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SLOT SECURITY AGREEMENT
between
NORTHWEST AIRLINES, INC.,
as Pledgor
and
BANKERS TRUST COMPANY,
as Collateral Agent
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Dated as of May 12, 1998
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TABLE OF CONTENTS
Page
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Section 1. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 3. No Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 4. Representation, Warranties and Covenants . . . . . . . . . . . . . . . .2
Section 5. Supplements, Further Assurances. . . . . . . . . . . . . . . . . . . . .4
Section 6. Provisions Concerning Pledged Collateral . . . . . . . . . . . . . . . .4
(i) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(ii) Permitted Transfers of Pledged Slots . . . . . . . . . . . . . . . .4
(iii) Financing Statements . . . . . . . . . . . . . . . . . . . . . . . .4
(iv) Compliance with Laws and Regulations . . . . . . . . . . . . . . . .5
(v) Notice of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. Collateral Agent Appointed Attorney-in-Fact. . . . . . . . . . . . . . .5
Section 8. Collateral Agent May Perform . . . . . . . . . . . . . . . . . . . . . .6
Section 9. The Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 10. Events of Default, Remedies . . . . . . . . . . . . . . . . . . . . . .6
A. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . .6
B. Remedies; Obtaining the Collateral Upon Event of Default . . . . . . . .6
C. Remedies; Disposition of the Collateral. . . . . . . . . . . . . . . . .7
Section 11. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . .8
Section 12. No Waiver; Discontinuance of Proceeding . . . . . . . . . . . . . . . .8
Section 13. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 14. Amendments, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 15. Termination; Release. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 16. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 18. Continuing Security Interest; Transfer of Notes . . . . . . . . . . . 13
Section 19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 20. Consent to Jurisdiction and Service of Process. . . . . . . . . . . . 14
Section 21. Security Interest Absolute. . . . . . . . . . . . . . . . . . . . . . 14
Section 22. Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . 15
Section 23. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 24. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . 15
Section 25. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 26. The Pledgor's Duties. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 27. Limited Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 15
SLOT SECURITY AGREEMENT
SLOT SECURITY AGREEMENT, dated as of May 12, 1998 (as amended,
modified or supplemented from time to time, this "Agreement"), between NORTHWEST
AIRLINES, INC., a Minnesota corporation (the "Pledgor"), and BANKERS TRUST
COMPANY, as Collateral Agent (the "Collateral Agent"), for the benefit of the
Banks and the Agents under, and any other lender from time to time party to, the
Credit Agreement herein referred to (such Banks, the Agents and the other
lenders, if any, are hereinafter called the "Secured Creditors"). Except as
otherwise defined in Section 16 of this Agreement, terms used herein and defined
in the Credit Agreement shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Pledgor has requested that the Agents and the Banks agree
to amend the Credit Agreement on the terms and subject to the conditions
provided in the Temporary Amendment;
WHEREAS, it is a condition precedent to the effectiveness of the
Temporary Amendment that the Pledgor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, the Pledgor desires to execute this Agreement to satisfy the
condition precedent described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
Section 1. PLEDGE. The Pledgor hereby pledges to the Collateral
Agent and grants to the Collateral Agent for the benefit of the Secured
Creditors a security interest in all of the following (the "Collateral"), to
secure all of the Obligations:
(i) all of the right, title and interest of the Pledgor in, to and
under each and every Pledged Slot, now existing or hereafter arising from
time to time; and
(ii) all Proceeds of any and all of the foregoing;
Section 2. OBLIGATIONS. This Agreement secures, and the Collateral
is collateral security for, the Obligations.
Section 3. NO RELEASE. Nothing set forth in this Agreement shall
relieve the Pledgor from the performance of any term, covenant, condition or
agreement on the Pledgor's part to be performed or observed under or in respect
of any of the Collateral or from any liability
to any Person under or in respect of any of the Collateral or impose any
obligation on the Collateral Agent or any Secured Party to perform or observe
any such term, covenant, condition or agreement on the Pledgor's part to be so
performed or observed or impose any liability on the Collateral Agent or any
Secured Creditor for any act or omission on the part of the Pledgor relating
thereto or for any breach of any representation or warranty on the part of the
Pledgor contained in this Agreement, or in respect of the Collateral or made in
connection herewith or therewith. This Section shall survive the termination of
this Agreement and the discharge of the Pledgor's other obligations hereunder
and under the Credit Documents.
