Exhibit 4(b)(1)
-------------------------------------------------------------------------------
TRUST AGREEMENT
[NW 1997 G]
Dated as of September 25, 1997
between
NORTHWEST AIRLINES, INC.,
Trustor
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
One British Aerospace Avro 146-RJ85A
Aircraft
-------------------------------------------------------------------------------
TRUST AGREEMENT
[NW 1997 G]
This TRUST AGREEMENT [NW 1997 G] dated as of September 25, 1997 between
NORTHWEST AIRLINES, INC., a Minnesota corporation (the "Original Trustor"), and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association (in
its individual capacity, "FSB") and otherwise not in its individual capacity but
solely as trustee hereunder (herein in such capacity with its permitted
successors and assigns called the "Owner Trustee");
WHEREAS, the Trustor desires to create a trust for the purpose of issuing
Secured Certificates, the proceeds of which issuance shall initially be held by
the Indenture Trustee on behalf of the Owner Trustee in the Collateral Account
and released, subject to the proviso to Section 1(d) of the Participation
Agreement, on the Delivery Date in order to finance a portion of Lessor's Cost
of the Aircraft, to acquire the Aircraft from Lessee on the Delivery Date, to
lease the Aircraft to Lessee on the Delivery Date and to receive the benefits
herein provided;
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, FSB and the Trustor agree as follows:
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms used
herein shall have the respective meanings assigned thereto in Appendix A to the
Participation Agreement for all purposes hereof. All definitions contained in
this Section 1.01 shall be equally applicable to both the singular and plural
forms of the terms defined. For all purposes of this Trust Agreement the
following terms shall have the following meanings:
"Excluded Payments" has the meaning ascribed to such term in the Trust
Indenture.
"Indenture Event of Default" has the meaning which the term "Event of
Default" has in the Trust Indenture.
"Lease" means that certain Lease Agreement [NW 1997 G], to be dated as of
the Delivery Date, and to be entered into by the Owner Trustee and Lessee on the
Delivery Date, as said Lease Agreement may from time to time be supplemented or
amended, or the
terms thereof waived or modified, to the extent permitted by, and in accordance
with, the terms of this Trust Agreement. The term "Lease" shall also include
each Lease Supplement from time to time entered into pursuant to the terms of
the Lease.
"Lease Event of Default" has the meaning which the term "Event of Default"
shall have in the Lease.
"Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its
permitted successors and assigns.
"Ownership Interest" means, in the case of each Trustor, the percentage of
its undivided beneficial interest in the Trust Estate created by this Trust
Agreement, which percentage shall be 100%.
"Participation Agreement" has the meaning ascribed to such term in the
Lease.
"Replacement Airframe" has the meaning ascribed to such term in the Trust
Indenture.
"Replacement Engine" has the meaning ascribed to such term in the Trust
Indenture.
"Subsequent Trustor" means any corporation to which the Original Trustor or
any transferee from the Original Trustor or any Subsequent Trustor shall have
transferred at any time after the Delivery Date all of the undivided right,
title and interest originally held by the Original Trustor in this Trust
Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of this Trust Agreement and Section 8 of the
Participation Agreement, provided that any such transfer: (i) shall be effected
by a written agreement, in form and substance reasonably satisfactory to the
Owner Trustee in its individual capacity, among such transferee, its transferor
and the Owner Trustee, which shall provide that such transferee thereby becomes
a party to, and beneficiary of, this Trust Agreement and a Trustor for all
purposes hereof and that such transferee assumes all of the obligations of its
transferor under this Trust Agreement; and (ii) so long as the Lease shall be in
effect or any Secured Certificates remain unpaid, such transferee and its
transferor shall have complied with all of the terms of Section 8(n) of the
Participation Agreement.
