessee in respect of any claim against the Lessee arising from a
payment by the Guarantor in the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings relating to the Lessee,
or in the event of any proceedings for voluntary liquidation, dissolution or
other winding-up of the Lessee, whether or not involving insolvency or
bankruptcy proceedings, in which case the Obligations shall be paid and
performed in full before any payment in respect of a claim by the Guarantor
shall be made by or on behalf of the Lessee.
4. Amendments, Etc. No amendment of or supplement to this Guarantee,
or waiver or modification of, or consent under, the terms hereof, shall be
effective unless evidenced by an instrument in writing signed by the Guarantor
and each Party against whom such amendment, supplement, waiver, modification or
consent is to be enforced.
5. Payments. All payments by the Guarantor hereunder in respect of
any Obligation shall be made in Dollars and otherwise as provided in the Lease,
the Participation Agreement or any other Operative Document in which such
Obligation is contained; provided that the Guarantor consents to all the terms
of the Trust Indenture and agrees to make all payments hereunder directly to the
Indenture Trustee until such time as the Indenture Trustee shall give notice to
the Guarantor that the Lien of the Trust Indenture has been fully discharged and
thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay
directly to the Lessor, in its individual capacity, or to the Owner Participant
or another Party, as the case may be, any amount owing to such Person as
Supplemental Rent for indemnities provided in Section 7 of the Participation
Agreement or the Tax Indemnity Agreement or otherwise not constituting part of
the Trust Indenture Estate.
6. Assignment of Guarantee. As and to the extent provided in the
Trust Indenture, the Lessor will assign, and create a security interest in,
certain of its rights hereunder to and for the benefit of the Indenture Trustee.
From and after the execution and delivery of the Trust Indenture, and until
receipt by the Guarantor of a written notice from the Indenture Trustee
-4-
<PAGE>
to the effect that the Trust Indenture has been fully satisfied and discharged,
no remedy or election hereunder may be exercised by the Lessor or consent given
by the Lessor, except by or with the prior written consent of the Indenture
Trustee, and the Guarantor will make payment of all amounts hereunder that are
assigned to the Indenture Trustee directly to the Indenture Trustee, and such
payments shall discharge the obligations of the Guarantor to the Lessor to the
extent of such payments.
7. Jurisdictional Matters. The Guarantor (a) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County, for
the purposes of any suit, action or other proceeding arising out of this
Guarantee brought by any party, and (b) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper, or that this Guarantee may not be enforced in
or by such courts. The Guarantor hereby generally consents to service of process
at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038,
Attention: Managing Attorney, or such office of the Guarantor in New York City
as from time to time may be designated by the Guarantor in writing to the
Parties.
8. Integration; Counterparts; Successors and Assigns; Headings. This
Guarantee (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the Guarantor and
the Parties, with respect to the subject matter hereof, (b) may be executed in
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, and (c) shall be
binding upon the successors and assigns of the Guarantor and shall inure to the
benefit of, and shall be enforceable by, each of the Parties to the fullest
extent permitted by applicable laws. The headings in this Guarantee are for
purposes of reference only, and shall not limit or otherwise affect the meanings
hereof.
9. Notices. All requests, notices or other communications hereunder
shall be in writing, addressed as follows:
If to the Guarantor:
to the address or telecopy number set forth in the
Participation Agreement
If to a Party:
to the address or telecopy number set forth in the
Participation Agreement
All requests, notices or other communications shall be given in the manner, and
shall be effective at the times and under the terms, set forth in Section 13(b)
of the Participation Agreement.
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
-5-
<PAGE>
as a waiver thereof; nor will any single or partial exercise of any right or
remedy hereunder preclude any other or further exercise of such right or remedy
or the exercise of any other right or remedy.
11. Survival. All representations and warranties contained herein or
made in writing by the Guarantor in connection herewith shall survive the
execution and delivery of this Guarantee regardless of any investigation made by
any Party or any other Person.
12. Severability. To the fullest extent permitted by applicable law,
any provision of this Guarantee that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or any provision in any other Operative Document, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
13. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND
THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK.
14. Enforcement Expenses. The Guarantor agrees to pay to any Party
any and all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by such Party in enforcing, or collecting under, this
Guarantee.
15. Termination. Subject to the provisions of Section 3 hereof, this
Guarantee shall terminate upon the indefeasible payment and performance in full
of all of the Obligations.
16. No Guarantee of Secured Certificates. This Guarantee relates
only to the Obligations described in Section 1 and nothing in this Guarantee
shall be deemed to constitute a guarantee of payment of any of the Secured
Certificates or shall give rise to any inference that the Lessee or the
Guarantor has so guaranteed such payment.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
------------------------------------
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:
-7-
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW ____ __]
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]
<PAGE>
PARTICIPATION AGREEMENT
[NW ____ _]
DATED AS OF
[----------------]
AMONG
NORTHWEST AIRLINES, INC.,
OWNER,
NORTHWEST AIRLINES CORPORATION,
GUARANTOR,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
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 BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
N[_____]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
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.......................................................9
SECTION 7. Representations and Warranties of the Owner and the Guarantor; Indemnities.....................10
(a) Representations and Warranties......................................................10
(b) General Tax Indemnity...............................................................12
(c) General Indemnity...................................................................12
(d) Income Tax..........................................................................12
SECTION 8. Representations, Warranties and Covenants......................................................13
SECTION 9. Reliance of Liquidity Provider and Policy Provider.............................................21
SECTION 10. Other Documents................................................................................22
SECTION 11. Certain Covenants of the Owner.................................................................22
SECTION 12. [Intentionally Omitted]........................................................................22
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction..........................................22
SECTION 14. [Intentionally Omitted]........................................................................23
SECTION 15. Miscellaneous..................................................................................23
SECTION 16. Sale/leaseback Transaction.....................................................................24
</TABLE>
i
<PAGE>
SCHEDULES
<TABLE>
<S> <C> <C>
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
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-1 - Form of Opinion of Vedder, Price, Kaufman & Kammholz, special
counsel for the Manufacturer
Exhibit C-2 - 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 Section 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
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
</TABLE>
ii
<PAGE>
PARTICIPATION AGREEMENT
[NW ____ _]
THIS PARTICIPATION AGREEMENT [NW ____ _] 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 OF CONNECTICUT, NATIONAL
ASSOCIATION, 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") (this "AGREEMENT");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement between the Owner
and the Supplier, the Supplier has agreed to sell to the Owner, among other
things, certain British Aerospace Avro 146-RJ85A aircraft, including the
Aircraft which has been [or is being] delivered by the Supplier 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 _____ __]
(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 ____ _], 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 ____ _], dated as of
the date hereof, pursuant to
<PAGE>
which the Guarantor guarantees certain obligations of the Owner 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 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) Morgan Stanley Capital
Services, Inc. (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 the
obligations of the Liquidity Provider under each Liquidity Facility were
guaranteed by Morgan Stanley Dean Witter & Co.; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated [_________], 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 [__________], 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
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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 [____ __], not later than 9:30 a.m., New York City time, on the
Closing Date in immediately available funds in Dollars, the amount set forth
opposite the name of such Pass Through Trust on SCHEDULE II hereto.
Upon the occurrence of the above transfers by the Pass Through
Trustee for each Pass Through Trust to the Owner, 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].
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(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto,
shall each be satisfactory in form and substance to the Pass
Through Trustee and 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.
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:
(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
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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 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 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).
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(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
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
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Owner, an opinion substantially in the form of EXHIBIT C -1
hereto from Vedder, Price, Kaufman & Kammholz, special counsel
for the Manufacturer and, (ii) an opinion substantially in the
form of EXHIBIT C-2 hereto from counsel to the Manufacturer.
(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].
(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. Section 1110 with respect to the Aircraft.
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<PAGE>
(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 (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),
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and (C)(1) an incumbency certificate of the Pass Through Trustee as
to the person or persons authorized to execute and deliver this
Agreement and any other documents to be executed on behalf of the
Pass Through Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons;
(2) a copy of the articles of association and by-laws of the Pass
Through Trustee, each certified by the Secretary of an Assistant
Secretary of the Pass Through Trustee; and (3) 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 necessary action 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].
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
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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 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;
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(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 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 Supplier 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 (x) the
termination of the Mortgage and (y) the Trust Indenture and the
Trust Indenture Supplement covering the Aircraft attached thereto
and made a part
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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
(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,
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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:
(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
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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 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.
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(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) it 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 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
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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.
(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
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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].
(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
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(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 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 a duly organized national
banking association, validly existing and in good standing with the
Comptroller of the Currency under the laws of the United States,
has the full power, authority and legal right under the laws of the
United States pertaining to its banking, trust and fiduciary powers
to execute and deliver each of the Pass Through Trust Agreements,
the Intercreditor Agreement and this Agreement and to perform its
obligations under the Pass Through Trust Agreements, the
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Intercreditor Agreement and this Agreement, and has its chief
executive office located in Hartford, Connecticut;
(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 State of Connecticut 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 Connecticut 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 State of Connecticut 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 State of
Connecticut 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 for federal income
tax purposes 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
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under subpart E, Part I, of Subchapter J of the Code or as a
partnership, such trusts will not be subject to any Taxes imposed
by the State of Connecticut 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 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
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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;
(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 AND POLICY PROVIDER.
