Exhibit 99(a)
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 L]
Dated as of
May 1, 1998
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
SUMITOMO BANK CAPITAL MARKETS, INC.,
Owner Participant,
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee under each of
the Pass Through Trust Agreements,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
_____________________
One British Aerospace Avro 146-RJ85A Aircraft
N512XJ
Leased to Northwest Airlines, Inc.
INDEX TO AMENDED AND RESTATED PARTICIPATION AGREEMENT
Page
----
SECTION 1. Participations in Lessor's Cost of the Aircraft.................. 4
SECTION 2. Lessee's Notice of Delivery Date................................. 7
SECTION 3. Instructions to the Owner Trustee................................ 7
SECTION 4. [Intentionally Omitted.]......................................... 8
SECTION 5. Delivery Date Closing Conditions................................. 8
(a) Conditions Precedent to the Delivery Date Closing........... 8
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor...................................................17
SECTION 6. Extent of Interest of Certificate Holders........................19
SECTION 7. Representations and Warranties of Lessee and the Guarantor;
Indemnities......................................................19
(a) Representations and Warranties...............,..............19
(b) General Tax Indemnity............ Error! Bookmark not defined.
(c) General Indemnity................ Error! Bookmark not defined.
(d) Income Tax....................... Error! Bookmark not defined.
SECTION 8. Representations, Warranties and Covenants........................22
SECTION 9. Reliance of Liquidity Provider...................................41
SECTION 10. Other Documents.................................................42
SECTION 11. Certain Covenants of Lessee.....................................42
SECTION 12. Owner for Federal Tax Purposes..................................43
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction...........43
SECTION 14. Change of Situs of Owner Trust..................................44
SECTION 15. Miscellaneous...................................................45
SECTION 16. Expenses........................................................46
SECTION 17. Refinancings....................................................47
SECTION 18. Collateral Account..............................................49
(i)
APPENDICES
----------
Appendix A - Definitions
SCHEDULES
---------
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
--------
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibits B-H - [Intentionally Omitted]
Exhibit I-1 - Form of Delivery Date Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
special counsel for Lessee and the Guarantor
Exhibit I-2 - Form of Delivery Date Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇, special counsel for Lessee and the Guarantor
Exhibit I-3 - Form of Delivery Date Opinion of Lessee's Legal Department
Exhibit J-1 - Form of Delivery Date Opinion of Vedder, Price, ▇▇▇▇▇▇▇▇ &
Kammholz, special counsel for the Manufacturer
Exhibit J-2 - Form of Delivery Date Opinion of in-house counsel for the
Manufacturer
Exhibit K - Form of Delivery Date Opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special counsel for the Owner Trustee
Exhibit L-1 - Form of Delivery Date Opinion of Thelen, Marrin, ▇▇▇▇▇▇▇ &
Bridges LLP, special counsel for the Owner Participant
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant
Exhibit M - Form of Delivery Date Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C.
Exhibit N - Form of Delivery Date Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP,
special counsel for the Indenture Trustee
Exhibit O-1 - Form of Delivery Date Opinion of Powell, Goldstein, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, special counsel for the Liquidity Provider
Exhibit O-2 - Form of Delivery Date Opinion of in-house counsel for the
Liquidity Provider
Exhibit P - Form of Delivery Date Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇, special counsel for Lessee, as to Section 1110 of the
U.S. Bankruptcy Code
(ii)
Exhibit Q - Form of Delivery Date Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP,
special counsel for the Pass Through Trustee
Exhibit R - Section 7(b) - General Tax Indemnity
Exhibit S - Section 7(c) - General Indemnity
(iii)
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[NW 1997 L]
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT [NW 1997 L] dated as
of May 1, 1998, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation
(the "Guarantor"), (iii) SUMITOMO BANK CAPITAL MARKETS, INC., a Delaware
corporation (the "Owner Participant"), (iv) STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity except as otherwise provided herein,
but solely as trustee (in such capacity, the "Pass Through Trustee") under
each of three separate Pass Through Trust Agreements (as defined below), (v)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity, except as expressly provided herein, but
solely as Owner Trustee under the Trust Agreement (herein, in such latter
capacity, together with any successor owner trustee, called the "Owner
Trustee"), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity, but solely as subordination
agent and trustee (in such capacity, the "Subordination Agent") under the
Intercreditor Agreement (defined below), and (vii) STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, in its individual capacity and
as Indenture Trustee under the Trust Indenture (as hereinafter defined)
(herein, in such latter capacity together with any successor indenture
trustee, called the "Indenture Trustee"), does hereby amend and restate in
its entirety the Participation Agreement dated as of September 25, 1997 among
the Lessee, Northwest Airlines, Inc., as the Initial Owner Participant (the
"Initial Owner Participant"), the Guarantor, the Pass Through Trustee, the
