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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
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One Airbus [A320-212] [A319-113] Aircraft
N[_____]
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TABLE OF CONTENTS
Page
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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.......................................13
(d) Income Tax..............................................13
SECTION 8. Representations, Warranties and Covenants.......................13
SECTION 9. Reliance of Liquidity Provider..................................22
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
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SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
Exhibit A - Schedule of Countries Authorized for
Reregistration
Exhibit B-1 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
special counsel for the Owner and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Owner and the Guarantor
Exhibit B-3 - Form of Opinion of the Owner's Legal Department
Exhibit C - Form of Opinion of counsel for the Supplier and
the Manufacturer
Exhibit D - [Intentionally Omitted]
Exhibit E-1 - [Intentionally Omitted]
Exhibit E-2 - [Intentionally Omitted]
Exhibit F - Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
Exhibit G - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special
counsel for the Indenture Trustee
Exhibit H-1 - [Intentionally Omitted]
Exhibit H-2 - [Intentionally Omitted]
Exhibit I - Form of ss.1110 Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇, special counsel for the Owner
Exhibit J-1 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel
for the Pass Through Trustee
Exhibit J-2 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel
for the Subordination Agent
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
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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 Airbus Industrie [A320-212] [A319-113] 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 and the Supplier have executed the Manufacturer
Consent and Agreement to Assignment of Warranties [NW _____ __] and the Supplier
Consent and Agreement to Assignment of Warranties [NW ____ _] (herein
collectively 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 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) Citibank, N.A. (the "Liquidity
Provider") entered into three revolving credit agreements (each, a "Liquidity
Facility"), one for the benefit of the holders of Certificates of each Pass
Through Trust, with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated June 25, 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 June 18, 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. ▇▇▇-▇▇▇-▇▇▇, 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) and the Guaranty;
(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;
(6) the Guarantee; and
(7) the French Pledge Agreement.
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:
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(A)(1) an incumbency certificate of the Owner and the
Guarantor (as the case may be) as to the person or persons
authorized to execute and deliver this Agreement, the Pass Through
Trust Agreements, the Guarantee and any other documents to be
executed on behalf of the Owner or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the Owner
and the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Owner or the Guarantor (as the case may be) in
connection with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of the Owner
and the Guarantor, certified by the Secretary of State of the State
of Minnesota in the case of the Owner and certified by the Secretary
of State of the State of Delaware in the case of the Guarantor, a
copy of the by-laws of the Owner and the Guarantor, certified by the
Secretary or Assistant Secretary of the Owner and the Guarantor (as
the case may be), and a certificate or other evidence from the
Secretary of State of the State of Minnesota in the case of the
Owner and from the Secretary of State of the State of Delaware in
the case of the Guarantor, dated as of a date reasonably near the
Closing Date, as to the due incorporation and good standing of the
Owner or the Guarantor (as the case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture 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
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relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(viii) All appropriate action required to have been taken prior to
the Closing Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of
the United States, and all orders, permits, waivers, authorizations,
exemptions and approvals of such entities required to be in effect on the
Closing Date in connection with the transactions contemplated by this
Agreement shall have been issued, and all such orders, permits, waivers,
authorizations, exemptions and approvals shall be in full force and effect
on the Closing Date.
(ix) On the Closing Date the Pass Through Trustee shall have
received a certificate signed by an authorized officer of the Owner (and
with respect to the matters set forth in clause (4) below, the Guarantor)
to the effect that:
(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness, and the Owner has good title to the Aircraft free and
clear of Liens other than Permitted Liens;
(2) the Trust Indenture and the Trust Indenture Supplement
covering the Aircraft shall have been duly filed for recordation (or
shall be in the process of being so duly filed for recordation) with
the Federal Aviation Administration;
(3) application for registration of the Aircraft in the name
of the Owner has been duly made with the Federal Aviation
Administration; and
(4) the representations and warranties contained herein of the
Owner and the Guarantor are correct as though made on and as of the
Closing Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(x) The Owner and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements.
(xi) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee and the Indenture Trustee, and reasonably
satisfactory as to scope and substance to the Pass Through Trustee, an
opinion substantially in the form of Exhibit B-1 hereto from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the Owner and the Guarantor, an
opinion substantially in the form of Exhibit B-2 hereto from Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, 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.
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(xii) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Guarantor and the Owner
and reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Guarantor and the Owner, an opinion substantially in the form
of Exhibit C hereto from counsel to the Supplier and 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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇ ▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Owner, which opinion shall state (with customary
assumptions and qualifications) that the Indenture Trustee would be
entitled to the benefits of 11 U.S.C. ss.1110 with respect to the
Aircraft.