Each of the parties hereto agrees and acknowledges that the Liquidity Provider
and the Policy Provider
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shall be a third party beneficiary of each of the representations and warranties
made herein by such party, and that the Liquidity Provider and the Policy
Provider may rely on such representations and warranties to the same extent as
if such representations and warranties were made to the Liquidity Provider and
the Policy Provider directly. The Owner agrees and acknowledges that the
Liquidity Provider, Morgan Stanley and the Policy Provider shall each 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, Morgan Stanley and the Policy Provider directly.
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,
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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.
(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
-23-
<PAGE>
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 Trustee under the Trust Indenture. The terms of this Agreement
shall inure to the benefit of the Liquidity Provider, its successors and
permitted assigns, to the Policy Provider, its successors and permitted assigns
and to Morgan Stanley. 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. Section 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 (a
"SALE/LEASEBACK TRANSACTION"). In connection with such Sale/Leaseback
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 Sale/Leaseback
Transaction, the parties agree that (a) the documents to be utilized shall be
(i) an amended and restated participation agreement [NW ____ __] 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 ____ __], such lease agreement to be
-24-
<PAGE>
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 connection with a leveraged
lease transaction, (iii) an amended and restated trust indenture [NW ____ __]
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 ____ ___],
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 ____ __], 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 ____ __] 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). Such new secured certificates will have
the same payment terms as the Secured Certificates except that in the event that
the Owner enters into a Sale/Leaseback Transaction prior to July 31, 2000, the
Owner shall have the right to reoptimize the new secured certificates to be
issued to the Certificate Holders by the owner trustee in compliance with the
Mandatory Economic Terms (as such term is defined in the Note Purchase
Agreement). Notwithstanding the foregoing, the Owner shall not have the right to
enter into a Sale/Leaseback Transaction unless the Owner causes to be delivered
to the Indenture Trustee (a) 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
(other than such change in amount, manner and timing of interest that results
from any reoptimization of the new secured certificates permitted pursuant to
this Section 16)and that the Pass Through Trusts will not be subject to Federal
income taxation as a result of such assumption and release and (b) written
confirmation from Moody's Investors Services, Inc. and Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc., that the Sale/Leaseback Transaction
and/or reoptimization of the
-25-
<PAGE>
new secured certificates in connection therewith will not result in a
withdrawal, suspension or downgrading of the ratings of any class of Pass
Through Certificates (without regard to the Policy (as such term is defined in
the Policy Provider Agreement)).
-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: U.S. MAIL
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
OVERNIGHT COURIER
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity,
except as otherwise provided herein, but
solely as Pass Through Trustee,
PASS THROUGH TRUSTEE
By:
--------------------------------------
Name:
Title:
Address: 225 Asylum Street, Goodwin Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (860) 244-1889
- 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: U.S. MAIL
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
OVERNIGHT COURIER
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
- 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
U.S. MAIL
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
OVERNIGHT COURIER
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
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 [____ _]
SCHEDULE I-1
<PAGE>
Loan Participant: State Street Bank and Trust Company
of Connecticut, National Association
225 Asylum Street, Goodwin Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (860) 244-1889
Subordination Agent: State Street Bank and Trust Company
U.S. MAIL
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02102-0778
OVERNIGHT COURIER
Corporate Trust Department
2 Avenue de Lafayette
Boston, Massachusetts 02111-1724
Telecopy No.: (617) 662-1462
SCHEDULE I-2
<PAGE>
SCHEDULE II
COMMITMENTS
<TABLE>
<CAPTION>
INTEREST RATE
PURCHASERS AND MATURITY PURCHASE PRICE
<S> <C> <C>
Northwest Airlines
Pass Through Trust
1999-3G 7.935% Series G Secured $[___________]
Certificates due
[___________]
1999-3B 9.485% Series B Secured $[___________]
Certificates due
[___________]
1999-3C 9.152% Series C Secured $[___________]
Certificates due
[___________]
</TABLE>
SCHEDULE II-1
<PAGE>
SCHEDULE III
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3G, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3B, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
3. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank
and Trust Company of Connecticut, National Association, as supplemented
by Trust Supplement No. 1999-3C, dated as of December 9, 1999 among
Northwest Airlines, Inc., Northwest Airlines Corporation and State
Street Bank and Trust Company of Connecticut, National Association.
SCHEDULE III-1
<PAGE>
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW ____ _]
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
EXHIBIT A-1
<PAGE>
EXHIBIT B-1 TO PARTICIPATION AGREEMENT
[FORM OF OPINION OF SIMPSON THACHER & BARTLETT
SPECIAL COUNSEL FOR THE OWNER AND THE GUARANTOR
[-------- ---, ----]
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)
$150,203,000 aggregate principal amount of 7.935% Pass Through Trust
Certificates, Series 1999-3G (the "Class G Certificates"), (ii) $58,013,000
aggregate principal amount of 9.485% Pass Through Trust Certificates, Series
1999-3B (the "Class B Certificates") and (iii) $31,947,000 aggregate principal
amount of 9.152% Pass Through Trust Certificates, Series 1999-3C (the "Class C
Certificates" and, together with the Class G Certificates and the Class B
Certificates, the "Certificates") pursuant to the Underwriting Agreement, dated
as ofDecember 2, 1999 (the "Underwriting Agreement"), by and among Morgan
Stanley & Co. Incorporated, Chase Securities Inc., Salomon Smith Barney Inc.,
and U.S. Bancorp Piper Jaffray Inc., as underwriters, the Company and NWA Corp.
Capitalized terms used herein unless otherwise defined herein have the
respective meanings given them in the Underwriting Agreement.
In connection with this opinion we have examined the
following:
(i) the Pass Through Trust Agreement dated as of June 3, 1999
by and among NWA Corp., the Company and State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as
trustee (the "Trustee") (the "Basic Agreement");
(ii) the Trust Supplement No. 1999-3G, dated as of December 9,
1999, to the Basic Agreement, by and among NWA Corp., the Company
and the Trustee (the Basic Agreement as so supplemented, the
"1999-3G Pass Through Trust Agreement"); the Trust Supplement No.
1999-3B, dated as of December 9, 1999, to the Basic Agreement, by
and among NWA Corp., the Company and the Trustee (the Basic
Agreement as so supplemented, the "1999-3B Pass Through Trust
Agreement"); and the Trust Supplement No. 1999-3C, dated as of
December 9, 1999, to the Basic Agreement, by and among NWA Corp.,
the Company and the Trustee (the Basic Agreement as so
supplemented, the "1999-3C Pass Through Trust Agreement" and,
together with the 1999-3G Pass Through Trust Agreement and the
1999-3B 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");
<PAGE>
The Persons Listed on Annex A hereto ________ __, ____
(iii) the Intercreditor Agreement dated as of December 9, 1999
(the "Intercreditor Agreement"), by and among the Trustee, Morgan
Stanley Capital Services, Inc. (the "Liquidity Provider"), State
Street Bank and Trust Company, not in its individual capacity,
except as set forth therein, but solely as subordination agent (the
"Subordination Agent"), and MBIA Insurance Corporation;
(iv) the Revolving Credit Agreement, Class G Certificates, the
Revolving Credit Agreement, Class B Certificates and the Revolving
Credit Agreement, Class C Certificates (collectively, the
"Liquidity Facilities"), each dated as of December 9, 1999, by and
between the Subordination Agent and the Liquidity Provider; and
(v) the Indemnity Agreement, dated as of December 9, 1999,
between ABN AMRO Bank, N.V., and the Company.
Unless otherwise indicated, "Pass Through Documents" refers to
the documents described in (i) and (ii) above.
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.
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.
In addition, for purposes of this opinion we have assumed the
following:
(a) each of the Company and the Trustee has been duly
incorporated and, since the date of execution of each Pass Through Document, has
been validly existing and in good standing as a corporation and trust company,
respectively, under the laws of the jurisdiction of its incorporation and
qualification, respectively;
(b) each of the Company and the Trustee has duly
authorized, executed and delivered each Pass Through Document to which it is a
party;
(c) each of the Company and the Trustee has full power,
authority and legal right to enter into and perform its respective obligations
under, and consummate the transactions contemplated by, each Pass Through
Document to which it is a party;
(d) the execution, delivery and performance of the Pass
Through Documents by the Company and the Trustee do not violate the laws of the
jurisdiction in which each entity is organized or any other applicable laws,
excepting the laws of the State of New York and the General Corporation Law of
the State of Delaware; and
-3-
<PAGE>
The Persons Listed on Annex A hereto ________ __, ____
(e) the execution, delivery and performance of the Pass
Through Documents by the Company and the Trustee do not constitute a breach or
violation of any agreement or instrument which is binding upon such entity
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 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 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.