Section 4. REPRESENTATION, WARRANTIES AND COVENANTS. The Pledgor
represents, warrants and covenants as follows:
(i) All filings, registrations and recordings necessary or
reasonably requested by the Collateral Agent to create, preserve, protect
and perfect the security interests granted by the Pledgor to the Collateral
Agent hereby in respect of the Collateral have been accomplished by the
Pledgor. The security interests granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to this instrument in and to the
Collateral constitute and hereafter will constitute a perfected security
interest therein superior and prior to the rights of all other Persons
therein and subject to no other Liens, except for Permitted Liens and
subject to the Federal Aviation Act and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests.
(ii) The Pledgor is, and as to Collateral acquired by it from time
to time after the date hereof the Pledgor will be, the owner of all
Collateral free from any Lien except for the Lien and security interest
created by this Agreement, Permitted Liens and subject to the Federal
Aviation Act and/or the ability of the FAA to withdraw slots. The Pledgor
will, at or before the time it subjects any property to the Lien of this
Agreement, cause evidence of its title to be duly recorded, filed, or filed
for recording, to the extent permitted or required under any applicable
law, by the Pledgor as owner. Pledgor shall defend the Collateral against
any and all claims and demands of all Persons at any time claiming any
interest therein adverse to the Collateral Agent or any Secured Creditor.
(iii) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) on the date
hereof, covering or purporting to cover any interest of any kind in the
Collateral, and so long as the Credit Agreement has not been terminated or
any of the Obligations remain, the Pledgor shall not execute or authorize
to be filed in any public office any financing statement (or similar
statement or instrument of registration under the law of any jurisdiction),
or statements relating to the Collateral, except financing statements filed
or to be filed in respect of and covering the security interests granted
hereby by the Pledgor.
(iv) The chief executive offices of the Pledgor as of the date of
this Agreement are located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The
Pledgor shall not move its chief executive office except to such new
location as the Pledgor may establish in
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accordance with this Section 4(iv). The Pledgor shall not establish any
other location for its chief executive office until (i) it shall have given
to the Collateral Agent not less than 45 days' prior written notice of its
intention so to do, clearly describing such new location (which shall be
within the continental United States of America), and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new location, it shall have taken
all action reasonably satisfactory to the Collateral Agent to maintain the
perfection and priority of the security interest of the Collateral Agent on
behalf of the Secured Creditors in the Collateral intended to be granted
hereby.
(v) The Pledgor represents and warrants that it holds the
requisite authority to hold each of the Pledged Slots pursuant to authority
granted by the FAA pursuant to Title 14 of the Code of Federal Regulations,
Part 93, and that it has, at all times after obtaining each such Pledged
Slot, complied in all material respects with all of the terms, conditions
and limitations of each rule or regulation of the FAA and DOT and with all
applicable provisions of the Federal Aviation Act and applicable rules and
regulations promulgated thereunder and that there exists no material
violation of such terms, conditions or limitations that gives the FAA or
DOT the right to terminate, cancel, withdraw or modify the rights of the
Pledgor in any such Pledged Slot.
(vi) The Pledgor is a Citizen of the United States and a
Certificated Air Carrier. All material licenses, permits, authorizations,
certificates of compliance, certificates of public convenience and
necessity and other certificates (including, without limitation, air
carrier operating certificates and operations specifications issued by the
FAA pursuant to 14 C.F.R. Part 121) which are required by the DOT or the
FAA and which are adequate for the conduct of the business of the Pledgor
are in full force and duly issued to the Pledgor. There are no license
fees owed on the Pledgor's DOT or FAA licenses, certificates or
authorizations. The Pledgor is in compliance with all material
requirements of the certificates and authorizations issued to it by the DOT
or the FAA.
(vii) The Pledgor has full corporate power and authority and legal
right to pledge all the Collateral pursuant to this Agreement.
(viii) No consent of any other party (including, without limitation,
stockholders or creditors of the Pledgor), and no consent, authorization,
approval, or other action by, and (except in connection with the perfection
of the Lien created hereby) no notice to or filing with, any Governmental
Authority or other Person is required either (x) for the pledge by the
Pledgor of the Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement or (y) for the exercise by the
Collateral Agent of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement; PROVIDED,
HOWEVER, that the transfer of Pledged Slots is subject to confirmation by
the FAA.
(ix) All information set forth herein relating to the Collateral is
accurate in all material respects as of the date hereof.