Owner Trustee, the Subordination Agent and the Indenture Trustee (the
"Original Participation Agreement"; and as so amended and restated hereby,
the or this "Agreement");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement between Lessee and the
Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things,
certain British Aerospace Avro 146-RJ85 aircraft, including the Aircraft which
has been delivered by the Manufacturer to Lessee and which is the subject of
this Agreement;
WHEREAS, the parties to the Original Participation Agreement entered into
such Original Participation Agreement on the Certificate Closing Date, and
pursuant to Section 1(c) of the Original Participation Agreement, the parties
thereto contemplated amending and restating such Original Participation
Agreement by entering into this Agreement;
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass
Through Trust Supplements set forth in Schedule III hereto (collectively, the
"Pass Through Trust Agreements"), on the Certificate Closing Date, three
separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") were
created to facilitate certain of the transactions contemplated hereby and by the
Original Participation Agreement, including, without limitation, the issuance
and sale by each Pass Through Trust of pass through certificates pursuant
thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates by
each Pass Through Trust were applied in part by the Pass Through Trustee on the
Certificate Closing Date to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, on the Certificate Closing Date, (i) the Royal Bank of Canada (the
"Liquidity Provider") entered into three revolving credit agreements (each, a
"Liquidity Facility"), one for the benefit of the holders of Certificates of
each Pass Through Trust, with the Subordination Agent, as agent for the Pass
Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass
Through Trustee, the Liquidity Provider and the Subordination Agent entered into
the Intercreditor Agreement, dated as of September 25, 1997 (the "Intercreditor
Agreement");
WHEREAS, the Secured Certificates are being held by the Subordination Agent
pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts;
WHEREAS, in order to facilitate the transactions contemplated hereby and by
the Original Participation Agreement, Lessee and the Guarantor entered into the
Underwriting Agreement, dated as of September 16, 1997, among Lessee, the
Guarantor and the several underwriters named therein (the "Underwriting
Agreement");
WHEREAS, on the Certificate Closing Date, the Initial Owner Participant
entered into a Trust Agreement [NW 1997 L], dated as of September 25, 1997 (said
Trust Agreement, prior to being amended and restated in its entirety as of the
date hereof, being herein called the "Original Trust Agreement"), with the Owner
Trustee, pursuant to which Original Trust Agreement the Owner Trustee agreed,
among other things, to hold the Trust Estate defined in Section 1.01 thereof for
the use and benefit of the Initial Owner Participant;
WHEREAS, immediately prior to the execution and delivery of this Agreement,
the Initial Owner Participant and the Owner Participant entered into an
Assignment and Assumption Agreement [NW 1997 L], dated as of the date hereof
(the "Assignment and Assumption Agreement"), pursuant to which the Initial Owner
Participant transferred its Beneficial Interest and certain other rights to the
Owner Participant;
WHEREAS, concurrently with the execution and delivery of this Agreement, to
reflect the transactions contemplated by the Assignment and Assumption, the
Owner Participant and the Owner Trustee are amending and restating the Original
Trust Agreement in its entirety by entering into an Amended and Restated Trust
Agreement [NW 1997 L], dated as of the date hereof (said Amended and Restated
Trust Agreement [NW 1997 L], as the same may be amended or supplemented from
time to time, being herein called the "Trust Agreement", such term to include,
unless the context otherwise requires, any Trust
2
Supplement referred to below), pursuant to which Trust Agreement the Owner
Trustee agrees, among other things, to hold the Trust Estate defined in Section
1.01 thereof (herein called the "Trust Estate") for the use and benefit of the
Owner Participant;
WHEREAS, on the Certificate Closing Date, the Indenture Trustee and the
Owner Trustee entered into a Trust Indenture and Security Agreement [NW 1997 L]
dated as of September 25, 1997 (said Trust Indenture and Security Agreement,
prior to being amended as of the date hereof, being herein called the "Original
Trust Indenture") pursuant to which the Owner Trustee issued secured
certificates substantially in the form set forth in Section 2.01 thereof in
three series, which Secured Certificates were secured by the Liquid Collateral
prior to the Delivery Date, and by mortgage and security interests created by
the Owner Trustee in favor of the Indenture Trustee thereafter;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Owner Trustee and the Indenture Trustee are entering into the First
Amendment to Trust Indenture and Security Agreement [NW 1997 L], dated as of the
date hereof (the Original Trust Indenture, as so amended by said First Amendment
to Trust Indenture and Security Agreement [NW 1997 L] and as the same may be
amended or supplemented from time to time, being herein called the "Trust
Indenture"), pursuant to which certain provisions of the Original Trust
Indenture are being amended to reflect the transactions contemplated by this
Agreement;
WHEREAS, on the Certificate Closing Date, the Guarantor entered into the
Guarantee [NW 1997 L] dated as of September 25, 1997, pursuant to which the
Guarantor guaranteed certain obligations of Lessee under the Operative
Documents as defined in the Original Participation Agreement (the "Original
Guarantee");
WHEREAS, the parties hereto wish to have the Original Guarantee amended
and restated in its entirety, so that the Guarantor is entering into an