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 or NWA Corp.
of, and the performance by the Company 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:
-4-
<PAGE>
The Persons Listed on Annex A hereto ________ __, ____
(a) 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.
(b) We express no opinion with respect to matters
governed by the Federal Aviation Act and the rules and regulations promulgated
thereunder.
(c) The remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
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 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 Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Standard & Poor's Ratings Service
Moody's Investors Service, Inc.
MBIA Insurance Corporation
<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 ______]
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 ______], dated as of
[___________ ___, ___] (the "PARTICIPATION AGREEMENT"), among the Owner,
Guarantor, State Street Bank and Trust Company of Connecticut, National
Association, 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
but not defined herein have the respective meanings given to them in or by
reference to the Participation Agreement, unless the context otherwise requires.
We are rendering this opinion letter to you at the request of the Owner pursuant
to Section 4(a)(xi) of the Participation Agreement.
In rendering the opinions set forth below, we have examined and relied
upon the originals, copies or specimens, certified or otherwise identified to
our satisfaction, of the Transaction Documents (as defined below) and such
certificates, corporate and public records, agreements and instruments and other
documents, including, among other things, the documents delivered on the date
hereof, as we have deemed appropriate as a basis for the opinions expressed
below. In such examination we have assumed the genuineness of all signatures,
the authenticity of all documents, agreements and instruments submitted to us as
originals, the conformity to original documents, agreements and instruments of
all documents, agreements and instruments submitted to us as copies or
specimens, the authenticity of the originals of such documents, agreements and
instruments submitted to us as copies or specimens, and the accuracy of the
matters set forth in the documents, agreements and instruments we reviewed. We
have also assumed that the Owner is an "air carrier" within the meaning of the
Federal Aviation Act. As to any facts material to such opinions that were not
known to us, we have relied upon statements and representations of officers and
other representatives of the Owner, Guarantor and the other parties to the
Operative Documents and of public officials. Except as expressly set forth
herein, we have not undertaken any independent investigation (including, without
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2-
limitation, conducting any review, search or investigation of any public files,
records or dockets) to determine the existence or absence of the facts that are
material to our opinions, and no inference as to our knowledge concerning such
facts should be drawn from our reliance on the representations and warranties of
the Owner, Guarantor and the other parties to the Operative Documents contained
in the Participation Agreement and the other Operative Documents (including,
without limitation, in Sections 7 and 8 of the Participation Agreement) in
connection with the preparation and delivery of this letter.
In particular, we have examined and relied upon:
A the Participation Agreement;
B the Trust Indenture;
C the Trust Indenture Supplement
D the Secured Certificates;
E the Consent and Agreement; and
F the Guarantee.
Items A to F above are referred to in this letter as the
"TRANSACTION DOCUMENTS". References in this letter to "APPLICABLE LAWS" shall
mean those laws, rules and regulations of the State of New York which, in our
experience, are normally applicable to transactions of the type contemplated by
the Transaction Documents. References in this letter to the term "GOVERNMENTAL
AUTHORITIES" means executive, legislative, judicial, administrative or
regulatory bodies of the State of New York. References in this letter to the
term "GOVERNMENTAL APPROVAL" means any consent, approval, license, authorization
or validation of, or filing, recording or registration with, any Governmental
Authority pursuant to Applicable Laws.
We have also assumed that all documents, agreements and
instruments have been duly authorized, executed and delivered by all parties
thereto, that all such parties had the power and legal right to execute and
deliver all such documents, agreements and instruments, and that such documents,
agreements and instruments are (other than with respect to the Owner and
Guarantor) valid, binding and enforceable obligations of such parties. As used
herein, "to our knowledge", "known to us" or words of similar import mean the
actual knowledge, without independent investigation, of any lawyer in our firm
actively involved in the transactions contemplated by the Participation
Agreement.
We express no opinion concerning the laws of any jurisdiction
other than the laws of the State of New York and the federal laws of the United
States of America.
Based upon and subject to the foregoing, and subject further
to the assumptions, limitations and qualifications set forth below, we are of
opinion that:
The execution and delivery by the Owner of the
Participation Agreement, the Secured Certificates, the Trust
Indenture and the Trust Indenture Supplement (collectively,
the "OWNER DOCUMENTS") and the performance by the Owner of its
obligations thereunder (a) do not require any Governmental
Approval to be obtained on the part of the Owner, except those
that have been obtained and, to our knowledge, are in effect,
and those required by the terms of the Operative
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3-
Documents after the Delivery Date, and (b) do not result in a
violation of any provision of any Applicable Laws applicable
to the Owner.
The execution and delivery by Guarantor of its
obligations under the Guarantee and the performance by
Guarantor of its obligations thereunder (a) do not require any
Governmental Approval to be obtained on the part of Guarantor,
except those that have been obtained and, to our knowledge,
are in effect, and those required by the terms of the
Operative Documents after the Delivery Date, and (b) do not
result in a violation of any provision of any Applicable Laws
applicable to Guarantor.
Each of the Owner Documents constitutes a legal,
valid and binding agreement of the Owner, enforceable against
the Owner in accordance with its terms and the Guarantee
constitutes a legal, valid and binding agreement of Guarantor
enforceable against Guarantor in accordance with its terms, in
each case subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium,
receivership or other similar laws relating to or affecting
creditors' or lessors' rights generally, and to general
principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity) and requirements
of commercial reasonableness, good faith and fair dealing, and
to 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 except that the enforcement of rights with
respect to indemnification may be limited by considerations of
public policy.
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
Supplier to the Owner, [(B) the termination of the Mortgage,]
and (C) the Trust Indenture and 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 Trust Indenture Estate, 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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4-
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 Trust Indenture Estate as against the
Owner and any third parties in any applicable jurisdiction
within the United States. The Trust Indenture creates for the
benefit of the Indenture Trustee a valid security interest in
the Trust Indenture Estate to the extent a security interest
may be created therein under the Uniform Commercial Code as in
effect in the State of New York (the "NYUCC").
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 except for the filings and recordations contemplated or
referred to herein, [other than the Mortgage, and UCC-1 financing statement
filed in the Office of the Secretary of State of the State of Minnesota on
[__________], filing number [__________], naming the Owner as Debtor and
[____________________], as Secured Party (as to which a UCC-3 termination
statement is being filed on the date hereof),] there are no filings or
recordations with respect to 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 respect of all or any
portion of the Trust Indenture Estate (other than any such financing statements
as have been filed therein in favor of the Indenture Trustee as secured party
under the Trust Indenture) 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 also 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. We have further assumed that as to such portion of the
Trust Indenture Estate as is in existence on the date hereof, the Owner has
rights therein and value has been given, in each case within the meaning of
Section 9-203 of the NYUCC. 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. We express no opinion herein as to: (A) any section
of any Operative Document relating to concepts of "severability" of certain
provisions in such Operative Document; (B) any provision in any Operative
Document insofar as it constitutes: (i) a waiver of FORUM NON CONVENIENS in
respect of any court other than the Supreme Court of the State of New York; or
(ii) a waiver of the right to object to improper venue in respect of any court
other than the Supreme Court of the State of New York; (C) the effect of any law
of any jurisdiction (other than the State of New York) wherein any Certificate
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5-
Holder may be located that limits rates of interest, fees or other charges that
may be charged by such Certificate Holder; and (D) any provision contained in
the Operative Documents relating to jurisdiction or service of process other
than in respect of the courts of the State of New York or the courts of the
United States of America located in the State of New York. 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, 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. 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 letter 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 are furnishing this opinion letter to you solely for your
benefit in connection with the transactions referred to herein. This opinion
letter is not to be relied upon, used, circulated, quoted or otherwise referred
to by any person or entity for any other purpose without our prior written
consent. In addition, we disclaim any obligation to update this opinion letter
for changes in fact or law, or otherwise.
Very truly yours,
<PAGE>
SCHEDULE A
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 _____]
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 _______], dated as
of [____________ __, ____] (the "PARTICIPATION AGREEMENT"), among the Owner,
Guarantor, State Street Bank and Trust Company of Connecticut, National
Association, 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).
Based upon and subject to the foregoing, and subject further
to the assumptions, limitations and qualifications set forth below, it is my
opinion that:
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 2
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) violate 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, violate 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
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.
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 3
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, (B) the termination of the Mortgage and the Predecessor Lease, and
(C) 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 Trust Indenture Estate, 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 Trust Indenture Estate 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 & 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, [other than the Mortgage, the Predecessor Lease and a UCC-1
financing statement filed in the Office of the Secretary of State of the State
of Minnesota on [___________], filing number [_____________], naming the Owner
as Debtor and
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 4
[__________________], as Secured Party (as to which a UCC-3 termination
statement is being filed on the date hereof),] 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 respect of all or any portion of the Trust
Indenture Estate (other than any such financing statements as have been filed
therein in favor of the Indenture Trustee as secured party under the Trust
Indenture) 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 benefit 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.