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(x) This Agreement is made with full recourse to the Pledgor and
pursuant to and upon all the warranties, representations, covenants and
agreements on the part of the Pledgor contained herein, in the other Credit
Documents, and otherwise in writing in connection herewith or therewith.
Section 5. SUPPLEMENTS, FURTHER ASSURANCES. The Pledgor agrees that
at any time and from time to time, at the expense of the Pledgor, the Pledgor
will promptly execute and deliver all further instruments and documents, in form
and substance reasonably acceptable to the Collateral Agent, and take all
further action, that may be required or that the Collateral Agent reasonably
deems necessary, in order to perfect, preserve and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. The Pledgor shall pay any applicable filing fees and other expenses
related to the filing or financing and continuation statements or the expenses
for other action taken to perfect the security interest granted hereunder. The
Pledgor hereby authorizes the Collateral Agent to file any financing or
continuation statements without the signature of the Pledgor when permitted by
law.
Section 6. PROVISIONS CONCERNING PLEDGED COLLATERAL.
(i) MAINTENANCE. Except as otherwise provided in this Section
6(i), Pledgor will do or cause to be done all things necessary to preserve
and keep in full force and effect its material rights in and to use its
Pledged Slots. Without in any way limiting the foregoing, the Pledgor
shall promptly take all such steps as may be necessary to obtain renewal of
each such Pledged Slot from the FAA, within a commercially reasonable time
prior to the expiration of such authority, and shall take all such other
steps as may be necessary now or in the future to maintain, renew and
obtain the rights, licenses or certifications as are necessary to the
continued and future use by the Pledgor of the Pledged Slots. The Pledgor
shall further take all actions necessary or, in the reasonable judgment of
Collateral Agent, advisable in order to maintain the Pledgor's material
rights in and the Pledgor's right to use the Pledged Slots. Nothing in
this provision shall be interpreted to prevent the Pledgor from modifying
or discontinuing its use of any of the Pledged Slots due to a determination
made by the Pledgor that it is commercially reasonable not to maintain or
otherwise perform with respect to any of the Pledged Slots as specified
above; PROVIDED, HOWEVER, the Pledgor shall give the Collateral Agent
thirty days prior notice of any material modification or any
discontinuation of use of any of the Slots.
(ii) PERMITTED TRANSFERS OF PLEDGED SLOTS. Notwithstanding
anything to the contrary herein contained, the Pledgor shall be entitled to
transfer or otherwise dispose of its rights in Pledged Slots to the extent
expressly permitted by Section 8.03(II)(ii) of the Credit Agreement.
(iii) FINANCING STATEMENTS. The Pledgor shall sign and deliver to
the Collateral Agent such financing and continuation statements, in form
and substance acceptable to the Collateral Agent, as may from time to time
be required or necessary to grant, continue
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and maintain a valid, enforceable, first priority security interest in the
Collateral as provided herein, and the other rights, as against third
parties, provided hereby, all in accordance with the Uniform Commercial
Code as enacted in any and all relevant jurisdictions or any other relevant
law. The Pledgor shall pay any applicable filing fees and other expenses
related to the filing of such financing and continuation statements. The
Pledgor authorizes the Collateral Agent to file any such financing or
continuation statements without the signature of the Pledgor where
permitted by law.
(iv) COMPLIANCE WITH LAWS AND REGULATIONS. The Pledgor shall
promptly comply in all material respects with all laws, ordinances, orders,
rules, regulations, and requirements of all Federal, state, municipal or
other governmental or quasi-governmental authorities or bodies then having
jurisdiction over the Collateral (or any part thereof) and/or the use
thereof by the Pledgor, of every nature and kind (the "Requirements")
including any of the same which relate to or require changes or
requirements incident to or as the result of any use thereof or otherwise,
and the Pledgor shall so comply, whether or not such Requirements shall now
exist or shall hereafter be enacted or promulgated and whether or not the
same may be said to be within the present contemplation of the parties
hereto. Notwithstanding the foregoing, if the Pledgor contests a
Requirement, it shall not be obligated to comply with such Requirement to
the extent such non-compliance or deferral is consistent with law and does
not have a materially adverse effect on the Collateral or the security
interest therein.