Amended and Restated ▇▇▇▇▇▇▇▇▇ [▇▇ ▇▇▇▇ L] dated as of the date hereof,
pursuant to which the Guarantor agrees to guarantee the obligations of Lessee
under the Operative Documents (the "Guarantee");
WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW 1997 L], dated as of the date hereof (herein
called the "Purchase Agreement Assignment"), whereby Lessee assigns to the
Owner Trustee certain rights and interests of Lessee under the Purchase
Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the Consent and Agreement
[NW 1997 L] (herein called the "Consent and Agreement"), substantially in
the form attached to the Purchase Agreement Assignment (herein called the
"Consent and Agreement");
(iii) the Owner Trustee will execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust
Indenture (the "Trust
3
Supplement") covering the Aircraft, supplementing the Trust Agreement and
the Trust Indenture;
(iv) the Owner Trustee and Lessee will enter into the Lease Agreement
[NW 1997 L], dated as of the date hereof (such Lease Agreement, as the same
may be amended or supplemented from time to time to the extent permitted by
the terms thereof and this Agreement, herein called the "Lease", such term
to include, unless the context otherwise requires, the Lease Supplement
referred to below), whereby, subject to the terms and conditions set forth
therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to
lease from the Owner Trustee, the Aircraft on the date (the "Delivery
Date") that the Aircraft is sold and delivered by Lessee to the Owner
Trustee under the ▇▇▇▇ of Sale, and accepted by the Owner Trustee for all
purposes of the Lease, such acceptance to be evidenced by the execution of
the Trust Supplement covering the Aircraft, and such lease to be evidenced
by the execution and delivery of a Lease Supplement covering the Aircraft;
and
(v) the Owner Participant and Lessee will enter into a Tax Indemnity
Agreement [NW 1997 L], dated as of the date hereof (the "Tax Indemnity
Agreement");
WHEREAS, on the Delivery Date, pursuant to and subject to the terms and
conditions of this Agreement, the Purchase Agreement Assignment and the ▇▇▇▇ of
Sale, the Owner Trustee will purchase, and receive title to, the Aircraft from
Lessee and lease the Aircraft to Lessee pursuant to the Lease; and
WHEREAS, certain terms are used herein as defined in Section 13(a) hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby amend and restate the Original
Participation Agreement in its entirety and agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft.
(a) Participations Prior to the Delivery Date. Subject to the terms and
conditions of the Original Participation Agreement, the Pass Through Trustee for
each Pass Through Trust agreed to finance, in part, the Owner Trustee's payment
of Lessor's Cost for the Aircraft by paying to the Indenture Trustee on behalf
of the Owner Trustee on the Certificate Closing Date the aggregate purchase
price of the Secured Certificates being issued to such Pass Through Trustee as
set forth on Schedule II of the Original Participation Agreement opposite the
name of such Pass Through Trust. On the Certificate Closing Date, the Indenture
Trustee, on behalf of the Owner Trustee, deposited by wire transfer or
intra-bank transfer, the amounts received by it pursuant to the preceding
sentence, which amounts constitute the Debt Portion set forth on Schedule II
hereto (Schedule II hereto, as it relates to the Pass Through Trustee, being
identical to Schedule II to the Original Participation Agreement) in the
Collateral Account pursuant to the Original Trust Indenture.
4
Upon the occurrence of the above transfers by the Pass Through Trustee for
each Pass Through Trust to the Indenture Trustee for the benefit of the Owner
Trustee, the Owner Trustee, at the direction of the Initial Owner Participant,
issued, pursuant to Article II of the Original Trust Indenture, to the
Subordination Agent on behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Secured Certificates of the maturity and aggregate principal
amount, bearing the interest rate and for the purchase price set forth on
Schedule II to the Original Participation Agreement opposite the name of such
Pass Through Trust.
(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to participate
in the payment of Lessor's Cost for the Aircraft by making an equity investment
in the beneficial ownership of the Aircraft on the date to be designated
pursuant to Section 2 hereof, but in no event later than May 7, 1998, by
transferring to the account of the Owner Trustee at State Street Bank and Trust
Company, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA No. 011-00-0028,
Account No. ▇▇▇▇-▇▇▇-▇, Reference: Northwest/NW 1997 L, not later than 9:30
a.m.. New York City time, on the Delivery Date in immediately available funds in
Dollars, the amount set forth opposite the Owner Participant's name in Schedule
II hereto.
(c) The schedule of principal payments on the Secured Certificates set
forth in Schedule I to the Original Trust Indenture and Schedule I to each
Secured Certificate on the Certificate Closing Date were calculated as of the
Certificate Closing Date based upon a hypothetical owner's economic return and
certain assumptions regarding the Delivery Date, Transaction Expenses, tax law,
Basic Term and certain other items (the "Assumptions"). On the Delivery Date
(the "Reoptimization Date"), the Owner Trustee, as a result of the parties
hereto entering into this Agreement, may elect to amend Schedule I to the
Original Trust Indenture and such Schedules to each Secured Certificate to
reflect the actual Net Economic Return and changes to the Assumptions. On the
Reoptimization Date the Owner Trustee shall deliver and the Subordination Agent
on behalf of the Pass Through Trustee of each Pass Through Trust shall accept
delivery of an amended Schedule I to each Secured Certificate containing such
changed principal installments.