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(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 ▇▇▇▇▇▇▇ ▇▇▇▇ 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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇ ▇▇▇▇ 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 ▇▇▇▇ 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
-11-
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) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable opinion
its status as a Citizen of the United States (without making use of any
voting trust, voting powers agreement or similar arrangement) is likely to
change and will resign as Indenture Trustee as provided in Section 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
-15-
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
-19-
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. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of
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the representations and warranties made herein by such party, and that the
Liquidity Provider may rely on such representations and warranties to the same
extent as if such representations and warranties were made to the Liquidity
Provider directly. The Owner agrees and acknowledges that the Liquidity Provider
shall be a third party beneficiary of the indemnities contained in Section 7(c)
hereof, and may rely on such indemnities to the same extent as if such
indemnities were made to the Liquidity Provider directly.
SECTION 10. Other Documents. The Indenture Trustee agrees to
promptly furnish to the Owner copies of any supplement, amendment or waiver or
modification of any of the Operative Documents to which the Owner is not a
party. Each Loan Participant agrees that it will not take any action in respect
of the Collateral except through the Indenture Trustee pursuant to the Trust
Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. Certain Covenants of the Owner. The Owner covenants and
agrees with each of the Loan Participants and the Indenture Trustee:
(a) The Owner will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Indenture Trustee shall reasonably require for accomplishing the purposes of
this Agreement and the other Operative Documents; provided that any instrument
or other document so executed by the Owner will not expand any obligations or
limit any rights of the Owner in respect of the transactions contemplated by any
Operative Documents.
(b) The Owner will cause the Trust Indenture, all supplements and
amendments to the Trust Indenture and this Agreement to be promptly filed and
recorded, or filed for recording, to the extent permitted under the Federal
Aviation Act, or required under any other applicable law. Upon the execution and
delivery of the Trust Indenture, the Trust Indenture and the Trust Indenture
Supplement covering the Aircraft shall be filed for recording with the Federal
Aviation Administration.
SECTION 12. [Intentionally Omitted].
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings attributed thereto in the Annex A to
the Trust Indenture. Unless the context otherwise requires, any reference herein
to any of the Operative Documents refers to such document as it may be amended
from time to time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 13(b). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) as follows:
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(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, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Managing Attorney, or such
office of the Owner in New York City as from time to time may be designated by
the Owner in writing to the Indenture Trustee.
SECTION 14. [Intentionally Omitted].
SECTION 15. Miscellaneous.
(a) [Intentionally Omitted].
(b) The representations, warranties, indemnities and agreements of
the Owner, the Guarantor, the Indenture Trustee, the Subordination Agent and the
Pass Through Trustee provided for in this Agreement, and the Owner's, the
Guarantor's, the Indenture Trustee's, the Subordination Agent's and the Pass
Through Trustee's obligations under any and all thereof, shall survive the
making available of the Commitments by each Pass Through Trustee, the transfer
of any interest by any Loan Participant in any Secured Certificate or the
Collateral and the expiration or other termination of this Agreement or any
other Operative Document.
(c) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee.
The terms of this Agreement shall be binding upon, and inure to the benefit of,
the Owner and, subject to the terms of this Agreement, its successors and
permitted assigns, the Guarantor, the Pass Through Trustee and its successors as
Pass Through Trustee (and any additional trustee appointed) under any of the
Pass Through Trust
-23-
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. THIS AGREEMENT SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(d) [Intentionally Omitted].
(e) It is the intention of the parties hereto that the Indenture
Trustee will be entitled to the benefits of 11 U.S.C. ss. 1110 in the event of
any reorganization of the Owner under Chapter 11 of the Bankruptcy Code.
SECTION 16. Sale/leaseback Transaction. Notwithstanding anything to
the contrary contained herein or any other Operative Document, upon not less
than __ days prior written notice to the parties hereto, the Owner shall have
the right to sell the Aircraft and transfer title to the Aircraft to an owner
trustee for the benefit of an owner participant (which shall be a "Transferee"
(as defined in the form of Leased Aircraft Participation Agreement (as such term
is defined in the Note Purchase Agreement)) in a transaction in which such owner
trustee assumes all of the obligations of the Owner under the Secured
Certificates and the Trust Indenture on a non-recourse basis (with the Owner
being released from such obligations, except to the extent accrued prior
thereto), leases the Aircraft to the Owner and assigns such lease to the
Indenture Trustee pursuant to an amended and restated trust indenture. In
connection with such a transaction, each of the parties hereto and each
Certificate Holder will execute and deliver appropriate documentation permitting
the owner trustee to assume the obligations of the Owner under the Secured
Certificates and the Trust Indenture on a non-recourse basis, releasing the
Owner from all obligations in respect of the Secured Certificates and the Trust
Indenture (except to the extent accrued prior thereto), and take all other
actions as are reasonably necessary to permit such assumption by the owner
trustee. In connection with any such transaction, the parties agree that (a) the
documents to be utilized shall be (i) an amended and restated participation
agreement [NW ____ __] 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 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
-24-
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).