(v) NOTICE OF LAWS. The Pledgor agrees to give the Collateral
Agent notice of any violations of any Requirement enacted, passed,
promulgated, made, issued or adopted by any of the governmental departments
or agencies or authorities hereinbefore mentioned affecting the Collateral
or the Pledgor's use thereof, a copy of which is served upon or received by
the Pledgor, or otherwise brought to the attention of the Pledgor, by
mailing within thirty (30) business days after such service, receipt, or
after the same otherwise comes to the attention of the Pledgor, a copy of
each and every one thereof to the Collateral Agent. At the same time, the
Pledgor will inform the Collateral Agent as to the work or steps which the
Pledgor proposes to do or take in order to correct the violation.
Notwithstanding the foregoing, however, if such work or step would require
any alterations which would, in the Collateral Agent's reasonable opinion,
reduce the value of the Collateral or change the general character or use
of the Collateral, the Pledgor may, with the consent of the Collateral
Agent, defer compliance therewith, as long as such deferral is consistent
with applicable law in order that the Pledgor may, with the consent of the
Collateral Agent, at the Pledgor's expense, contest or seek modification of
or other relief with respect to such Requirements, but nothing herein shall
relieve the Pledgor of the duty and obligation, at the Pledgor's expense,
to comply with such Requirements, or such Requirements as modified,
whenever the Collateral Agent shall so direct.
Section 7. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor
hereby appoints the Collateral Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time in the
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Collateral Agent's discretion to take any action and to execute any instrument
which the Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, which appointment as attorney-in-fact
is coupled with an interest.
Section 8. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein within a reasonable time after receipt of
a written request to do so from the Collateral Agent, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the reasonable
expenses of the Collateral Agent, including, without limitation, the fees and
expenses of its counsel, incurred in connection therewith, shall be payable by
the Pledgor and shall be considered Obligations.
Section 9. THE COLLATERAL AGENT . It is expressly understood and
agreed by the parties hereto and each Secured Creditor, by accepting the
benefits of this Agreement, acknowledges and agrees that the obligations of the
Collateral Agent as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 11 of the Credit
Agreement.
Section 10. EVENTS OF DEFAULT, REMEDIES.
A. EVENTS OF DEFAULT. It shall be an Event of Default hereunder if
under the Credit Agreement an "Event of Default" (as such term is defined in
such Agreement) shall occur.
B. REMEDIES; OBTAINING THE COLLATERAL UPON EVENT OF DEFAULT. If any
Event of Default shall have occurred and be continuing, then and in every such
case, the Collateral Agent (acting at the direction and with the consent of the
Required Banks) may, at any time or from time to time during such Event of
Default:
(i) Declare the entire right, title and interest of the Pledgor in
and to each Pledged Slot vested, subject to the requirements imposed by the
Federal Aviation Act and the FAA, in which event such rights, title and
interest shall immediately vest in the Collateral Agent, in which case the
Pledgor agrees to execute and deliver such deeds of conveyance, assignments
and other documents or instruments (including any notices or applications
to the DOT, FAA or any other governmental or regulatory authority having
jurisdiction over any such Pledged Slot or the use thereof) as shall be
requested by the Collateral Agent in order to effectuate the transfer of
such Pledged Slots, together with copies of the certificates or orders
issued by the FAA representing same and any other rights of the Pledgor
with respect thereto, to any designee or designees selected by the
Collateral Agent and approved by the FAA, it being understood that, as of
the date hereof, transfers of Pledged Slots within the United States must
accommodate FAA requirement that said slots be used only by air carriers;
it being further understood that the Pledgor's obligation to deliver such
Collateral and such documents and instruments with respect thereto is of
the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled
to a decree requiring specific performance by the Pledgor of said
obligations; and
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(ii) Sell or otherwise liquidate, or direct the Pledgor to sell or
otherwise liquidate, any or all of the Collateral or any part thereof,
subject to the requirements imposed by the Federal Aviation Act and the FAA
and take possession of the proceeds of any such sale or liquidation.
C. REMEDIES; DISPOSITION OF THE COLLATERAL. (i) The Collateral Agent
may from time to time exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it and
to the extent not in violation of applicable law, including the Federal Aviation
Act, and subject to the approval of the DOT or its successor or nominee, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code (the "Code") in effect in all relevant jurisdictions at the time of an
Event of Default, and the Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Collateral Agent may deem commercially reasonable. To
the extent not inconsistent with the Federal Aviation Act and the FAA
requirements, the Collateral Agent or any other Secured Creditor may be the
purchasers of any or all of the Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at such sale, to
use and apply any of the Obligations owed to such Person as a credit on account
of the purchase price of any Collateral payable by such Person at such sale.