The Owner Trustee will give not less than 10 days' notice of the
Reoptimization Date. Any amendments to the Trust Indenture and such Schedules
shall not vary the Mandatory Economic Terms and on the Reoptimization Date
Lessee shall deliver a certificate to the Pass Through Trustee and the Liquidity
Provider signed by the Vice President and Treasurer or any other authorized
officer of Lessee certifying to such effect.
(d) Commitments to Participate in Lessor's Cost. (i) Participation in
Lessor's Cost. Subject to the terms and conditions of this Agreement, on the
Delivery Date, (i) the Indenture Trustee agrees to release the Debt Portion or
such lesser amount as may then be held in the Collateral Account, if any, to the
Owner Trustee for application to Lessor's Cost of the Aircraft as provided
below, (ii) the Owner Participant shall participate in Lessor's Cost of the
Aircraft through an investment in the Trust Estate in the amount set forth
opposite the Owner Participant's name in Schedule II hereto, and (iii) Lessee
shall sell the Aircraft to the
5
Owner Trustee and the Owner Trustee shall immediately thereafter lease the
Aircraft to Lessee pursuant to the Lease. In consideration for the assignment
to the Owner Trustee by Lessee under the Purchase Agreement Assignment of any
warranties thereunder, the transfer by the Initial Owner Participant to the
Owner Participant of its Beneficial Interest and the transfer of title to the
Aircraft from Lessee to the Owner Trustee, the following cash payment will be
made by wire transfer of immediately available funds on the Delivery Date: by
the Owner Trustee to Lessee, an amount equal to Lessor's Cost of the Aircraft.
Upon receipt by Lessee of such payment and the satisfaction of the conditions
set forth in Section 5 hereof, Lessee shall transfer title to and delivery the
Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take
title to and accept delivery of the Aircraft.
(ii) No Obligation to Increase Commitments. (A) If the Indenture Trustee
shall default in its obligation to make the amount of its Debt Portion available
pursuant hereto, the Owner Participant shall have no obligation to make any
portion of such Debt Portion available or to increase the amount of its
Commitment, but the obligations of the Owner Participant shall nevertheless
remain subject to the terms and conditions of this Agreement.
(B) Subject to the provisions of Section 1(e) hereof, if the closing of
the transactions contemplated by the Operative Documents shall not have been
consummated by 3:00 p.m. (New York City time), or such earlier time as directed
by Lessee, on the Scheduled Delivery Date, the Owner Trustee shall, if
instructed in writing by Lessee, at the risk and expense of Lessee, use its
reasonable best efforts to cause the Owner Participant's Commitment to be
invested and reinvested to the extent practicable at the direction received by
it from Lessee (with a copy to the Owner Participant), at the risk of Lessee, in
Cash Equivalents consisting of either commercial paper or time deposits;
provided, however, that in the absence of instructions by 3:00 p.m. (New York
City time) the Owner Trustee shall use its reasonable best efforts to cause such
amount or the proceeds thereof to be invested and reinvested to the extent
practicable in overnight Eurodollar time deposits. Earnings on any such
investments shall be applied to Lessee's payment obligations, if any, to the
Owner Participant pursuant to the next succeeding paragraph, and the balance, if
any, of such earnings remaining after such application shall be paid in
accordance with Lessee's written instructions.
If for any reason (i) the Delivery Date shall not occur (whether by reason
of a failure to meet a condition precedent thereto set forth in Section 5 hereof
or otherwise) on or before the third Business Day after the Scheduled Delivery
Date (or earlier if requested by the Owner Participant) or, if earlier, May 7,
1998, or (ii) Lessee has notified the Owner Trustee (with a copy to the Owner
Participant) prior to 3:00 p.m. (New York City time) on any date after the
Scheduled Delivery Date that it does not intend to go forward to close the
transactions contemplated hereby for such Delivery Date, the Owner Participant
may cancel any funding arrangements made to fund its Commitment on the Scheduled
Delivery Date but the Owner Participant's Commitment hereunder with respect to
the Aircraft shall not be terminated thereby until 5:30 p.m. (New York City
time) on May 7, 1998, whereupon the Owner Participant's Commitment hereunder
shall terminate. On such third Business Day (or such earlier date) or May 7,
1998, as the case may be, or the earliest practicable Business Day thereafter,
the Owner Trustee shall return the amounts held by it hereunder to the Owner
6
Participant, provided that the Owner Trustee shall have had a reasonable time to
liquidate any Cash Equivalents it has been authorized to invest in pursuant to
the preceding paragraph and to obtain the proceeds therefrom in funds of the
type originally received, and Lessee shall pay interest on such funds to the
Owner Participant at an interest rate equal to the weighted average (based on
outstanding principal amount) rate of interest on the Secured Certificates
issued pursuant to the Trust Indenture, such interest to be payable for the
period from and including such Scheduled Delivery Date to but excluding the date
such funds are returned to the Owner Participant in accordance with the terms
hereof; provided that if any such funds are returned to the Owner Participant
after 3:00 p.m. (New York City time) on any such date, such funds shall be
deemed for purposes of this paragraph to have been returned on the next
succeeding Business Day and interest shall accrue for such additional period.