<PAGE>
SCHEDULE A
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT C-1 TO PARTICIPATION AGREEMENT
[Form of Opinion of Vedder, Price, Kaufman & Kammholz,
special counsel for the Manufacturer]
[________________, ____]
To the Parties on Schedule 1
Re: Purchase Agreement dated as of February 5, 1997, as amended
(the "AGREEMENT") between Aero International (Regional) SAS as
agent for and on behalf of British Aerospace (Operations)
Limited ("OPERATIONS") and Northwest Airlines, Inc. (the
"COMPANY") and the Manufacturer Support Agreement dated
February 5, 1997, as amended (the "SUPPORT AGREEMENT") between
Aero International (Regional) SAS, as agent for and on behalf
of Operations, and the Company (the Agreement, together with
the Support Agreement, are herein referred to collectively as
the "PURCHASE AGREEMENT").
Ladies and Gentlemen:
We have acted as special counsel to Operations in connection
with the Purchase Agreement and the transactions contemplated thereby.
Capitalized terms not otherwise defined herein shall have the respective
meanings specified in the Purchase Agreement.
In connection with the opinions set forth below, we have
examined originals, or copies certified to our satisfaction, of the Purchase
Agreement and the Consent and Agreement [NW ______] dated as of
[____________,____] (the "CONSENT AND AGREEMENT") executed by British
Aerospace Regional Aircraft SA acting as an agent for and on behalf of
Operations (the Purchase Agreement together with the Consent and Agreement
are herein referred to as the "DOCUMENTS") and such other agreements,
certificates and other statements of corporate officers of Operations as we
have deemed relevant and necessary as a basis therefor. As to any facts
material to such opinions, we have relied, to the extent that we deem such
reliance proper, upon such agreements, certificates, statements and documents
and on the representations and warranties set forth in the Documents. In
rendering such opinions, we have assumed:
(x) the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to the
authentic original documents of all documents submitted to us as
copies;
(y) the due authorization, execution and delivery by each of
the parties of each of the Documents and of each other document
examined by us for the purposes hereof; and
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 2
(z) that each party to each of the Documents has the power,
corporate or otherwise, and authority to execute, deliver and perform
the Documents and that such execution, delivery and performance do not
and will not contravene such party's charter, by-laws or other
constituent document or any agreement or other document to which such
party or any of its property is subject or any law, rule, regulation or
judicial or administrative mandate applicable to such party or any of
its property.
Based upon and subject to the foregoing and to the matters set
forth below, we are of the opinion that the Documents are legal, valid and
binding obligations of Operations, enforceable against Operations in accordance
with their terms.
The foregoing opinions are subject to the following
qualifications and exceptions:
(a) The opinions set forth above are subject to the
qualifications that the enforceability of the
Documents may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and (y)
general principles of equity, regardless of whether
enforcement is pursuant to a proceeding in equity or
at law; and
(b) We express no opinion as to:
(i) whether a Federal court of the United States
would have subject matter jurisdiction over
any action brought pursuant to any of the
Documents;
(ii) whether a Federal court of the United States
or a New York State court would recognize
any claim that any action brought pursuant
to any of the Documents is brought in an
inconvenient forum;
(iii) the validity, binding effect and
enforceability of any provision of any of
the Documents which purports to bind the
parties to agree to conclude an agreement at
a future date;
(iv) the availability of the remedy of specific
performance;
(v) the enforceability of any provision in the
Documents which requires a party to make any
or all payments thereunder without setoff or
counterclaim or any other right which such
party may have; or
(vi) the enforceability of any indemnity against
loss from a court judgment in another
currency.
We are members of the Bar of the State of New York and no
opinion is expressed herein with respect to any jurisdiction other than the
Federal laws of the United States and the laws of the State of New York.
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 3
This opinion is solely for your benefit. No other person or
entity shall be entitled to rely on this opinion without our prior written
consent. This opinion is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
<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 of Connecticut, National Association,
as Pass Through Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT C-2 TO PARTICIPATION AGREEMENT
[FORM OF OPINION OF IN-HOUSE COUNSEL TO THE MANUFACTURER]
[________________, ____]
To the Addressees Listed
in the Attached Schedule A
Re: British Aerospace Avro 146-RJ85A Aircraft Manufacturer's
Serial No. [________] Registration No. N[_____]
Ladies and Gentlemen,
I have acted as counsel to British Aerospace Regional Aircraft S.A., a SOCIETE
ANONYME, with a share capital of 250 000 FF, whose registered office is at 3,
allee Pierre Nadot, 31701 Blagnac Cedex France, registered at the companies
registry in Toulouse under number 419 099 148 ("BAERASA"), in connection with
the Relevant Documents (as defined below).
In rendering the opinions expressed herein, I have examined copies, certified or
otherwise identified to my satisfaction, of the following documents:
1. the Purchase Agreement, dated as of 5 February 1997, as amended,
between Aero International (Regional) SAS ("AI(R)") (acting as agent on
behalf of British Aerospace (Operations) Limited ("BAe") and Northwest
Airlines, Inc. ("NORTHWEST") (the "PURCHASE AGREEMENT") in relation to,
INTER ALIA, the Aircraft.
2. the Manufacturer Support Agreement, dated 5 February 1997, as
amended, between AI(R), acting as agent of BAe, and Northwest (the
"MANUFACTURER SUPPORT AGREEMENT").
3. the Trust Indenture and Security Agreement [_________] (the
"TRUST INDENTURE"), dated as of [________, ____], between Northwest, as
owner, and State Street Bank and Trust Company, as indenture trustee,
relating to the Avro RJ Aircraft bearing registration mark N[____] (the
"AIRCRAFT").
4. the Consent and Agreement [__________], dated as of [_______, ____]
(the "CONSENT AND AGREEMENT"), in respect of the Trust Indenture,
executed by BAeRASA acting as the agent of BAe.
(the documents at 1 to 4 above being referred to herein as the "RELEVANT
DOCUMENTS")
I have examined, or caused to be examined, such records and documents and such
questions of law, limited to the laws of England, and facts as I have considered
necessary or appropriate to
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 2
form the basis of the opinions hereinafter expressed. I have relied upon the
Relevant Documents and on the information contained therein as to factual
matters.
Based upon the foregoing, and subject to the qualifications and assumptions
herein contained and to the provisions of any law other than English law, I am
of the opinion that at the date hereof:
1. BAeRASA (a) is duly empowered and authorized to act as, and is acting
as, agent for BAe under the Consent and Agreement, (b) has taken all
action necessary for the authorization, execution, delivery and
performance of the Consent and Agreeement and any instrument or
agreement required thereunder, (c) requires no authorizations,
approvals, exemptions nor similar consents from any governmental
authority in England in connection with the execution, delivery and
performance of the Consent and Agreement and any instrument or
agreement required thereunder or any transaction contemplated thereby,
and (d) such execution, delivery and performance do not and will not
contravene its charter, by-laws or other constituent document or any
agreement or other document to which it or any its property is subject
or any law, rule, regulation or judicial or administrative mandate
applicable to any of its property.
2. AI(R) (a) was duly empowered and authorized to act as, and was acting
as, agent for BAe under the Purchase Agreement and the Manufacturer
Support Agreement, (b) has taken all action necessary for the
authorization, execution, delivery and performance of the Relevant
Documents to which it is a party and any instrument or agreement
required thereunder, (c) requires no authorizations, approvals,
exemptions nor similar consents from any governmental authority in
England in connection with the execution, delivery and performance of
the Relevant Documents to which it is a party and any instrument or
agreement required thereunder or any transaction contemplated thereby,
and (d) to the best of my knowledge, such execution, delivery and
performance do not and will not contravene its charter, by-laws or
other constituent document or any agreement or other document to which
it or any its property is subject or any law, rule, regulation or
judicial or administrative mandate applicable to any of its property.
3. The Consent and Agreement constitutes the legal, valid and binding
obligation of BAeRASA (acting as agent of BAe) enforceable against BAe
in accordance with its terms and would be so treated in the courts of
England except as set out below.
4. Upon execution of the Trust Indenture and the Consent and Agreement,
the Trust Indenture and the Consent and Agreement shall be effective to
perfect as against BAe, BAeRASA [(AIR)], and third parties the
assignment to the Indenture Trustee of the rights of Northwest under
the Manufacturer Support Agreement.
5. Those of the Relevant Documents to which AI(R) is a party (acting as
agent of BAe) constitute the legal, valid and binding obligations of
AI(R) (acting as agent of BAe) enforceable against BAe in accordance
with their terms and would be so treated in the courts of England
except as set out below.
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 3
6. To the extent that, notwithstanding any provision in the Relevant
Documents to the contrary, a court should deem applicable the laws of
England, those of the Relevant Documents to which either AI(R) or
BAeRASA is a party (acting as agent of BAe) would represent the legal,
valid and binding obligations of BAe (as principal) under the laws of
England, enforceable against BAe in accordance with their respective
terms except as set out below.