"Trust Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Residual Agreement, the ▇▇▇▇
of Sale and the FAA ▇▇▇▇ of Sale, including, without limitation, all amounts of
Basic Rent and Supplemental Rent including without limitation insurance proceeds
(other than insurance proceeds payable to or for the benefit of the Owner
Trustee, for its own account or in its individual capacity, the Trustor, the
Loan Participants or the Indenture Trustee) and requisition, indemnity or other
payments of any kind for or with respect to the Aircraft (except amounts owing
to the Trustor, to the Indenture Trustee, to the Owner Trustee, in its
individual capacity, or to the Loan Participants or any other holder of a
Secured Certificate, or to any of their respective directors, officers,
-2-
employees, servants and agents, pursuant to Section 7 of the Participation
Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payments.
"Trust Indenture Estate" has the meaning ascribed to such term in the Trust
Indenture.
"Trust Office" shall mean the principal corporate trust office of the Owner
Trustee at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Department, or the principal corporate trust office of any
successor Owner Trustee.
"Trust Supplement" means a supplement to the Trust Indenture and to this
Trust Agreement in substantially the form of Exhibit A to the Trust Indenture
which shall particularly describe the Aircraft, and any Replacement Airframe and
Replacement Engine included in the property of the Owner Trustee covered by this
Trust Agreement.
"Trustor" means the Original Trustor and each Subsequent Trustor to the
extent that the same shall, at the relevant time, have an Ownership Interest.
ARTICLE II
AUTHORIZATION AND DIRECTIONS;
DECLARATION OF TRUST
SECTION 2.01. Authorization and Direction to Owner Trustee. The Trustor
hereby authorizes and directs the Owner Trustee:
(a) to execute and deliver as and when specified in Sections 4(a) of the
Participation Agreement each of the other Operative Documents and any other
agreements, instruments or documents to which the Owner Trustee is a party in
the respective forms thereof in which delivered from time to time by the Trustor
to the Owner Trustee for execution and delivery and to enter into and perform
the transactions contemplated thereby;
(b) to execute and deliver from time to time the Secured Certificates in
the manner and subject to the terms and conditions provided in the Participation
Agreement and the Trust Indenture;
(c) to execute and deliver each other document referred to in the
Operative Documents to which the Owner Trustee is a party or which the Owner
Trustee is required to deliver pursuant to the Operative Documents;
(d) subject to the terms of this Agreement, to perform the obligations and
duties and, upon instruction of the Trustor, exercise the rights of the Owner
Trustee under the Operative Documents; and
-3-
(e) to execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the directions
of the Trustor, as the Trustor may deem necessary or advisable in connection
with the Certificate Closing Date and the Delivery Date and the transactions
contemplated hereby, the taking of any such action by the Owner Trustee in the
presence of the Trustor or its counsel to evidence, conclusively, the direction
of the Trustor.
SECTION 2.02. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate upon the trusts hereinafter set forth for the
use and benefit of the Trustor, subject, however, to the provisions of and the
Lien created by the Trust Indenture and, when executed and delivered, to the
provisions of the Lease.
ARTICLE III
[Reserved]
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. Distribution of Payments. (a) Payments to Indenture
Trustee. Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to the Owner Trustee shall be payable directly
to the Indenture Trustee (and if any of the same are received by the Owner
Trustee shall upon receipt be paid over to the Indenture Trustee without
deduction, set-off or adjustment of any kind) for distribution in accordance
with the provisions of Article III of the Trust Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Trust Indenture
shall have been discharged pursuant to Section 10.01 thereof, any payment of the
type referred to in Section 4.01(a) hereof (other than Excluded Payments)
received by the Owner Trustee, any payments received from the Indenture Trustee
other than as specified in Section 4.01(d) hereof and any other amount received
as part of the Trust Estate and for the application or distribution of which no
provision is made herein, shall be distributed forthwith upon receipt by the
Owner Trustee in the following order of priority: first, so much of such
payment as shall be required to reimburse the Owner Trustee for any expenses not
otherwise reimbursed as to which the Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by the Owner
Trustee; second, so much of the remainder for which provision as to the
application thereof is contained in the Lease or any of the other Operative
Documents shall be applied and distributed in accordance with the terms of the
Lease or such other Operative Document; and third, the balance, if any, shall be
paid to the Trustor.