Lessee shall reimburse the Owner Trustee on demand for any loss incurred
by the Owner Trustee as a result of the investment of funds by the Owner
Trustee in accordance with the terms of this Section 1(d). Further, Lessee
shall indemnify the Owner Trustee and hold it harmless from and against any
cost or expense the Owner Trustee may incur as a result of any investment of
funds or transfer of funds referred to herein in accordance with the terms
hereof. The Owner Trustee shall not be liable for failure to invest such
funds except as otherwise provided herein or for any losses incurred on such
investments except for any losses arising out of its own gross negligence or
willful misconduct.
(e) Optional Postponement. Without limiting the provisions of Section
1(d)(ii) hereof, the Scheduled Delivery Date may be postponed from time to time
(but in no event shall the Delivery Date be later than May 7, 1998) for any
reason, if Lessee gives the Owner Participant, the Indenture Trustee, the Owner
Trustee and the Pass Through Trustee confirmed facsimile notice (or telephone
notice followed by written confirmation) of such postponement and notice of the
date to which the Delivery Date has been postponed, such notice of postponement
to be received by each party no later than 11:00 a.m. (New York City time) on
the Business Day preceding the Scheduled Delivery Date.
SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to give
each Participant, the Owner Trustee, the Pass Through Trustee and the Indenture
Trustee at least two Business Days' telecopy or other written notice of the date
the Delivery Date is scheduled for the Aircraft, which shall be a Business Day,
which notice shall specify the amount of Lessor's Cost, the Debt Portion, and
the amount of the Owner Participant's Commitment for the Aircraft. As to the
Owner Participant, the making of its Commitment for the Aircraft available in
the manner required by Section 1 shall constitute a waiver of such notice.
SECTION 3. Instructions to the Owner Trustee. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 5(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee the Lessor's Cost for the Aircraft;
7
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the Aircraft
on the Delivery Date pursuant to the Acceptance Certificate;
(iii) to accept from Lessee the ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of Sale
for the Aircraft referred to in Section 5(a)(v)(8) and 5(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
and
(v) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative Document.
SECTION 4. [Intentionally Omitted.]
SECTION 5. Delivery Date Closing Conditions. (a) Conditions
Precedent to the Delivery Date Closing. It is agreed that the obligations of
each of the Pass Through Trustee, the Owner Trustee, the Owner Participant,
the Indenture Trustee, and the Subordination Agent to enter into the
transactions to be consummated on the Delivery Date are subject to the
satisfaction (or waiver by such party) prior to or on the Delivery Date of
the following conditions precedent, except that paragraphs (iii), (v)(5) and
(14), (x), (xxi), (xxii) and (xxiv) shall not be a condition precedent to the
obligations of the Pass Through Trustee, and paragraphs (iv), (vii)(D), (xiv)
and (xxvi) shall not be a condition precedent to the obligation of the Owner
Participant:
(i) The Pass Through Trustee and the Owner Participant shall have
received due notice with respect to such participation pursuant to Section
2 hereof (or shall have waived such notice either in writing or as provided
in Section 2).
(ii) No change shall have occurred after the date of the execution and
delivery of this Agreement in applicable law or regulations or guidelines
or interpretations thereof by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for the Pass
Through Trustee to release the Debt Portion or the Owner Participant to
make its Commitment available in accordance with Section 1 hereof or which
would otherwise have an adverse impact on the Owner Participant's interests
under the Operative Documents.
(iii) In the case of the Owner Participant, the Indenture Trustee
shall have released the Debt Portion or such lesser amount as may be held
in the Collateral Account together with amounts payable by Lessee pursuant
to Section 18 of the Original Participation Agreement.
8
(iv) In the case of the Pass Through Trustees, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(v) The following documents shall have been duly authorized, executed
and delivered by the respective party or parties thereto, shall each be
satisfactory in form and substance to the Pass Through Trustee and the
Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Pass Through Trustee and the
Owner Participant, or their respective counsel, provided that an excerpted
copy of the Purchase Agreement shall only be delivered to and retained by
the Owner Trustee (but the Indenture Trustee shall also retain an excerpted
copy of the Purchase Agreement which may be inspected by the Owner
Participant and its counsel prior to the Delivery Date and subsequent to
the Delivery Date may be inspected and reviewed by the Indenture Trustee if
and only if there shall occur and be continuing an Event of Default) and
provided, further, that the chattel paper counterpart of the Lease and the
Lease Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement and the
Residual Agreement need only be satisfactory to the Owner Participant and
Lessee and shall only be delivered to Lessee and the Owner Participant and
their respective counsel:
(1) this Agreement;
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the Delivery Date;
(8) the ▇▇▇▇ of Sale;
(9) the FAA ▇▇▇▇ of Sale;
(10) an acceptance certificate covering the Aircraft in the form
agreed to by the Owner Participant and Lessee (herein called the
"Acceptance Certificate") duly completed and executed by the Owner Trustee
or its agent, which may be a representative of Lessee, and by such
representative on behalf of Lessee;
9
(11) the Trust Indenture (the Original Trust Indenture, as amended as
of the Delivery Date by the First Amendment to Trust Indenture);
(12) the Consent and Agreement;
(13) the Guarantee;
(14) the Residual Agreement;
(15) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft); and
(16) the Assignment and Assumption Agreement.