Notwithstanding the foregoing, the Owner shall not have the right to sell the
Aircraft and transfer title to the Aircraft to an owner trustee for the benefit
of the owner participant in a transaction in which such owner trustee assumes
all of the obligations of the Owner under the Secured Certificates and the Trust
Indenture on a non-recourse basis (with the Owner being released from such
obligations), leases the Aircraft to the Owner and assigns such lease to the
Indenture Trustee in a transaction such as that described above unless the Owner
causes to be delivered to the Indenture Trustee an opinion of counsel to the
effect that the Certificate Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such assumption and release and will
be subject to Federal income tax in the same amounts, in the same manner and at
the same time as would have been the case if such assumption and release had not
occurred and that the Pass Through Trusts will not be subject to Federal income
taxation as a result of such assumption and release.
-25-
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
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
NORTHWEST AIRLINES CORPORATION,
Guarantor
By:____________________________________
Name:
Title:
Address: U.S. Mail
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ AND
TRUST COMPANY,
Indenture Trustee
By:____________________________________
Name:
Title:
Address: U.S. Mail
Corporate Trust Department
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
Corporate Trust Department
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 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
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
Corporate Trust Department
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-28-
SCHEDULE I
Names and Addresses
Owner: Northwest Airlines, Inc.
U.S. Mail
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer
USBank, Minneapolis
ABA No. ▇▇▇▇▇▇▇▇▇
Acct. No. 150250099440
Indenture Trustee: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
Corporate Trust Department
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer
State Street Bank and Trust Company
ABA No. ▇▇▇-▇▇▇-▇▇▇
for credit to State Street Bank and Trust Company
Acct. No. ▇▇▇▇-▇▇▇-▇
Attn: Corporate Trust Department
Reference: Northwest/NW [____ _]
SCHEDULE I-1
Loan Participant: State Street Bank and Trust Company
of Connecticut, National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Subordination Agent: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
Corporate Trust Department
▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I-2
SCHEDULE II
Commitments
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------ --------------
Northwest Airlines
Pass Through Trust
7.575% Series A
Secured Certificates
1999-2A due [___________] $[___________]
7.950% Series B
Secured Certificates
1999-2B due [___________] $[___________]
8.304% Series C
Secured Certificates
1999-2C due [___________] $[___________]
SCHEDULE II-1
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. 1999-2A, dated as of June 25, 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. 1999-2B, dated as of June 25, 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. 1999-2C, dated as of June 25, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
SCHEDULE III-1
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
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-1
Indemnitee would be subject to such Income Tax if the sole
connection between such Tax Indemnitee and the Taxing Authority had
been the location and operation of the Aircraft or the activities of
the Owner or any lessee within such Taxing Authority;
(3) to any capital gains taxes, excess profits taxes, value
added taxes, accumulated earnings taxes, personal holding company
taxes, succession taxes or estate or similar taxes;
(4) to any Tax imposed as a result of a transfer or
disposition by a Tax Indemnitee including, without limitation, a
transfer or disposition of all or any portion of its respective
equitable or legal ownership interest in a Secured Certificate
(including sales of participations therein), the Collateral (as
defined in the Trust Indenture) or any Operative Document or any
interest in such Tax Indemnitee;
(5) to any Tax based on or measured by any fees received by
the Pass Through Trustee, the Indenture Trustee or any Agent in
connection with any transaction contemplated by the Operative
Documents;
(6) [Intentionally Omitted]
(7) to any Tax in the nature of an intangible or similar tax
upon or with respect to the value or principal amount of the
interest of any Tax Indemnitee in any of the Secured Certificates;
(8) with respect to any Tax Indemnitee to any Tax imposed on
or with respect to a transferee (or subsequent transferee) of an
original Tax Indemnitee to the extent such Taxes would not have been
required to be withheld or imposed on or with respect to such
original Tax Indemnitee;
(9) to any Tax which would not have been imposed but for an
Indenture Trustee's Lien;
(10) to any Tax to the extent such Tax would not have been
imposed but for a present or future connection between the Tax
Indemnitee or any Affiliate thereof and the jurisdiction imposing
such Taxes (including, without limitation, the Tax Indemnitee or an
Affiliate thereof being or having been a citizen or resident
thereof, or being or having been organized, present or 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-2
law, treaty or regulation as a condition to the allowance of any
reduction in the rate of such Tax or any exemption or other relief
from such Tax;
(12) to any Tax on a Tax Indemnitee to the extent arising out
of, or caused by, or to the extent such Tax would not have been
incurred but for, (A) the willful misconduct or gross negligence of
such Tax Indemnitee or any of its Affiliates or (B) the inaccuracy
or breach of any representation, warranty, covenant or agreement by
such Tax Indemnitee or any of its Affiliates in any Operative
Document;
(13) to any Tax on a Tax Indemnitee to the extent consisting
of interest, penalties, fines or additions to Tax resulting from the
negligence or willful misconduct of such Tax Indemnitee or any of
its Affiliates in connection with the filing of, or failure to file,
any tax return, the payment of, or failure to pay any Tax, or the
conduct of any proceeding in respect thereof unless resulting from
the failure by the Owner to perform its obligations under Section
7(b)(v) hereof; or
(14) to any excise tax imposed on any Tax Indemnitee under
Section 4975 of the Internal Revenue Code as a result of the use by
such Tax Indemnitee or any of its Affiliates of the assets of an
"employee benefit plan" (as defined in Section 3(3) of ERISA) to
purchase a Secured Certificate or otherwise acquire any interest in
any Secured Certificate.