-4-
(c) Certain Distributions to Trustor. All amounts from time to time
distributable by the Indenture Trustee to the Trustor pursuant to the Trust
Indenture shall, if paid to the Owner Trustee, be distributed by the Owner
Trustee to the Trustor in accordance with the provisions of Article III of the
Trust Indenture.
(d) Excluded Payments. Any Excluded Payments received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
(e) The Trustor and the Owner Trustee acknowledge that the proceeds from
the sale of the Secured Certificates to be effected on the Certificate Closing
Date are to be held by the Indenture Trustee in the Collateral Account in the
manner specified in the Trust Indenture for application as provided therein and
in Section 1(d) of the Participation Agreement.
SECTION 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to the Trustor pursuant to this
Article IV by transferring by wire transfer the amount to be distributed to such
account or accounts of the Trustor as the Trustor may designate from time to
time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner
Trustee will, if so requested by the Trustor in writing, pay any or all amounts
payable to the Trustor pursuant to this Article IV either (i) by crediting such
amount or amounts to an account or accounts maintained by the Trustor with the
Owner Trustee in its individual capacity in immediately available funds, (ii) by
payment at the Trust Office of the Owner Trustee, in immediately available
funds, or (iii) by mailing an official bank check or checks in such amount or
amounts payable to the Trustor at such address as the Trustor shall have
designated in writing to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.01. Notice of Event of Default. If the Owner Trustee shall have
knowledge of an Indenture Event of Default (or an event which with the passage
of time or the giving of notice or both would constitute an Indenture Event of
Default) the Owner Trustee shall give to the Trustor prompt telephonic or
telecopy notice thereof followed by prompt confirmation thereof by certified
mail, postage prepaid, provided that (i) in the case of an event which with the
passage of time would constitute an Indenture Event of Default referred to in
paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no
event be furnished later than ten (10) days after the Owner Trustee shall first
have knowledge of such event and (ii) in the case of a misrepresentation by the
Owner Trustee which with the passage of time would constitute an Indenture Event
of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture,
such notice shall in no event be furnished later than ten (10) days after the
Owner Trustee shall first have knowledge of such event. Subject to the
-5-
terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall
refrain from taking such action, not inconsistent with the provisions of the
Trust Indenture, with respect to such Indenture Event of Default or other event
as the Owner Trustee shall be directed in writing by the Trustor. If the Owner
Trustee shall not have received instructions as above provided within twenty
(20) days after the mailing of such notice to the Trustor, the Owner Trustee
until instructed otherwise in accordance with the preceding sentence may, but
shall be under no duty to, take or refrain from taking such action with respect
to such Indenture Event of Default or other event, not inconsistent with the
provisions of the Trust Indenture, as it shall deem advisable in the best
interests of the Trustor. For all purposes of this Trust Agreement and the
other Operative Documents, in the absence of actual knowledge by an officer of
FSB in the Corporate Trust Department, the Owner Trustee shall not be deemed to
have knowledge of an Indenture Event of Default or other event referred to in
this Section 5.01 unless notified in writing by the Indenture Trustee, the
Trustor or Lessee.
SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of the Trustor, the Owner Trustee will take such of the following actions,
not inconsistent with the provisions of the Trust Indenture, as may be specified
in such instructions: (i) give such notice or direction or exercise such right,
remedy or power hereunder or under any of the Operative Documents to which the
Owner Trustee is a party or in respect of all or any part of the Trust Estate as
shall be specified in such instructions (including entering into agreements
referred to in clause (i) of the definition of "Subsequent Trustor"); (ii) take
such action to preserve or protect the Trust Estate (including the discharge of
Liens) as may be specified in such instructions; (iii) approve as satisfactory
to it all matters required by the terms of the Operative Documents to be
satisfactory to the Owner Trustee, it being understood that without written
instructions of the Trustor, the Owner Trustee shall not approve any such matter
as satisfactory to it; and (iv) subject to the rights of Lessee under the
Operative Documents, after the expiration or earlier termination of the Lease,
deliver the Aircraft to the Trustor in accordance with such instructions, convey
all of the Owner Trustee's right, title and interest in and to the Aircraft for
such amount, on such terms and to such purchaser or purchasers as shall be
designated in such instructions, or net lease the Aircraft on such terms and to
such lessee or lessees as shall be designated in such instructions.