The opinions set forth above are subject to the following reservations:
(i) the enforceability of the Relevant Documents may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and/or the
general principles of equity;
(ii) provisions in the Relevant Documents as to severability of certain
provisions on the grounds of illegality may not be binding under
English law and would be decided by the court in its absolute
discretion;
(iii) English courts do not necessarily give effect to an indemnity for the
costs of litigation;
(iv) the Relevant Documents may be amended orally by the parties thereto
notwithstanding provisions therein to the contrary;
(v) any provision for interest to be paid on overdue amounts at a rate in
excess of the rate applicable prior to a default may amount to a
penalty and may therefore not be recoverable;
(vi) failure or delay in exercising any right may constitute a waiver of
that right notwithstanding provisions to the contrary in the Relevant
Documents; and
(vii) an instrument liable to stamp duty in the United Kingdom cannot be
relied upon, enforced or registered unless it is duly stamped. I
express no opinion on the application of United Kingdom legislation
relating to stamp duties.
In rendering this opinion I have assumed the due authorization, execution and
delivery of all Relevant Documents by all parties thereto (other than BAeRASA
and AI(R)) and that the Relevant Documents constitute the legal, valid and
binding obligation of the parties thereto in so far as the laws of New York are
concerned which is the law expressed to govern certain of the Relevant
Documents.
<PAGE>
To the Addressees listed
on Page 1 hereof
__________________, ____
Page 4
The law covered by this opinion letter is limited to the laws of England. This
opinion is solely for your benefit in connection with the transactions referred
to therein and may not be relied upon by any other person.
Yours faithfully,
[__________________]
[LEGAL COUNSEL]
<PAGE>
SCHEDULE A
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
State Street Bank and Trust Company, not in its individual capacity but solely
as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley Dean Witter
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT F TO PARTICIPATION AGREEMENT
[FORM OF OPINION OF CROWE & DUNLEVY, P.C.]
[________________, ____]
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO
Re: British Aerospace model Avro 146-RJ85A 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 [___________], [(i) the Mortgage and
Security Agreement Release and Termination Agreement dated [__________] between
[_________] and Northwest Airlines, Inc., which released the Aircraft and the
AllliedSignal, Inc. model LF507 aircraft engines with manufacturer's serial
numbers PO ___, PO ___, PO ___, and PO ___ (the "Engines") from the terms of
Conveyance No. [_________] and (ii)] the Trust Indenture and Security Agreement
[NW ____ __] 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 ____ __] dated [______________] (the "Indenture
Supplement") covering the Aircraft and the AllliedSignal, Inc. model LF507
aircraft engines with manufacturer's serial numbers PO ___, PO ___, PO ___, and
PO ___ (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 Release,] the Indenture with the Indenture
Supplement attached, [are][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 of Connecticut, National Association, as
Pass Through Trustee
State Street Bank and Trust Company, as Indenture Trustee
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT G TO PARTICIPATION AGREEMENT
[Form of Opinion of Bingham Dana LLP,
special counsel for the Indenture Trustee]
[________________,____]
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Financing of One British Aerospace
model Avro 146-RJ85A Aircraft [NW _______]
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
____] dated as of [________________] (the "INDENTURE") between Northwest
Airlines, Inc. and State Street, as Indenture Trustee, in connection with the
execution and delivery of the Participation Agreement [NW ____] dated as of
[________________] (the "PARTICIPATION AGREEMENT") by and among the Indenture
Trustee, Northwest Airlines, Inc., the Owner, Northwest Airlines Corporation
(the "GUARANTOR"), State Street Bank and Trust Company of Connecticut, National
Association, as Pass Through Trustee (the "PASS THROUGH TRUSTEE") and State
Street Bank, as Subordination Agent (the "SUBORDINATION AGENT") and the
transactions contemplated thereby. Capitalized terms not otherwise defined
herein shall have the meanings specified in or referenced in 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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2- ________________, ____
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 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 such qualification is required generally or necessary in order
for such party to enforce its rights
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3- ________________, ____
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.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).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.We express no opinion
as to the availability of any specific or equitable relief of any
kind.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.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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4- ________________, ____
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.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.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 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 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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -5- ________________, ____
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 are imposed solely because State Street has its
principal place of business in Massachusetts or performs 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, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 ____ ___], dated as of
[______________] (the "PARTICIPATION AGREEMENT"), among the Owner, Northwest
Airlines Corporation, as Guarantor, State Street Bank and Trust Company of
Connecticut, National Association, 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 but not defined herein have the respective meanings given to them in
or by reference to the Participation Agreement, unless the context otherwise
requires. As used herein, the term "Airframe" shall mean the British Aerospace
Avro 146-RJ85A Airframe bearing U.S. Registration No. N[________] and
Manufacturer's Serial No. [_____], the term "Engines" shall mean the four
AllliedSignal, Inc. Model LF507 Engines bearing manufacturer's Serial Nos.
PO___, PO ___, PO ___ and PO ___, 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. We are rendering this opinion letter to you at the request
of the Owner pursuant to Section 4(a)(xxiii) of the Participation Agreement.
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 officer
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -2-
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.
We express no opinion concerning the laws of any jurisdiction
other than the laws of the State of New York and the federal laws of the United
States of America.
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
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -3-
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 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(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 (IN RE
WESTERN PACIFIC AIRLINES, INC.), 219 B.R. 305, ON REHEARING, 221 B.R. 1 (D.
Colo. 1998), APPEAL DISMISSED AS MOOT SUB NOM., BOULLIOUN AIRCRAFT HOLDING CO.,
INC. V. SMITH MANAGEMENT, Nos. 98-1018, 98-1214, 1999 WL 459469 (10th Cir. July
7, 1999), 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.
- ----------------------
(1) Pub. L. 103-394
<PAGE>
TO THE ADDRESSEES LISTED
ON SCHEDULE A HERETO -4-
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 lessee of an Aircraft
which may be leased by the Owner. 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 are furnishing this opinion letter to you solely for your
benefit in connection with the transactions referred to herein. This opinion
letter is not to be relied upon, used, circulated, quoted or otherwise referred
to by any person or entity for any other purpose without our prior written
consent. In addition, we disclaim any obligation to update this opinion letter
for changes in fact or law, or otherwise.
Very truly yours,
<PAGE>
SCHEDULE A
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
State Street Bank and Trust Company of Connecticut, National Association, 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
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<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 British Aerospace Avro 146 - RJ85A airframe FAA Registration No.
N[_____] and MSN [_____], and AllliedSignal, Inc. Model LF507 engine MSN PO
____, AlliedSignal, Inc. Model LF507 engine MSN PO ___, AlliedSignal, Inc. Model
LF507 engine MSN PO ___, and AllliedSignal, Inc. Model LF507 engine PO [____]
(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>
CWT\NYLIB1\399161.5
EXHIBIT J-1 TO PARTICIPATION AGREEMENT
[FORM OF OPINION OF BINGHAM DANA LLP,
SPECIAL COUNSEL FOR THE PASS THROUGH TRUSTEE]
[----------------------, ----]
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Financing of British Aerospace Avro
146-RJ85A Aircraft [NW ---- ----]
Ladies and Gentlemen:
We have acted as special counsel for State Street Bank and Trust
Company of Connecticut, National Association, 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, 1999, among Northwest Airlines
Corporation, Northwest Airlines, Inc. and State Street as supplemented by Trust
Supplement No. 1999-3G, Trust Supplement No. 1999-3B and Trust Supplement No.
1999-3C, each dated as of December 9, 1999 and each among Northwest Airlines,
Inc., Northwest Airlines Corporation 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 _______] dated as
of [_______________] (the "PARTICIPATION AGREEMENT") by and among State Street
Bank and Trust Company, as Indenture Trustee, Northwest Airlines, Inc.,
Northwest Airlines Corporation (the "GUARANTOR"), State Street, as Pass Through
Trustee and State Street Bank and Trust Company, as Subordination Agent (the
"SUBORDINATION AGENT") and the transactions contemplated thereby. Capitalized
terms not otherwise defined herein shall have the meanings specified in or
referenced in 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.
We have examined the Participation Agreement, the Liquidity Facility
for each of the Class G, Class B, and Class C Trusts, the Intercreditor
Agreement, the Note Purchase Agreement, the Escrow and Paying Agent Agreement
for each of the Class G, Class B and Class C Trusts each dated as of December 9,
1999 and each among First Security Bank, National Association, as Escrow Agent,
the underwriters named therein, State Street, as Pass Through
<PAGE>
Trustee and State Street Bank and Trust Company, as Paying Agent, each of the
Pass Through Trusts and the Insurance and Indemnity Agreement dated as of
December 9, 1999, among MBIA Insurance Corporation, Northwest Airlines, Inc.,
State Street Bank and Trust Company as Subordination Agent and State Street Bank
and Trust Company of Connecticut, National Association as Pass Through Trustee
under the Class G Trust (together, the "OPERATIVE DOCUMENTS"), the Certificate
of the Comptroller of the Currency 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 national banking association and exercise trust powers,
our opinion relies upon and is limited by such Certificate of the Comptroller of
the Currency.