(iii) Calculation of General Tax Indemnity Payments. Any payment
which the Owner shall be required to make to or for the account of any Tax
Indemnitee with respect to any Tax which is subject to indemnification
under this Section 7(b) shall be in an amount which, after reduction by
the amount of all Taxes required to be paid by such Tax Indemnitee in
respect of the receipt or accrual of such amount and after consideration
of any current savings of such Tax Indemnitee resulting by way of any
deduction, credit or other tax benefit attributable to such indemnified
Tax that actually reduces any Taxes for which the Owner is not required to
indemnify such Tax Indemnitee pursuant to this Section 7(b) or the Tax
Indemnity Agreement, shall be equal to the payment otherwise required
hereunder.
If, by reason of any Tax payment made to or for the account of a Tax
Indemnitee by the Owner pursuant to this Section 7(b), such Tax Indemnitee
or any of its Affiliates subsequently realizes a tax deduction or credit
(including a foreign tax credit) not previously taken into account in
computing such payment, such Tax Indemnitee shall promptly pay to the
Owner an amount equal to the sum of (I) the actual reduction in Taxes, if
any, realized by such Tax Indemnitee which is attributable to such
deduction or credit and (II) the actual reduction in Taxes realized by
such Tax Indemnitee as a result of any payment made by such Tax Indemnitee
pursuant to this sentence. For purposes of this Section 7(b)(iii), items
of foreign Tax of any Tax Indemnitee shall be deemed to be utilized by
such Tax Indemnitee as credits or deductions for any taxable year in
accordance with the following priorities:
EXHIBIT K-3
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 or
otherwise prejudice any Tax the Owner's right to indemnity under this
Section 7(b) except to the extent such failure has a materially adverse
effect on the ability to contest such claim). If the Tax cannot be
contested in a Owner Controlled Contest, upon request from the Owner
within thirty (30) days after receipt of such notice, such Tax Indemnitee
shall in good faith at the Owner's sole cost and expense contest the
imposition of such
EXHIBIT K-4
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.
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
EXHIBIT K-5
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 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
EXHIBIT K-6
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, ▇▇▇▇ or advice received by it
concerning any Tax, provided, however, that the failure of any Tax
Indemnitee to forward any such notice, ▇▇▇▇ 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.
(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-7
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 or the Pass Through Trust Agreements or in connection
therewith being incorrect in any material respect, or (B) the failure by such
Indemnitee (or any member of the Related Indemnitee Group) to perform or observe
any agreement, covenant or condition in any of the Operative Documents, the
Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust
Agreements applicable to it including, without limitation, the creation or
existence of a Loan Participant Lien or an Indenture Trustee's Lien (except to
the extent such failure was caused directly by the failure of the Owner to
perform any obligation under an Owner Document), or (C) the willful misconduct
or the gross negligence of such Indemnitee (or any member of the Related
Indemnitee Group) (other than gross negligence imputed to such Indemnitee (or
any member of the Related Indemnitee Group) solely by reason of its interest in
the Aircraft), or (D) with respect to any Indemnitee, a disposition (voluntary
or involuntary) by such Indemnitee of all or any part of such Indemnitee's
interest in the Airframe, any Engine or in the Operative Documents other than
during the continuance of an Event of Default under the Trust Indenture, or (E)
any Tax whether or not the Owner is required to indemnify for such Tax pursuant
to Section 7(b) hereof (it being understood that Section 7(b) hereof provides
for the Owner's liability with respect to Taxes), or (F) in the case of an
Indemnitee which is a Loan
EXHIBIT L-1
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 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
EXHIBIT L-2
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 their rights to
investigate, defend or compromise such Expense as may be required to retain the
EXHIBIT L-3
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