All of the foregoing documents, together with the Secured Certificates, are
sometimes referred to herein, collectively, as the "Operative Documents" and,
individually, as an "Operative Document".
In addition, the Owner Participant shall have received executed
counterparts or conformed copies of the following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Class A, Class B and Class C
Trusts.
(vi) Uniform Commercial Code financing statements (A) to amend and
restate each financing statement referred to in Section 4(a)(iv) of the
Original Participation Agreement and Section 7(a)(vi) hereof and (B)
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture that are not covered by the recording system
established by the Federal Aviation Act, shall have been executed and
delivered by the Owner Trustee, and such financing statements shall have
been duly filed in all places necessary or advisable, and any additional
Uniform Commercial Code financing statements deemed advisable by the Owner
Participant or the Pass Through Trustee shall have been executed and
delivered by Lessee or the Owner Trustee and duly filed.
(vii) The Pass Through Trustee (to the extent not received on the
Certificate Closing Date) and the Owner Participant shall have received the
following:
(A)(1)an incumbency certificate of Lessee and the Guarantor (as
the case may be) as to the person or persons authorized to execute and
deliver this Agreement, the Lease, the Lease Supplement covering the
Aircraft, the ▇▇▇▇ of Sale, the FAA ▇▇▇▇ of Sale, the Purchase
Agreement Assignment, the Tax Indemnity Agreement, the Pass Through
Trust Agreements, the Guarantee and
10
any other documents to be executed on behalf of Lessee or the
Guarantor (as the case may be) in connection with the transactions
contemplated hereby on the Delivery Date and the signatures of such
person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof, certified
by the Secretary or an Assistant Secretary of Lessee and the Guarantor
(as the case may be), duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the documents
required to be executed and delivered on behalf of Lessee or the
Guarantor (as the case may be) in connection with the transactions
contemplated hereby to be consummated on the Delivery Date;
(3) a copy of the certificate of incorporation of Lessee and the
Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of Lessee and certified by the Secretary of
State of the State of Delaware in the case of the Guarantor, a copy of
the bylaws of Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of Lessee and the Guarantor (as the case may be),
and a certificate or other evidence from the Secretary of State of the
State of Minnesota in the case of Lessee and from the Secretary of
State of the State of Delaware in the case of the Guarantor, dated as
of a date reasonably near the Delivery Date, as to the due
incorporation and good standing of Lessee or the Guarantor (as the
case may be) in such state; and
(4) a certificate signed by an authorized officer of Lessee and
the Guarantor, dated the Delivery Date, certifying that each of the
documents referred to in Section 4(a)(iii) of the Original
Participation Agreement to which Lessee or the Guarantor is a party
shall be in full force and effect, and there shall not have occurred
any default thereunder, or any event which, with the lapse of time or
the giving of notice or both, would be a default thereunder.
(B)(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, the Pass Through Trust Agreements and
any other documents to be executed on behalf of the Indenture Trustee
in connection with the transactions contemplated hereby on the
Delivery Date and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture Trustee, duly authorizing the transactions
contemplated hereby and the execution and delivery of each of the
documents required to be executed and delivered on behalf of the
Indenture Trustee in connection with the transactions contemplated
hereby to be consummated on the Delivery Date;
11
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee;
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Delivery Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date); and
(5) the Original Trust Indenture shall be in full force and
effect, and there shall not have occurred any default thereunder, or
any event which, with the lapse of time or the giving of notice or
both, would be a default thereunder.
(C)(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the Lease, the Lease Supplement covering the Aircraft, the Trust
Agreement, the Trust Indenture, the Residual Agreement, the Purchase
Agreement Assignment and any other documents to be executed on behalf
of the Owner Trustee in connection with the transactions contemplated
hereby on the Delivery Date and the signatures of such person or
persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary of
the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the documents
required to be executed and delivered on behalf of the Owner Trustee
in connection with the transactions contemplated hereby to be
consummated on the Delivery Date;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee;
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Delivery Date, certifying that the representations
and warranties contained herein of the Owner Trustee (in its
individual capacity and as trustee) are correct as though made on and
as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties are correct on and as
of such earlier date); and
(5) the Original Trust Indenture, the Original Trust Agreement
and the Secured Certificates shall be in full force and effect, and
there shall not have occurred any default thereunder, or any event
which, with the lapse of time or the giving of notice or both, would
be a default thereunder.
12
(D)(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement, the
Residual Agreement and any other documents to be executed on behalf of
the Owner Participant in connection with the transactions contemplated
hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Participant, certified by the Secretary or an Assistant
Secretary of the Owner Participant, duly authorizing the transactions
contemplated hereby and the execution and delivery of each of the
documents required to be executed and delivered on behalf of the Owner
Participant in connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the Owner
Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Delivery Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(viii) All appropriate action required to have been taken prior to
the Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of the
United States, and all orders, permits, waivers, authorizations, exemptions
and approvals of such entities required to be in effect on the Delivery
Date in connection with the transactions contemplated by this Agreement
shall have been issued, and all such orders, permits, waivers,
authorizations, exemptions and approvals shall be in full force and effect
on the Delivery Date.