SECTION 5.03. Indemnification. The Owner Trustee shall not be required to
take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless the Owner Trustee shall have been
indemnified by the Trustor, in manner and form satisfactory to the Owner
Trustee, against any liability, cost or expense (including reasonable counsel
fees and disbursements) which may be incurred in connection therewith; and, if
the Trustor shall have directed the Owner Trustee to take any such action or
refrain from taking any action, the Trustor agrees to furnish such indemnity as
shall be required and, in addition, to the extent not otherwise paid pursuant to
the provisions of the Participation Agreement, to pay the reasonable
compensation of the Owner Trustee for the services performed or to be performed
by it pursuant to such direction and any fees and disbursements of counsel or
agents employed by the Owner Trustee in connection therewith. The Owner Trustee
shall not be required to take any action under Section 5.01 or 5.02 hereof
-6-
if the Owner Trustee shall reasonably determine, or shall have been advised by
counsel, that such action is contrary to the terms of any of the Operative
Documents to which the Owner Trustee is a party, or is otherwise contrary to
law.
SECTION 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with any of the Operative Documents to which
the Owner Trustee is a party, except as expressly required by the terms of any
of the Operative Documents to which the Owner Trustee is a party, or (to the
extent not inconsistent with the provisions of the Trust Indenture) as expressly
provided by the terms hereof or in written instructions from the Trustor
received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or
obligations shall be read into this Trust Agreement against the Owner Trustee.
FSB agrees that it will, in its individual capacity and at its own cost or
expense (but without any right of indemnity in respect of any such cost or
expense under Section 7.01 hereof) promptly take such action as may be necessary
to duly discharge and satisfy in full all Lessor Liens which it is required to
discharge pursuant to Section 8(h) of the Participation Agreement and otherwise
comply with the terms of said Section binding on it.
SECTION 5.05. Satisfaction of Conditions Precedent. Anything herein to
the contrary notwithstanding, the Owner Trustee shall comply with the provisions
of Section 2.01(b) hereof upon the satisfaction, to the satisfaction of special
counsel for the Owner Trustee, of all the applicable conditions precedent
specified in Section 4 of the Participation Agreement.
SECTION 5.06. No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not have any power, right or authority to, and the Owner
Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Estate except
(i) as expressly required by the terms of any of the Operative Documents to
which the Owner Trustee is a party, (ii) as expressly provided by the terms
hereof, or (iii) as expressly provided in written instructions from the Trustor
pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. FSB accepts the trusts
hereby created and agrees to perform the same but only upon the terms hereof
applicable to it. The Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. FSB shall not be answerable or accountable under any circumstances,
except (a) for its own willful misconduct or gross negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof, (c) for
its or the Owner
-7-
Trustee's failure to use ordinary care to disburse funds and (d) for liabilities
that may result from the inaccuracy of any representation or warranty of it (or
from the failure by it to perform any covenant) in Section 6.03 hereof, in
Section 6.03 of the Trust Indenture or in Section 8(c), 8(d) and 8(v) of the
Participation Agreement.
SECTION 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and the
last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSB shall
have any duty (i) to see to any recording or filing of any Operative Document or
of any supplement to any thereof or to see to the maintenance of any such
recording or filing or any other filing of reports with the Federal Aviation
Administration or other governmental agencies, except that FSB, in its
individual capacity, shall comply with the reporting requirements set forth in
14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall,
to the extent that information for that purpose is supplied by Lessee pursuant
to any of the Operative Documents, complete and timely submit (and furnish the
Trustor with a copy of) any and all reports relating to the Aircraft which may
from time to time be required by the Federal Aviation Administration or any
government or governmental authority having jurisdiction, or (ii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust Indenture Estate or the Trust Estate, except as
provided in Section 8 of the Participation Agreement. Notwithstanding the
foregoing, the Owner Trustee will furnish to the Indenture Trustee and the
Trustor, promptly upon receipt thereof, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and other
instruments furnished to the Owner Trustee under any Operative Document.