Each purchaser at any such sale shall acquire the property sold absolutely free
from any claim or right on the part of the Pledgor, and the Pledgor hereby
waives, to the fullest extent permitted by law, all rights of redemption, stay
or appraisal which it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Pledgor hereby waives, to
the full extent permitted by law, any claims against the Collateral Agent
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale.
(ii) Except as otherwise provided herein, the Pledgor hereby
waives, to the fullest extent permitted by applicable law, notice or judicial
hearing in connection with the Collateral Agent's taking possession or the
Collateral Agent's disposition of any of the Collateral, including, without
limitation, any and all prior notice and hearing for any prejudgment remedy or
remedies and any such right which the Pledgor would otherwise have under law,
and the Pledgor hereby further waives to the fullest extent permitted by
applicable law: (a) all damages occasioned by such taking of possession; (b) all
other requirements as to the time, place and terms of sale or other requirements
with respect to the enforcement of the Collateral Agent's rights hereunder; and
(c) all rights of redemption, appraisement, valuation,
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stay, extension or moratorium now or hereafter in force under any applicable
law. Any sale of, or the grant of options to purchase, or any other realization
upon, any Collateral shall operate to divest all right, title, interest, claim
and demand, either at law or in equity, of the Pledgor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Pledgor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Pledgor.
Section 11. APPLICATION OF PROCEEDS. (a) Any cash held by the
Collateral Agent as Collateral and all cash proceeds received by the Collateral
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral pursuant to the exercise by the Collateral Agent
of its remedies as a secured creditor as provided in Section 10 of this
Agreement shall be applied from time to time by the Collateral Agent:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (ii) and (iii) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors, with each Secured
Creditor receiving an amount equal to its outstanding Obligations or, if
the proceeds are insufficient to pay in full all such Obligations, its Pro
Rata Share of the amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 15 hereof to the Pledgor
or as required by applicable law.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's
Obligations and the denominator of which is the then outstanding amount of all
Obligations.
(c) If any payment to any Secured Creditor of its Pro Rata Share
of any distribution would result in overpayment to such Secured Creditor, such
excess amount shall instead be distributed in respect of the unpaid Obligations
of the other Secured Creditors, with each Secured Creditor whose Obligations
have not been paid in full to receive an amount equal to such excess amount
multiplied by a fraction the numerator of which is the unpaid Obligations of
such Secured Creditor and the denominator of which is the unpaid Obligations of
all Secured Creditors entitled to such distribution.
(d) It is understood that the Company shall remain liable to the
extent of any deficiency between the amount of the proceeds of the Collateral
and the aggregate amount of the sums referred to in clauses (i) and (ii) of
Section 11(a).
Section 12. NO WAIVER; DISCONTINUANCE OF PROCEEDING. (a) Each and
every right, power and remedy hereby specifically given to the Collateral Agent
or otherwise in this
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Agreement shall be cumulative and shall be in addition to every other right,
power and remedy specifically given under this Agreement or the other Credit
Documents now or hereafter existing at law, in equity or by statute and each and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Collateral Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any default or Event of Default or an acquiescence
therein. No notice to or demand on the Pledgor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
(b) In the event the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case the Pledgor, the Collateral
Agent and each holder of any of the Obligations shall to the extent permitted by
applicable law be restored to their respective former positions and rights
hereunder with respect to the Collateral, and all rights, remedies and powers of
the Collateral Agent and the Secured Parties shall continue as if no such
proceeding had been instituted.
Section 13. INDEMNIFICATION. (a) The Pledgor agrees to indemnify,
reimburse and hold the Collateral Agent, each Secured Creditor and their
respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 13 referred to individually as "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all reasonable costs, expenses or disbursements (including
reasonable attorneys' fees and expenses) (for the purposes of this Section 13
the foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any other Credit Document or any
other document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage); provided that no Indemnitee shall be
indemnified pursuant to this Section 13(a) for
-9-
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. The Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the Pledgor
shall assume full responsibility for the defense thereof. Each Indemnitee
agrees to use its best efforts to promptly notify the Pledgor of any such
assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 13(a), the Pledgor
agrees to pay, or reimburse the Collateral Agent for, any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other reasonable fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Collateral Agent's
interest therein, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral.
(c) If and to the extent that the obligations of the Pledgor under
this Section 13 are unenforceable for any reason, the Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
(d) Any amounts paid by any Indemnitee as to which such Indemnitee
has the right to reimbursement shall constitute Obligations secured by the
Collateral. The indemnity obligations of the Pledgor contained in this Section
13 shall continue in full force and effect notwithstanding the full payment of
all the Notes issued under the Credit Agreement and the payment of all other
Obligations and notwithstanding the discharge thereof.