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 State of Connecticut as applied by courts located in
Connecticut 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 State of Connecticut, 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 State of Connecticut.
Our opinion is further subject to the following exceptions,
qualifications and assumptions: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
<PAGE>
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
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 Pass Through
Trustee with respect to the laws of the United States of America and
the internal substantive laws of the State of Connecticut, 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.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
State of Connecticut 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).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 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 Pass Through Trustee,
as applicable, under any of the Operative Documents.We express no
opinion as the availability of any specific or equitable relief of any
kind.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.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
<PAGE>
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 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.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.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
Connecticut 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 or as a partnership.
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 national banking association, validly formed and
authorized to operate as a national banking association under the laws of the
United States of America 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
<PAGE>
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 Connecticut 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
Connecticut 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 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 State of Connecticut 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
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 by State Street, as Pass Through Trustee, pursuant to the
Pass Through Trusts which are imposed solely because State Street has its
principal place of business in Connecticut or performs its administrative duties
under the Operative Documents in Connecticut. Neither State Street, in its
individual capacity or as the Pass Through Trustee, as the case may be, the
Indenture Trustee, 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 State of
Connecticut or any political subdivision thereof (except for Taxes on any fees
payable to State Street in its individual capacity) which are imposed because
State Street has its principal place of business in Connecticut or performs its
administrative duties under the Operative Documents in Connecticut, and there
are no Taxes under the laws of the State of Connecticut 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 are imposed because State Street has its
principal place of business in Connecticut or performs its administrative duties
under the Operative Documents in Connecticut.
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
<PAGE>
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, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
<PAGE>
EXHIBIT J-2 TO PARTICIPATION AGREEMENT
[FORM OF OPINION OF BINGHAM DANA LLP,
SPECIAL COUNSEL FOR THE SUBORDINATION AGENT]
[-------------, ----]
TO THE PARTIES SET FORTH
IN SCHEDULE A HERETO
RE: Northwest Airlines, Inc./Financing of British Aerospace Avro
146-RJ85A Aircraft [NW ---- ----]
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
December 9, 1999 (the "INTERCREDITOR AGREEMENT") among State Street Bank and
Trust Company of Connecticut, National Association, in its capacity as Trustee
under the Northwest Airlines Pass Through Trust 1999-3G, Northwest Airlines Pass
Through Trust 1999-3B and Northwest Airlines Pass Through Trust 1999-3C, Morgan
Stanley Capital Services, Inc.., as Class G 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 ____] 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 Bank and Trust Company of Connecticut, National
Association, 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 or referenced in 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, the Intercreditor Agreement and the Insurance and Indemnity Agreement
(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,
<PAGE>
Page 2
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 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: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 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
<PAGE>
Page 3
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.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).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.We express no opinion as the availability of any specific or
equitable relief of any kind.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.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.We express no opinion as to the
effect
<PAGE>
Page 4
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.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 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 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 duly obtained, given or
taken); and such authorization, execution, delivery,
<PAGE>
Page 5
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 are imposed solely because State Street has its
principal place of business in Massachusetts or performs 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 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
Subordination Agent, as the case may be, to enter into or perform its
obligations under the Operative Documents.
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>
SCHEDULE A
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
Northwest Airlines, Inc., as Owner
Northwest Airlines Corporation, as Guarantor
Standard & Poor's Ratings Services
Moody's Investors Service, Inc.
Morgan Stanley & Co. Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
U.S. Bancorp Piper Jaffray Inc.
MBIA Insurance Corporation
EXHIBIT K-1
<PAGE>
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW ____ _]
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:
(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
EXHIBIT K-2
<PAGE>
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,
the Policy Provider 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 or the Pass Through 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 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
EXHIBIT K-3
<PAGE>
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;
(14) to any Tax imposed on any Tax Indemnitee under
Section 4975 of the Internal Revenue Code or under subtitle B
of ERISA or equivalent state law 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;
(15) to any Tax that would not have been imposed but
for an amendment to any Operative Document to which the Owner
is not a party, which amendment was not requested or consented
to by the Owner in writing; or
(16) in the case of the Policy Provider, to any
premium or similar Tax.
(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.
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 benefit
(whether by deduction, allocation, apportionment 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
EXHIBIT K-4
<PAGE>
such Tax Indemnitee which is attributable to such tax benefit 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 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
EXHIBIT K-5
<PAGE>
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 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 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.
EXHIBIT K-6
<PAGE>
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 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
EXHIBIT K-7
<PAGE>
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 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.
EXHIBIT K-8
<PAGE>
(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-9
<PAGE>
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW ___9 __]
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, the Policy Provider Agreement 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, the
Policy Provider Agreement 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 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
EXHIBIT L-1
<PAGE>
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.
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
EXHIBIT L-2
<PAGE>
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).
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
EXHIBIT L-3
<PAGE>
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 of this Agreement may
proceed directly against the Owner without first seeking to enforce any other
right of indemnification.
EXHIBIT L-4
<PAGE>
Exhibit 99(h)
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT
[NW ____ _]
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 BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
BEARING U.S. REGISTRATION MARK N[______]
OWNED BY NORTHWEST AIRLINES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
THE SECURED CERTIFICATES
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....15
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................16
SECTION 2.12. Redemptions; Notice of Redemption............................16
SECTION 2.13. Assumption of Secured Certificates...........................17
SECTION 2.14. [Intentionally Omitted]......................................17
SECTION 2.15. Subordination................................................17
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Basic Distributions..........................................18
SECTION 3.02. Event of Loss; Replacement; Optional Redemption..............19
SECTION 3.03. Payments After Event of Default..............................20
SECTION 3.04. Certain Payments.............................................22
SECTION 3.05. Other Payments...............................................22
SECTION 3.06. Payments to the Owner........................................22
SECTION 3.07. Application of Payments Under Guarantee......................22
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 4.01. Event of Default.............................................23
SECTION 4.02. Remedies.....................................................24
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<PAGE>
SECTION 4.03. Return of Aircraft, Etc......................................26
SECTION 4.04. Remedies Cumulative..........................................27
SECTION 4.05. Discontinuance of Proceedings................................27
SECTION 4.06. Waiver of Past Defaults......................................28
SECTION 4.07. Appointment of Receiver......................................28
SECTION 4.08. Indenture Trustee Authorized to Execute Bills of Sale, Etc...28
SECTION 4.09. Rights of Certificate Holders to Receive Payment.............28
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Event of Default...................................29
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.....29
SECTION 5.03. Indemnification..............................................30
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions ..............................................30
SECTION 5.05. No Action Except Under Trust Indenture or Instructions.......30
SECTION 5.06. Investment of Amounts Held by Indenture Trustee..............30
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties..............................31
SECTION 6.02. Absence of Duties............................................31
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents.32
SECTION 6.04. No Segregation of Monies; No Interest........................32
SECTION 6.05. Reliance; Agreements; Advice of Counsel......................32
SECTION 6.06. Compensation.................................................33
SECTION 6.07. Instructions from Certificate Holders........................33
ARTICLE VII
COVENANTS OF THE OWNER
SECTION 7.01. Liens........................................................33
SECTION 7.02. Registration, Maintenance and Operation; Possession and
Leases; Insignia...........................................34
SECTION 7.03. Replacement and Pooling of Parts; Alterations, Modifications
and Additions..............................................39
SECTION 7.04. Insurance....................................................41
SECTION 7.05. Inspection...................................................46
SECTION 7.06. Loss, Destruction, Requisition, etc..........................47
SECTION 7.07. Interests in the Purchase Agreement..........................52
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<PAGE>
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification.....................................54
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Indenture Trustee; Appointment of Successor...55
SECTION 9.02. Appointment of Additional and Separate Trustees..............56
ARTICLE X
SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations........................57
SECTION 10.02. Indenture Trustee Protected..................................58
SECTION 10.03. Documents Mailed to Certificate Holders......................59
SECTION 10.04. No Request Necessary for Trust Indenture Supplement..........59
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture...............................59
SECTION 11.02. No Legal Title to Collateral in Certificate Holders..........59
SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding.............60
SECTION 11.04. Trust Indenture for Benefit of the Owner, Indenture Trustee,
and Certificate Holders....................................60
SECTION 11.05. Notices......................................................60
SECTION 11.06. Severability.................................................60
SECTION 11.07. No Oral Modification or Continuing Waivers...................61
SECTION 11.08. Successors and Assigns.......................................61
SECTION 11.09. Headings.....................................................61
SECTION 11.10. Normal Commercial Relations..................................61
SECTION 11.11. Governing Law; Counterpart Form..............................61
SECTION 11.12. Voting By Certificate Holders................................62
SECTION 11.13. Bankruptcy...................................................62
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<PAGE>
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
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<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT
[NW ____ _]
TRUST INDENTURE AND SECURITY AGREEMENT [NW ____ _], 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 Participation Agreement and the Secured
Certificates contained, for the benefit of the Certificate Holders and the
Indenture Indemnitees and the prompt payment of all amounts from time to time
owing hereunder and under the Participation Agreement to the Certificate Holders
and the Indenture Indemnitees 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
<PAGE>
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:
(a) 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;
(b) the Contract Rights, but subject always to the provisions of
Section 7.07 hereof;
(c) 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;
(d) 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 (e) 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 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
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<PAGE>
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 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.