SECTION 6.03. No Representations or Warranties as to Certain Matters.
NEITHER THE OWNER TRUSTEE NOR FSB MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT WHATSOEVER, or (b) any representation or warranty as to the validity,
legality or enforceability of this Trust Agreement or any Operative Document to
which the Owner Trustee is a party, or any other document or instrument, or as
to the correctness of any statement contained in any thereof except to the
extent that any such statement is expressly made herein or therein as a
representation by FSB in its individual capacity or by the Owner Trustee and
except that FSB in its individual capacity hereby represents and warrants that
this Trust Agreement has been, and (assuming due authorization, execution and
delivery by the Original Trustor of this Trust Agreement) the Operative
Documents to which it or the Owner Trustee is a party have been (or at the time
of execution and delivery of any such instrument by it or the Owner Trustee
hereunder or pursuant to the terms of the Participation Agreement that such an
instrument will be) duly executed and delivered by one of its officers who is or
will be, as the case may be, duly authorized
-8-
to execute and deliver such instruments on behalf of itself or the Owner
Trustee, as the case may be.
SECTION 6.04. No Segregation of Monies Required; No Interest. Monies
received by the Owner Trustee hereunder need not be segregated in any manner
except to the extent required by law, and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
SECTION 6.05. Reliance Upon Certificates, Counsel and Agents. The Owner
Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Trustor or Lessee
mentioned herein or in any of the Operative Documents to which the Owner Trustee
is a party shall be sufficiently evidenced by written instruments signed by a
person purporting to be the chairman of the board, the president, any executive
vice president, any senior vice president or any vice president or a managing
director and in the name of the Trustor or Lessee, as the case may be. The
Owner Trustee may accept a copy of a resolution of the Board of Directors or
Executive Committee of Lessee, certified by the secretary or any assistant
secretary of Lessee as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted by said Board or Committee
and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically described herein, the Owner
Trustee may for all purposes hereof rely on a certificate signed by a person
purporting to be the chairman of the board, the president, any executive vice
president, any senior vice president or any vice president or a managing
director of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to the Owner Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
trusts hereunder, the Owner Trustee may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through agents or
attorneys and may, at the expense of the Trust Estate, consult with counsel,
accountants and other skilled persons to be selected and employed by it. The
Owner Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the advice or opinion of any such counsel,
accountants or other skilled persons and the Owner Trustee shall not be liable
for the negligence of any such agent, attorney, counsel, accountant or other
skilled person appointed by it with due care hereunder.
SECTION 6.06. Not Acting in Individual Capacity. In acting hereunder, the
Owner Trustee acts solely as trustee and not in its individual capacity except
as otherwise expressly provided herein; and, subject to the terms of the
Participation Agreement and the Trust Indenture, all persons, other than the
Trustor, as provided herein, having any claim against the Owner Trustee by
reason of the transactions contemplated hereby shall look only to the Trust
Estate for payment or satisfaction thereof.
-9-
SECTION 6.07. Fees; Compensation. Except as provided in Section 5.03 or
7.01 hereof, the Owner Trustee agrees that it shall have no right against the
Trustor or (subject to the provisions of the Trust Indenture) the Trust Estate
for any fee as compensation for its services hereunder; provided, however, that
the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to
the lien of the Trust Indenture) for any such fee not paid by Lessee as
contemplated by the last paragraph of Section 7(c) of the Participation
Agreement.
SECTION 6.08. Tax Returns. The Owner Trustee shall be responsible for the
keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. The Trustor shall be responsible for causing to be
prepared and filed all income tax returns required to be filed by the Trustor.