(ix) On the Delivery Date the Pass Through Trustee and the Owner
Participant shall have received a certificate signed by an authorized
officer of Lessee (and with respect to the matters set forth in clauses (4)
and (5) below, the Guarantor) to the effect that:
(1) the Aircraft has been duly certified by the Federal Aviation
Administration as to type and has a current certificate of
airworthiness;
(2) the FAA ▇▇▇▇ of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft shall
have been duly filed for recordation (or shall be in the process of
being so duly filed for
13
recordation) with the Federal Aviation Administration, and the Trust
Agreement shall have been filed (or shall be in the process of being
so filed) with the Federal Aviation Administration;
(3) application for registration of the Aircraft in the name of
the Owner Trustee has been duly made with the Federal Aviation
Administration;
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such earlier
date); and
(5) there has been no material adverse change in the financial
condition of the Guarantor and its subsidiaries, taken as a whole,
since December 31, 1996.
(x) The Owner Participant shall have received an opinion, in form and
substance satisfactory to the Owner Participant, from BK Associates, Inc.,
independent aircraft appraisers, or such other recognized aircraft
appraiser agreed upon by the Owner Participant and Lessee.
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant and the Owner Trustee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee and the Owner Participant,
an opinion substantially in the form of Exhibit I-1 hereto from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for Lessee and the Guarantor, an
opinion substantially in the form of Exhibit I-2 hereto from Cadwalader,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, special counsel for Lessee and the Guarantor, and an
opinion substantially in the form of Exhibit I-3 hereto from Lessee's legal
department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit J-1 hereto from Vedder, Price, ▇▇▇▇▇▇▇
& Kammholz, special counsel to the Manufacturer, and an opinion
substantially in the form of Exhibit J-2 hereto from the Manufacturer's
in-house counsel, in each case with respect to the Manufacturer Documents.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the
14
Guarantor and Lessee, an opinion substantially in the form of Exhibit K
hereto from Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and substance
to the Pass Through Trustee, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit L-1 hereto from Thelen, Marrin,
▇▇▇▇▇▇▇ & Bridges LLP, special counsel for the Owner Participant, and an
opinion substantially in the form of Exhibit L-2 hereto from the Owner
Participant's in-house counsel.
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit M hereto from ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant, the
Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee, the Owner Participant, the
Guarantor and Lessee, an opinion substantially in the form of Exhibit N
hereto from ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the Indenture
Trustee.
(xvii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit O-1 hereto from Powell, Goldstein,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel for the Liquidity Provider, and an
opinion substantially in the form of Exhibit O-2 hereto from in-house
counsel for the Liquidity Provider.
(xviii) The Pass Through Trustee and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Pass Through Trustee and the Owner Participant, as to
the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xix) Lessor's Cost for the Aircraft shall be $21,100,000.
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery Date
to set aside, restrain, enjoin or
15
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(xxi) The Owner Participant shall have received from Thelen, Marrin,
▇▇▇▇▇▇▇ & Bridges LLP, special tax counsel to the Owner Participant, an
opinion, in form and substance satisfactory to the Owner Participant, with
respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxii) In the opinion of the Owner Participant and its special tax
counsel, there shall have been, since the date of execution and delivery of
the Tax Indemnity Agreement, no amendment, modification, addition, or
change in or to the provisions of the Code and the regulations promulgated
under the Code (including temporary regulations), Internal Revenue Service
Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of the
President of the United States, all as in effect on the date of execution
and delivery of the Tax Indemnity Agreement, the effect of which might
preclude the Owner Participant from obtaining any of the income tax
benefits and consequences assumed to be available to the Owner Participant
as set forth in Section 2 of the Tax Indemnity Agreement.
(xxiii) The Pass Through Trustee and the Owner Participant shall have
received a favorable opinion substantially in the form of Exhibit P hereto
addressed to the Pass Through Trustee and the Owner Participant, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee and the Owner Participant, from Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Lessee, which opinion shall state (with customary
assumptions and qualifications) that the Owner Trustee, as lessor under the
Lease, and the Indenture Trustee, as assignee of the Owner Trustee's rights
under the Lease pursuant to the Trust Indenture, would be entitled to the
benefits of 11 U.S.C. Section 1110 with respect to the Aircraft.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties contained
herein of the Pass Through Trustee are correct as though made on and as of
the Delivery Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such earlier date),
(B) an opinion substantially in the form of Exhibit Q hereto addressed to
the Owner Participant, the Guarantor and Lessee of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
LLP, special counsel for the Pass Through Trustee, and reasonably
satisfactory as to scope and substance to the Owner Participant, the
Guarantor and Lessee, and (C) such other documents and evidence with
respect to the Pass Through Trustee as it may reasonably request in order
to establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary corporate action in connection
therewith and compliance with the conditions herein set forth.