-3-
<PAGE>
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 BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT BEARING UNITED
STATES REGISTRATION NUMBER N[_____].
No.____ Date: [________]
$__________________
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 [April/October 1, _____], and thereafter on [October 1]
and [April 1] of each year, to and
-4-
<PAGE>
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 ____ _], 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 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.
-5-
<PAGE>
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 prior payment in full of the Secured
Obligations (as defined in the Trust Indenture) in respect of [Series G Secured
Certificates](1) [Series G 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.
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(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 G
Secured Certificate.
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THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
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<PAGE>
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:
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SCHEDULE I
SECURED CERTIFICATES AMORTIZATION
Percentage of
Principal Amount
Payment Date to be Paid
---------------------------- -------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Secured Certificates.
The Secured Certificates shall be dated the date of issuance
thereof, shall be issued in three separate series consisting of Series G, Series
B and Series C and in the maturities and principal amounts and shall bear
interest as specified in Schedule I hereto. On the Closing Date, 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. 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 [April/October 1, ____], and on each [October 1] and
[April 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 shall be made on the next
succeeding Business Day and
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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 (a) 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) and (b) the Owner's pro
rata share of all compensation and reimbursement of fees, expenses and
disbursements (including payment of indemnities) owed to the Policy Provider
under the Policy Provider Agreement other than fees payable to the Policy
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 3.01, Section 3.02,
Section 3.03 or Section 7.07 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
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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 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 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
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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), 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
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<PAGE>
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;
Second: to the payment of the Principal Amount of such Secured
Certificate (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Secured Certificate; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Principal Amount of such Secured Certificate remaining unpaid
(provided that such Secured Certificate shall not be subject to redemption
except as provided in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Principal Amount of such Secured Certificate in the inverse
order of their normal maturity.
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SECTION 2.06. Termination of Interest in 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
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
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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 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.
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SECTION 2.09. Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Certificate Holder for any
registration of transfer or exchange of Secured Certificates, but the Indenture
Trustee, as Secured Certificate Registrar, may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Secured
Certificates.
(b) The Indenture Trustee shall cancel all Secured Certificates
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation and shall destroy the canceled Secured Certificates.
SECTION 2.10. Mandatory Redemptions of Secured Certificates.
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 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
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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.
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 G), each Certificate Holder of such Series agrees that in the
event that such Certificate
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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 G until the Secured Obligations in
respect of Series G Secured Certificates have been paid in full and (ii) after
the Secured Obligations in respect of Series G 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 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 G Secured
Certificates shall be distributed to the Certificate Holders
of Series G ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments
then due under each Series G Secured Certificate bears to the
aggregate amount of the payments then due under all Series G
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
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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.
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 (other than amounts specified
in clause Second below);
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 G 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
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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.
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 G Secured Certificates, and the accrued but
unpaid interest and other amounts due thereon and all other
Secured Obligations in respect of the Series G Secured
Certificates to the date of distribution, shall be distributed
to the
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Certificate Holders of Series G, 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 G 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 G 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.
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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 the Indenture
Trustee in its individual capacity, any Certificate Holder or any other
Indenture Indemnitee, 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.
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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 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
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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 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
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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 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
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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.
SECTION 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 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
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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.
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,
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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.
SECTION 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. 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
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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.
SECTION 5.02. Action upon Instructions; Certain Rights and
Limitations.
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
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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
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
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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. Any of the investments permitted
hereunder may be made with or through, as applicable, the entity acting as
Indenture Trustee or its Affiliates.
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.
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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
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
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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 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
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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 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 British
Aerospace Avro Model 146-RJ85A aircraft powered by engines of the same type as
those with which the Airframe shall be equipped at the time of such grounding
and registered in the United States have been grounded by the FAA (although such
certification need actually be maintained only during such periods as the
Aircraft is registered in the United States), or the applicable laws of any
other jurisdiction in which the Aircraft may then be registered from time to
time in accordance with Section 8(f) of the Participation Agreement, and
utilizing, except during any period that a Lease is in effect, the same manner
and standard of maintenance, service, repair or overhaul used by 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
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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:
(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
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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;
(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
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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) 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
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(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 (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
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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 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
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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 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
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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 $250,000. 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.
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) $150,000,000
per occurrence and (ii) cargo liability insurance, in the case of both clause
(i) and clause (ii), (A) of the type and covering the same risks as from time to
time applicable to aircraft operated by 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 and the Policy Provider (but without imposing on any
such parties 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 additional insureds as their respective interests may appear, (B) shall
provide that in respect of the interest of the Indenture Trustee and the Policy
Provider (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 the
Policy Provider (and, if any Lease shall be
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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 the Policy Provider (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 the Policy
Provider (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 the
Policy Provider (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. Each
liability policy (1) shall be primary without right of contribution from any
other insurance which is carried by the Indenture Trustee or the Policy Provider
(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 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
the Policy Provider (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 the Policy Provider (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
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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 $3,500,000 (or, if the Aircraft is then under a Lease, in
excess of $2,000,000), 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 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
$3,500,000 (or, if the Aircraft is then under a Lease, of $2,000,000) 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
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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:
(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).
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(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.
(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
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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.
(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.
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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 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 no Event of Loss had occurred and
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 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
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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 value, utility
and remaining useful life (without regard to hours or cycles) of the Airframe
and Engines, if any, requested to be released (assuming no Event of Loss and
that 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
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transfer be deemed part of the property subject to the Lien of this 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 both 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 no Event of Loss had occurred and 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 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
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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 value, utility and remaining useful life (without regard to hours or
cycles) of the Engine requested to be released (assuming no Event of Loss and
that 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;
(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
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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.
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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 (b) of the
Granting Clause hereof is subject to the following:
(a) With respect to the assignment contained in clause (b) of the
Granting Clause, if and so long as (A) the Aircraft shall be subject to this
Trust Indenture and (B) no 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) all rights and powers related to the Contract Rights and
(ii) subject to paragraph 7.07(c) hereof, to retain any recovery or benefit
resulting from the enforcement of any Contract Rights 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) In the event that an Event of Default under this Trust Indenture
has occurred and is continuing and thereafter until 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 the Aircraft, to the extent that
the same have been assigned pursuant to clause (b) 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 (b) of the Granting Clause hereof, this
Section 7.07 and anything in this Trust Indenture to the contrary (but subject
to all the terms of the Purchase Agreement), all amounts that the Manufacturer
is obligated to pay to the Owner in respect of the Contract Rights under the
Purchase Agreement with respect to the Aircraft as it relates to such Contract
Rights (a "Manufacturer Payment"), will be payable and applicable as follows: so
long as the Aircraft is subject to this Trust Indenture, all Manufacturer
Payments shall be paid to the Owner unless and until an Event of Default under
this Trust Indenture has
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occurred and is continuing, whereupon the Indenture Trustee shall direct the
Manufacturer to make all Manufacturer Payments directly to the Indenture Trustee
until all Events of Default under this Trust Indenture have been cured or
waived. 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) 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
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 (e) 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.
(e) 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 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 and to understand thoroughly the terms and
conditions thereof.
(f) 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.
(g) For all purposes of the assignment contained in clause (b) of
the Granting Clause, the Manufacturer shall not be deemed to have knowledge of
and need not recognize any Event of Default, unless and until the Manufacturer
shall have received written notice thereof from the Indenture Trustee at the
address for the Manufacturer set forth in Section 11.05 hereof and three
Business Days shall have elapsed from the date of actual receipt by the
Manufacturer and, in acting in accordance with the terms of the Purchase
Agreement and the assignment contained in clause (b) of the Granting Clause, the
Manufacturer may act with acquittance and conclusively rely upon such notice.
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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 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.
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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 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
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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 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).
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(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 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,
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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 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.
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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 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.
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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, for U.S. mail at
Corporate Trust Department, P.O. Box 778, Boston, Massachusetts 02102-0778, and
for overnight courier at Corporate Trust Department, 2 Avenue de Lafayette,
Boston, Massachusetts 02111-1724 (Telecopy No. (617) 662-1462), (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. Any notice to the Manufacturer shall be addressed to it at
British Aerospace Regional Aircraft SA, 3, allee Pierre Nadot, B.P. 16, 31701
Blagnac, France, Attn: SVP Sales & Marketing (telecopy 011 33 5 3460 7300) with
a copy to British Aerospace Regional Aircraft, Inc., 13850 McLearen Road,
Herndon, Virginia 20171-3211, Attn: Contracts Director (telecopy (703)
736-4255). 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
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unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 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.