The Owner Trustee shall be responsible for causing to be prepared, at the
request and expense of the Trustor, all income tax returns required to be filed
with respect to the trust created hereby and shall execute and file such
returns. The Trustor or the Owner Trustee, as the case may be, upon request,
will furnish the Owner Trustee or the Trustor, as the case may be, with all such
information as may be reasonably required from the Trustor or the Owner Trustee,
as the case may be, in connection with the preparation of such income tax
returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY TRUSTOR
SECTION 7.01. Trustor to Indemnify Owner Trustee. The Trustor hereby
agrees, whether or not any of the transactions contemplated hereby shall be
consummated, to assume liability for, and hereby indemnify, protect, save and
keep harmless FSB in its individual capacity and its successors, assigns, legal
representatives, agents and servants, from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable by
FSB in its individual capacity on or measured by any compensation received by
FSB in its individual capacity for its services hereunder or in connection with
the transactions contemplated by the Operative Documents), claims, actions,
suits, costs, expenses or disbursements (including, without limitation,
reasonable ongoing fees of the Owner Trustee, reasonable legal fees and
expenses, and including without limitation any liability of an owner, any strict
liability and any liability without fault) of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against FSB in its individual
capacity (whether or not also indemnified against by Lessee under the
Participation Agreement or also indemnified against by any other person but only
to the extent not otherwise paid or reimbursed by Lessee or such other person)
in any way relating to or arising out of this Trust Agreement or any of the
Operative Documents or the enforcement of any of the terms of any thereof, or in
any way relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright
-10-
infringement), or in any way relating to or arising out of the administration of
the Trust Estate or the action or inaction of the Owner Trustee or FSB in its
individual capacity hereunder, except (a) in the case of willful misconduct or
gross negligence on the part of the Owner Trustee or FSB in its individual
capacity in the performance or non-performance of its duties hereunder or
(b) those resulting from the inaccuracy of any representation or warranty of FSB
in its individual capacity (or from the failure of FSB in its individual
capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the
Trust Indenture or, with respect to representations or warranties of FSB in its
individual capacity only, in Section 8(c), Section 8(d) or Section 8(v) of the
Participation Agreement or in any of the other Operative Documents or (c) as may
result from a breach by FSB in its individual capacity of its covenants in the
last sentence of Section 5.04 hereof or (d) in the case of the failure to use
ordinary care on the part of the Owner Trustee or FSB in its individual capacity
in the disbursement of funds. The indemnities contained in this Section 7.01
extend to FSB only in its individual capacity and shall not be construed as
indemnities of the Trust Indenture Estate or the Trust Estate (except to the
extent, if any, that FSB in its individual capacity has been reimbursed by the
Trust Indenture Estate or the Trust Estate for amounts covered by the
indemnities contained in this Section 7.01). The indemnities contained in this
Section 7.01 shall survive the termination of this Trust Agreement. In
addition, if necessary, FSB in its individual capacity shall be entitled to
indemnification from the Trust Estate, subject to the Lien of the Trust
Indenture, for any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to this
Section 7.01 to the extent not reimbursed by Lessee, the Trustor or others, but
without releasing any of them from their respective agreements of reimbursement;
and to secure the same FSB in its individual capacity shall have a Lien on the
Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior
to any interest therein of the Trustor. The payor of any indemnity under this
Article VII shall be subrogated to any right of the person indemnified in
respect of the matter as to which such indemnity was paid.
ARTICLE VIII
TRANSFER OF THE TRUSTOR'S INTEREST
SECTION 8.01. Transfer of Interests. The Original Trustor may, on the
Delivery Date (or, if earlier, the Transfer Date), assign, convey or otherwise
transfer its Beneficial Interest to an institutional investor to enable the
Owner Trustee to purchase the Aircraft pursuant to Section 1(d) of the
Participation Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. Resignation of Owner Trustee; Appointment of Successor.