Section 14. AMENDMENTS, ETC. This Agreement may not be amended,
modified or waived except with the written consent of the Pledgor and the
Collateral Agent (with the consent of the Required Banks or, to the extent
required by Section 12.12 of the Credit Agreement, all of the Banks). Any
amendment, modification or supplement of or to any provision of this Agreement,
any termination or waiver of any provision of this Agreement and any consent to
any departure by the Pledgor from the terms of any provision of this Agreement
shall be effective only in the specific instance and for the specific purpose
for which made or given. No notice to or demand upon the Pledgor in any
instance hereunder shall entitle the Pledgor to any other or further notice or
demand in similar or other circumstances.
Section 15. TERMINATION; RELEASE. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
shall survive) and the Collateral Agent, at the request and expense of the
Pledgor, will promptly execute and deliver to the Pledgor a proper instrument or
instruments (including Uniform Commercial Code termination statements on form
UCC-3) acknowledging the satisfaction and termination of this
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Agreement, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of its Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the earlier to occur of (x) the
Temporary Amendment Expiry Date and (y) the first date upon which the Total
Commitment and all Letters of Credit have been terminated, no Note is
outstanding (and all Loans have been paid in full), and all other Obligations
then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or this Agreement or is
otherwise released at the direction of the Required Banks (or all the Banks if
required by Section 12.12 of the Credit Agreement) and the proceeds of such sale
or sales or from such release are applied in accordance with the terms of the
Credit Agreement, such Collateral will be sold free and clear of the Liens
created by this Agreement and the Collateral Agent, at the request and expense
of the Pledgor, will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
the Pledgor as is then being (or has been) so sold or released and as may be in
the possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.
(c) At any time that the Pledgor desires that Collateral be
released as provided in the foregoing Section 15(a) or (b), it shall deliver to
the Collateral Agent a certificate signed by its chief financial officer or
another authorized senior officer stating that the release of the respective
Collateral is permitted pursuant to Section 15(a) or (b). If requested by the
Collateral Agent (although the Collateral Agent shall have no obligation to make
any such request), the Pledgor shall furnish appropriate legal opinions (from
counsel, which may be in-house counsel, acceptable to the Collateral Agent) to
the effect set forth in the immediately preceding sentence. The Collateral
Agent shall have no liability whatsoever to any Secured Creditor as the result
of any release of Collateral by it as permitted by this Section 15.
Section 16. DEFINITIONS. The following terms shall have the
following meanings. Such definitions shall be equally applicable to the
singular and plural forms of the terms defined.
"Agreement" has the meaning provided in the preamble hereto.
"Collateral" has the meaning provided in Section 1 hereof.
"Collateral Agent" has the meaning provided in the preamble hereto.
"Credit Agreement" shall mean the Credit Agreement, dated as of
December 15, 1995, as amended and restated as of October 16, 1996, further
amended and restated as of December 29, 1997, further amended as of January 23,
1998 and further amended as of May 12, 1998 by and among Northwest Airlines
Corporation, a Delaware corporation, NWA Inc., a Delaware corporation, Northwest
Airlines, Inc., a Minnesota corporation (the "Borrower"), the lenders from time
to time party thereto (the "Banks") ABN AMRO Bank N.V., as compliance agent (the
"Compliance Agent"), Bankers Trust Company, as administrative agent (the
"Administrative Agent"), Chase Securities Inc., as syndication agent (the
"Syndication Agent"),
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Citibank, N.A., as documentation agent (the "Documentation Agent"), and National
Westminster Bank plc and U.S. Bancorp (f/k/a First Bank National Association),
as agents (together with the Compliance Agent, the Administrative Agent, the
Syndication Agent and the Documentation Agent, each an "Agent" and collectively,
the Agents") as amended, modified and/or supplemented from time to time.
"DOT" shall mean the United States Department of Transportation.
"Event of Default" has the meaning provided in Section 10.A hereof.
"FAA" shall mean the Federal Aviation Administration, and any
successor thereto.
"Federal Aviation Act" shall mean the Federal Aviation Act of 1958, as
amended from time to time, and any successor provisions, and the rules and
regulations thereunder.
"Governmental Authority" shall mean any federal, state, local or other
governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body located in the United States.