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
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:
- Signature Page -
<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 _] 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 any 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 British Aerospace Avro 146-RJ85A
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.
Annex A-1
<PAGE>
"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.
"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.
Annex A-2
<PAGE>
"Certificate Holder" shall mean any holder from time to time
of one or more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United
States holding a carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49,
United States Code, for aircraft capable of carrying ten or more
individuals or 6,000 pounds or more of cargo or that otherwise is
certified or registered to the extent required to fall within the
purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in
Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States of America enacted in
substitution or replacement therefor.
"Civil Reserve Air Fleet Program" means the Civil Reserve Air
Fleet Program currently administered by the United States Air Force
Air Mobility Command pursuant to Executive Order No. 11490, as
amended, or any substantially similar program.
"Class G Trustee" means the Pass Through Trustee under the
Pass Through Trust Agreement, dated as of June 3, 1999, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company of Connecticut, National Association,
as supplemented by Trust Supplement No. 1999-3G, dated as of
December 9, 1999 among Northwest Airlines, Inc., Northwest Airlines
Corporation and State Street Bank and Trust Company of Connecticut,
National Association.
"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.
"Consent and Agreement" means the Consent and Agreement to
[NW ______ __] dated as of [ ], executed by the Manufacturer, as the
same may be amended, modified or supplemented from time to time in
accordance with the applicable provisions thereof.
"Contract Rights" means all of the Owner's right, title and
interest in and to Clause 7, paragraphs F.5. and F.7. of Part F, and
Part H and Part J of the
Annex A-3
<PAGE>
Manufacturer Support Agreement as and to the extent that the same
relate to the warranties with respect to the Aircraft, including,
without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer
under Clause 7, paragraphs F.5. and F.7. of Part F, Part H or Part J
of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity
provisions in Clause 7, Part H and Part J of the Manufacturer
Support Agreement in respect of the Aircraft and all claims
thereunder and (b) any and all rights of the Owner to compel
performance of the terms of Clause 7, paragraphs F.5. and F.7. of
Part F, Part H and Part J of the Manufacturer Support Agreement in
support thereof.
"Corporate Trust Office" shall mean the principal office of
the Indenture Trustee located at 225 Franklin Street, 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 Allied Signal LF507 type
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 the date of the Participation Agreement and
any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
Annex A-4
<PAGE>
"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 British Aerospace
Avro Model 146-RJ85A 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 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.
Annex A-5
<PAGE>
"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 _], 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, Morgan Stanley
(but only so long as it is the guarantor of the Liquidity Provider)
and the Policy Provider, (v) the Pass Through Trustees, (vi) each
Affiliate of the 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.
Annex A-6
<PAGE>
"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 Indemnitee" means (i) the Indenture Trustee, (ii)
the Loan Participants and each Certificate Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider, Morgan Stanley
(but only so long as it is the guarantor of the Liquidity Provider)
and the Policy Provider, (v) the Pass Through Trustee and (vi) the
respective directors, officers, employees, agents and servants of
each of the Persons described in clauses (i) through (v), 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, (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,
the Policy 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 December 9, 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.
"Lease" means any lease permitted by the terms of Section 7.02
of the Trust Indenture.
Annex A-7
<PAGE>
"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 Morgan Stanley Capital Services,
Inc., as Class G Liquidity Provider, Class B Liquidity Provider and
Class C Liquidity Provider under the Liquidity Facilities, whose
obligations have been guaranteed by Morgan Stanley, 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 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
Annex A-8
<PAGE>
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 British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales,
and its successors and assigns.
"Manufacturer Documents" means the Purchase Agreement, the
Residual Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means that certain
Manufacturer Support Agreement, dated February 5, 1997, between the
Manufacturer and the Owner, 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.
"Morgan Stanley" means Morgan Stanley Dean Witter & Co. in its
capacity as guarantor of the Liquidity Provider.
["Mortgage" means that certain Mortgage and Security Agreement
(N[________]), dated as of [_____________________].]
"Mortgaged Property" shall have the meaning specified in
Section 3.03 of the Trust Indenture.
"Note Purchase Agreement" means that certain 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 of
Connecticut, National Association, 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
Annex A-9
<PAGE>
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).
"Participants" means and includes the Loan Participants.
"Participation Agreement" means that certain Participation
Agreement [NW ______ __], 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 of Connecticut, National Association, a national banking
association, 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 [April 1 and October 1],
commencing on [April/October 1, _______] (or, if any such day is not
a Business Day, the
Annex A-10
<PAGE>
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.
"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.
"Policy Provider" means MBIA Insurance Corporation, a New
York-domiciled stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement dated as of December 9, 1999 among the Subordination Agent
for the Class G Trustee, Northwest and the Policy Provider, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Principal Amount" with respect to a Secured Certificate means
the stated original principal amount of such Secured Certificate
and, with respect to all Secured Certificates, means the aggregate
stated original principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date
on which any portion of the Principal Amount is due and payable in
accordance with the Amortization Schedule.
"Purchase Agreement" means that certain Sale and Purchase
Agreement, dated as of February 5, 1997, between the Manufacturer
and the Owner relating to the purchase by the Owner of the Aircraft
(including the Manufacturer Support Agreement), as originally
executed or as modified, amended or supplemented in accordance with
the terms thereof, but only insofar as the foregoing relates to the
Aircraft.
"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.
Annex A-11
<PAGE>
"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.
"Senior Holder" shall have the meaning specified in Section
2.15(c) of the Trust Indenture.
"Series B" or "Series B Secured Certificates" means Secured
Certificates issued and designated as "Series B" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured
Certificates issued and designated as "Series C" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series C."
"Series G" or "Series G Secured Certificates" means Secured
Certificates issued and designated as "Series G" hereunder, in the
Principal Amount and maturities and bearing interest as specified in
Schedule I to the Trust Indenture under the heading "Series G."
"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, (ii) the Policy Provider and (iii)
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,
Annex A-12
<PAGE>
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 ________ __], 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.
"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 December 2, 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.
Annex A-13
<PAGE>
-------------------------------
EXHIBIT A
TO
TRUST INDENTURE
AND SECURITY AGREEMENT
-------------------------------
TRUST INDENTURE SUPPLEMENT
[NW ________ __]
This TRUST INDENTURE SUPPLEMENT [NW ________ __], 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 ________
__], 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:
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:
EXHIBIT A-1
<PAGE>
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.
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-2
<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-3
<PAGE>
SCHEDULE I
Principal Amount Interest Rate
---------------- -------------
Series G . . . . . $[________________] 7.935%
Series B . . . . . $[________________] 9.485%
Series C . . . . . $[________________] 9.152%
SCHEDULE I-1
<PAGE>
Secured Certificates Amortization
SERIES G
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, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3G, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3B, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
3. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-3C, dated as of December 9, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
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.
SCHEDULE III-1
<PAGE>
Exhibit 99(i)
================================================================================
GUARANTEE
[NW ____ _]
Dated as of [______________]
from
NORTHWEST AIRLINES CORPORATION
One British Aerospace Avro 146-RJ85A Aircraft
================================================================================
<PAGE>
TABLE OF CONTENTS TO GUARANTEE
Page
----
1. Guarantee...............................................................1
2. No Implied Third Party Beneficiaries....................................3
3. Waiver; No Set-off; Reinstatement; Subrogation..........................3
4. Amendments, Etc.........................................................4
5. Payments................................................................4
6. Jurisdictional Matters..................................................4
7. Integration; Counterparts; Successors and Assigns; Headings.............4
8. Notices.................................................................5
9. No Waivers..............................................................5
10. Survival................................................................5
11. Severability............................................................5
12. GOVERNING LAW...........................................................5
13. Enforcement Expenses....................................................6
14. Termination.............................................................6
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<PAGE>
GUARANTEE
[NW ____ _]
This GUARANTEE [NW ____ _], 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 ____ _], 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) British Aerospace Avro
146-RJ85A aircraft, together with four (4) Allied Signal LF507 type engines
(such aircraft and engines, and any substitute Airframe and Engines under the
Trust Indenture, being collectively referred to herein as the "Aircraft"),
pursuant to a Participation Agreement [NW ____ _], 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 "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").
<PAGE>
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 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
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<PAGE>
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.
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
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<PAGE>
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 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
-4-
<PAGE>
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.
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.
-5-
<PAGE>
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the date first hereinabove set forth.
NORTHWEST AIRLINES CORPORATION
By:
------------------------------------
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 OF CONNECTICUT, NATIONAL
ASSOCIATION
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:
<PAGE>
SCHEDULE I
TO GUARANTEE
[NW ____ _]
PARTIES
State Street Bank and Trust Company, as Indenture Trustee
State Street Bank and Trust Company of Connecticut, National Association, as
Pass Through Trustee
State Street Bank and Trust Company, as Subordination Agent