(a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee
-11-
(i) shall resign if required to do so pursuant to Section 8(c) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to the Trustor, the Indenture
Trustee (so long as the Lien of the Trust Indenture has not been fully
discharged) and Lessee (so long as the Lease is in effect), such resignation to
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b) hereof. In addition, the Trustor may at any time remove
the Owner Trustee without cause by a notice in writing delivered to the Owner
Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has
not been fully discharged) and Lessee (so long as the Lease is in effect), such
removal to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or
removal of the Owner Trustee, the Trustor may appoint a successor Owner Trustee
by an instrument signed by the Trustor. If a successor Owner Trustee shall not
have been appointed within thirty (30) days after such notice of resignation or
removal, the Owner Trustee, the Trustor, Lessee or the Indenture Trustee may
apply to any court of competent jurisdiction to appoint a successor Owner
Trustee to act until such time, if any, as a successor shall have been appointed
as above provided. Any successor Owner Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Owner Trustee
appointed as above provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and the Trustor an instrument accepting such appointment, and thereupon
such successor Owner Trustee, without further act, shall become vested with all
the estates, properties, rights, powers, duties and trusts of the predecessor
Owner Trustee in the trusts hereunder with like effect as if originally named
the Owner Trustee herein; but nevertheless, upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
deliver an instrument transferring to such successor Owner Trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers and trusts
of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed.
(c) Qualification. Any successor Owner Trustee, however appointed, shall
be a Citizen of the United States without making use of a voting trust, voting
powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without
further act.
-12-
SECTION 9.02. Co-Trustees and Separate Trustees. If at any time it shall
be necessary or prudent in order to conform to any law of any jurisdiction in
which all or any part of the Trust Estate is located, or the Owner Trustee being
advised by counsel shall determine that it is so necessary or prudent in the
interest of the Trustor or the Owner Trustee, or the Owner Trustee shall have
been directed to do so by the Trustor, the Owner Trustee and the Trustor shall
execute and deliver an agreement supplemental hereto and all other instruments
and agreements necessary or proper to constitute another bank or trust company
or one or more persons (any and all of which shall be a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement) approved by the Owner Trustee and the Trustor, either to act as
co-trustee, jointly with the Owner Trustee, or to act as separate trustee
hereunder (any such co-trustee or separate trustee being herein sometimes
referred to as an "additional trustee"). In the event an Indenture Event of
Default not arising from a Lease Event of Default shall occur and be continuing,
the Owner Trustee may act under the foregoing provisions of this Section 9.02
without the concurrence of the Trustor; and the Trustor hereby appoints the
Owner Trustee its agent and attorney-in-fact to act for it under the foregoing
provisions of this Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent permitted by law,
be appointed and act, and the Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by the Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the holding
of title to the Trust Estate) the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, the Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) the Trustor, at any time, by an instrument in writing may remove
any such additional trustee unless such additional trustee was appointed by
the Owner Trustee without the concurrence of the Trustor during the
occurrence of an Indenture
-13-
Event of Default not arising from a Lease Event of Default, in which case
the Owner Trustee shall have the power to remove any such additional
trustee without the concurrence of the Trustor; and the Trustor hereby
appoints the Owner Trustee its agent and attorney-in-fact for it in such
connection in such contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of, the Trust Indenture or affect the interests of
the Indenture Trustee or the holders of the Secured Certificates in the
Trust Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by the Owner Trustee and the
Trustor. Subject to Section 10.02 hereof and the first sentence of Section 10
of the Participation Agreement, the Owner Trustee will execute any amendment,
supplement or other modification of this Trust Agreement or of any other
Operative Document to which the Owner Trustee is a party which it is requested
to execute by the Trustor, except that the Owner Trustee shall not execute any
such amendment, supplement or other modification which, by the express
provisions of any of the above documents, requires the consent of any other
party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A signed
copy of each amendment or supplement referred to in Section 10.01(a) hereof
shall be delivered by the Owner Trustee to the Indenture Trustee and each holder
of a Secured Certificate.