"Indemnitee" shall have the meaning provided in Section 13 hereof.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of the Pledgor and each Guarantor owing to the Secured
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document and the due performance and compliance by
the Pledgor and each Guarantor with the terms of each such Credit Document;
(ii) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral; and (iii) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities referred to in clauses (i) and (ii) above, after an
Event of Default shall have occurred and be continuing, the reasonable expenses
of re-taking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable attorneys'
fees and court costs.
"Pledged Slots" shall mean all the takeoff and landing rights of the
Borrower identified on Schedule I hereto.
"Pledgor" has the meaning provided in the preamble hereto.
"Proceeds" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect in any relevant jurisdiction or under other
relevant law and, in any event, shall include, but not be limited to, any and
all (i) proceeds of any insurance, indemnity, warranty or guarantee payable to
the Collateral Agent or to the Pledgor or any affiliate of the
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Pledgor from time to time with respect to any of the Collateral, (ii) payments
(in any form whatsoever), made or due and payable to the Pledgor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), (iii) instruments
representing obligations to pay amounts in respect of the Collateral, (iv)
products of the Collateral and (v) other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Requirements" has the meaning provided in Section 6(iii) hereof.
"Secured Creditors" has the meaning provided in the preamble hereto.
"Temporary Amendment" shall mean the Temporary Amendment to the Credit
Agreement, dated as of May 12, 1998, by and among Holdings, NWA, the Borrower,
the Agents and the Banks.
"Temporary Amendment Expiry Date" shall have the meaning provided in
the Temporary Amendment.
"Termination Date" has the meaning provided in Section 15 hereof.
Section 17. NOTICES. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and shall be delivered, mailed,
telegraphed, telexed, facsimile transmitted or cabled, addressed:
(a) if to the Pledgor, at its address set forth opposite its
signature below;
(b) if to the Collateral Agent, at its address set forth
opposite its signature below; or
(c) if to any Bank, either (x) to the Administrative Agent, at the
address of the Administrative Agent specified in the Credit Agreement or
(y) at such address as such Bank shall have specified in the Credit
Agreement;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. All such
notices and communications shall, when mailed, telegraphed, telexed, facsimile
transmitted or cabled or sent by overnight courier, be effective on the third
Business Day following deposit in the U.S. mails, certified, return receipt
requested, when delivered to the telegraph company, cable company or on the day
following delivery to an overnight courier, as the case may be, or sent by telex
or facsimile device, except that notices and communications to the Collateral
Agent shall not be effective until received by the Collateral Agent.
Section 18. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and
-13-
effect until payment in full in cash of all Obligations, (ii) be binding upon
the Pledgor, its successors and assigns, and (iii) inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Collateral Agent and each other Secured Creditor and each of their respective
successors, transferees and assigns; no other persons (including, without
limitation, any other creditor of the Pledgor) shall have any interest herein or
any right or benefit with respect hereto. Without limiting the generality of
the foregoing clause (iii) and subject to the provisions of the Credit
Agreement, any Secured Creditor may assign or otherwise transfer any
indebtedness held by it secured by this Agreement to any other person or entity,
and such other person or entity shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Creditor herein or
otherwise, subject, however, to the provisions of the Credit Agreement.
Section 19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT
OF LAWS PROVISIONS THEREOF.
Section 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings brought against the Pledgor with respect to this Agreement
may be brought in any state or federal court of competent jurisdiction in the
State of New York and by execution and delivery of this Agreement, the Pledgor
accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. The Pledgor designates and appoints CT Corporation System,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and such other Persons as may hereafter
be selected by the Pledgor irrevocably agreeing in writing to so serve, as its
agent to receive on its behalf service of all process in any such proceedings in
any such court, such service being hereby acknowledged by the Pledgor to be
effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to the Pledgor at the address set
forth on the signature page of this Agreement, except that unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of process. If any agent appointed by the Pledgor refuses
to accept service, the Pledgor hereby agrees that service upon it by mail shall
constitute sufficient notice. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of the
Collateral Agent to bring proceedings against the Pledgor in the courts of any
other jurisdiction.