SECTION 10.02. Discretion as to Execution of Documents. Prior to executing
any document required to be executed by it pursuant to the terms of Section
10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its
counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of the Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of the Owner Trustee
hereunder or under any other Operative Document to which the Owner Trustee is a
party, the Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
-14-
SECTION 10.04. Distribution of Documents. Promptly after the execution by
the Owner Trustee of any document entered into pursuant to Section 10.01 hereof,
the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed
copy thereof to the Trustor, but the failure of the Owner Trustee to mail such
conformed copy shall not impair or affect the validity of such document.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust Agreement and
the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Trust Indenture pursuant to
Section 10.01 thereof and the sale or other final disposition by the Owner
Trustee of all property constituting part of the Trust Estate and the final
distribution by the Owner Trustee of all monies or other property or proceeds
constituting part of the Trust Estate in accordance with Article IV hereof,
provided that at such time Lessee shall have fully complied with all of the
terms of the Lease and the Participation Agreement or (b) twenty-one years less
one day after the death of the last survivor of all of the descendants of the
grandparents of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ living on the date of the earliest execution
of this Trust Agreement by any party hereto; otherwise this Trust Agreement and
the trusts created hereby shall continue in full force and effect in accordance
with the terms hereof.
SECTION 11.02. Trustor Has No Legal Title in Trust Estate. The Trustor
shall not have legal title to any part of the Trust Estate. No transfer, by
operation of law or otherwise, of any right, title and interest of the Trustor
in and to the Trust Estate hereunder shall operate to terminate this Trust
Agreement or the trusts hereunder or entitle any successors or transferees of
the Trustor to an accounting or to the transfer of legal title to any part of
the Trust Estate.
SECTION 11.03. Trust Agreement for Benefit of Certain Parties Only. Except
as otherwise provided in Articles IX and X hereof, nothing herein, whether
expressed or implied, shall be construed to give any Person other than the Owner
Trustee and the Trustor any legal or equitable right, remedy or claim under or
in respect of this Trust Agreement; but this Trust Agreement shall be held to be
for the sole and exclusive benefit of the Owner Trustee and the Trustor.
SECTION 11.04. Notices; Consent to Jurisdiction. (a) All notices,
demands, instructions and other communications required or permitted to be given
to or made upon any party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or sent to
the intended recipient thereof in accordance with the provisions of this Section
11.04(a). Unless otherwise specified in a notice sent or delivered in
accordance with
-15-
the foregoing provisions of this Section 11.04(a), notices, demands,
instructions and other communications in writing shall be given to or made upon
the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee,
the Loan Participants, the Indenture Trustee or the Trustor, to the respective
addresses set forth below the signatures of such parties on the signature page
of the Participation Agreement, or (B) if to a Subsequent Trustor, addressed to
such Subsequent Trustor at such address as such Subsequent Trustor shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Certificate Holder, addressed to such Certificate Holder at its address set
forth in the secured certificate register maintained pursuant to Section 2.07 of
the Trust Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself to
the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, or any other Operative Document, the subject matter of
any thereof or any of the transactions contemplated hereby or thereby brought by
any party or parties thereto, or their successors or assigns, and (B) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, to the extent permitted by applicable
law, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or that the
Participation Agreement, or any other Operative Document or the subject matter
of any thereof or any of the transactions contemplated hereby or thereby may not
be enforced in or by such courts.
SECTION 11.05. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.06. Waivers, etc. No term or provision hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
entered into in compliance with the terms of Article X hereof; and any waiver of
the terms hereof shall be effective only in the specific instance and for the
specific purpose given.
SECTION 11.07. Counterparts. This Trust Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.08. Binding Effect, etc. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Owner Trustee and
its successors and assigns, and the Trustor, its successors and, to the extent
permitted by Article VIII hereof, its assigns. Any request, notice, direction,
consent, waiver or other
-16-
instrument or action by the Trustor shall bind its successors and assigns. Any
Trustor which shall cease to have any Ownership Interest shall thereupon cease
to be a party hereto or a Trustor for any reason and shall have no further
obligations hereunder.
SECTION 11.09. Headings; References. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.10. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NORTHWEST AIRLINES, INC.
BY s/▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Vice President-Finance
and Assistant Treasurer
FIRST SECURITY BANK,
NATIONAL ASSOCIATION
BY s/▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Title: Vice President
-18-