Section 21. SECURITY INTEREST ABSOLUTE. The obligations of the
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by, (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of the Pledgor,
except to the extent that the enforceability thereof may be limited by any such
event; (b) any exercise or non-exercise, or any waiver of, any right, remedy,
power or privilege under or in respect of this Agreement or any other Credit
Document, except as specifically set forth in a waiver granted pursuant to
Section 14; (c) any amendment to or modification of any Credit Document or any
security for any of the Obligations, whether or not
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the Pledgor shall have notice or knowledge of any of the foregoing, except as
specifically set forth in an amendment or modification executed pursuant to
Section 14; (d) any lack of validity or enforceability of the Credit Agreement
or any other agreement or instrument relating thereto; or (e) any other
circumstances which might otherwise constitute a defense available to, or a
discharge of, the Pledgor.
Section 22. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 23. HEADINGS. Section headings used in this Agreement are
for convenience of reference only and shall not affect the construction of this
Agreement.
Section 24. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same Agreement. A
set of the counterparts executed by all the parties hereto shall be lodged with
the Pledgor and the Collateral Agent.
Section 25. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Pledgor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and each Secured Creditor and their respective
successors and assigns; PROVIDED that the Pledgor may not transfer or assign any
or all of its rights or obligations hereunder without the prior written consent
of the Collateral Agent. All agreements, statements, representations and
warranties made by the Pledgor herein or in any certificate or other instrument
delivered by the Pledgor or on its behalf under this Agreement shall be
considered to have been relied upon by the Secured Creditors and shall survive
the execution and delivery of this Agreement and the other Credit Documents
regardless of any investigation made by the Secured Creditors or on their
behalf.
Section 26. THE PLEDGOR'S DUTIES. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that the Pledgor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Pledgor under or with
respect to any Collateral.
Section 27. LIMITED OBLIGATIONS. It is the desire and intent of the
Pledgor, the Collateral Agent and the Secured Creditors that this Agreement
shall be enforced against the Pledgor to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. If and to the extent that the obligations of the Pledgor under this
Agreement shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers, which laws would determine the
solvency of the Pledgor by reference to the full amount of the Obligations at
the time of the execution and delivery of this Agreement), then the amount of
the Obligations of the Pledgor shall be deemed to be reduced
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and the Pledgor shall pay the maximum amount of the Obligations which would be
permissible under the applicable law.
-16-
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
NORTHWEST AIRLINES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President-Finance and
Assistant Treasurer
Notice Address:
Northwest Airlines, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇; and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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SCHEDULE I
SCHEDULE OF PLEDGED SLOTS
The Pledged Slots are as follows:
I. DCA - WASHINGTON NATIONAL
SLOT SLOT
TIME NUMBER TIME NUMBER
0700(4) 1171 1300(4) 1142
1399 1161
1594 1211
1614 1265
0800(3) 1132 1400(6) 1109
1150 1390
1225 1442
0900(5) 1056 1471
1215 1533
1367 1549
1619 1500(2) 1282
1649 1621
1100(5) 1223 1800(4) 1401
1366 1515
1507 1563
1508 1626
1578 1900(4) 1232
1200(7) 1027 1277
1106 1307
1107 1379
1137 2000(4) 1308
1176 1332
1329 1638
1338 1643
----
48
Schedule I
Page 2
II. ORD - CHICAGO ▇'▇▇▇▇
SLOT SLOT
TIME NUMBER TIME NUMBER
0645(3) 7297 1315(2) 7689
7335 7897
7648 1415(2) 7483
0715(1) 7718 7979
0745(2) 7626 1515(2) 7497
7992 7696
0815(1) 8019 1545(2) 8130
0845(2) 8197 8504
8329 1615(1) 8018
0915(2) 7985 1645(3) 7947
8254 7998
0945(3) 7811 8561
8511 1715(1) 8123
8616 1745(2) 8106
1015(1) 8332 8127
1045(2) 8313 1815(1) 7933
8459 1845(1) 7812
1115(1) 7584 1915(2) 7955
1215(2) 7867 8513
8074 2015(1) 7967
1245(2) 7580 2045(1) 7655
----
8317 43
III. LGA-NEW YORK LAGUARDIA
SLOT SLOT
TIME NUMBER TIME NUMBER
0730 D 3505 1530 A 3524
0900 A 3018 D 3613
0930 D 3442 1600 D 3569
D 3692 1630 A 3859
1000 A 3747 D 3460
D 3202 1700 A 3602
1030 A 3231 1730 A 3458
1100 A 3233 1800 D 3127
A 3740 1830 A 3005
D 3534 1900 A 3858
1130 D 3026 1930 A 3006
D 3193 D 3361
1200 A 3244 D 3589
A 3459 2000 D 3249
D 3454 ----
1300 A 3685 31
D 3760