16
(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, in connection with the execution and
delivery of this Agreement, Lessee shall have delivered a certificate to
the Pass Through Trustee and the Liquidity Provider signed by a duly
authorized officer of Lessee stating that (i) the Trust Agreement, the
Trust Indenture, the Guarantee, this Agreement and the Lease do not vary
the Mandatory Economic Terms and contain the Mandatory Document Terms and
(ii) any substantive modification of such documents from the Original Trust
Agreement, the Original Trust Indenture, the Original Guarantee and the
Original Participation Agreement as in effect on the Certificate Closing
Date and any change in the Lease from the form set forth on Exhibit C to
the Original Participation Agreement does not materially and adversely
affect the holders of Pass Through Certificates and each Liquidity Provider
and such certification shall be true and correct.
Promptly upon the registration of the Aircraft and the recording of
the Trust Indenture, the Lease, the Lease Supplement covering the Aircraft
and the Trust Supplement covering the Aircraft pursuant to the Federal
Aviation Act, Lessee will cause ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the
Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an
opinion as to the due and valid registration of the Aircraft in the name of
the Owner Trustee, the due recording of the FAA ▇▇▇▇ of Sale, the Trust
Indenture, such Lease Supplement, such Trust Supplement and the Lease and
the filing of the Trust Agreement and the lack of filing of any intervening
documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor. It is agreed that the obligations of Lessee to sell the Aircraft
to the Owner Trustee and to accept delivery of the Aircraft under the
Lease, and the obligations of Lessee and the Guarantor to enter into the
other Operative Documents on the Delivery Date, are all subject to the
fulfillment to the satisfaction of Lessee and the Guarantor prior to or on
the Delivery Date of the following conditions precedent:
(i) All appropriate action required to have been taken on or
prior to the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such
entities required to be in effect on the Delivery Date in connection
with the transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and effect on the
Delivery Date.
(ii) The conditions specified in Sections 5(a)(ii), 5(a)(iii) and
5(a)(iv) hereof shall have been satisfied.
17
(iii) Those documents described in Section 5(a)(v) shall have
been duly authorized, executed and delivered by the respective party
or parties thereto (other than Lessee and the Guarantor) in the manner
specified in Section 5(a)(v), shall each be satisfactory in form and
substance to Lessee and the Guarantor, shall be in full force and
effect on the Delivery Date, and an executed counterpart of each
thereof shall have been delivered to Lessee or its special counsel and
the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 5(a)(vii) (other than the
certificate referred to in clause (A) thereof), (B) the certificate
referred to in Section 5(a)(xxiv)(A), and (C) such other documents and
evidence with respect to the Pass Through Trustee as Lessee or its
special counsel and the Guarantor or its special counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 5(a)(xii), 5(a)(xiii), 5(a)(xiv), 5(a)(xv),
5(a)(xvi), 5(a)(xvii) and 5(a)(xxiv)(B) in each case addressed to
Lessee and the Guarantor and dated the Delivery Date and in each case
in scope and substance reasonably satisfactory to Lessee and its
special counsel and the Guarantor and its special counsel.
(vi) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental
agency, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or governmental agency at the time
of the Delivery Date to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions
contemplated hereby.
(vii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or
regulations or guidelines or interpretations by appropriate regulatory
authorities which would make it a violation of law or regulations or
guidelines for Lessee or the Guarantor to enter into any transaction
contemplated by the Operative Documents.
(viii) In the opinion of Lessee and its special counsel, there
shall have been, since the date hereof, no amendment, modification,
addition or change in or to the Code, the regulations promulgated
under the Code (including temporary regulations), Internal Revenue
Service Revenue Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States which has not been the subject of
an adjustment to Basic Rent, Stipulated Loss Value and Termination
Value percentages and the Special Purchase Price pursuant to Section
3(d)(i)(C) of the Lease or which might give rise to an indemnity
obligation of Lessee under any of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
18
(x) No adjustment to Basic Rent shall have been proposed or made
pursuant to Section 3(d) of the Lease as a result of a change in tax
law if such adjustment would result in an increase in the Net Present
Value of Rents of more than one hundred basis points.
SECTION 6. Extent of Interest of Certificate Holders. No Certificate
Holder shall have any further interest in, or other right with respect to, the
mortgage and security interests created by the Trust Indenture when and if the
principal of and interest on all Secured Certificates held by such holder and
all other sums payable to such holder hereunder, under the Trust Indenture and
under such Secured Certificates shall have been paid in full. Each Pass Through
Trustee and, by its acceptance of a Secured Certificate, each Certificate Holder
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to such Certificate
Holder as provided in Article III of the Trust Indenture and that neither the
Owner Participant nor the Owner Trustee shall be personally liable to the Pass
Through Trustees or any Certificate Holder for any amounts payable under the
Secured Certificates, the Trust Indenture or hereunder, except as expressly
provided in the Operative Documents.
SECTION 7. Representations and Warranties of Lessee and the Guarantor;
Indemnities. (a) Representations and Warranties. Lessee and the Guarantor
represent and warrant to the Pass Through Trustee, the Owner Trustee, the
Indenture Trustee, the Liquidity Provider, the Subordination Agent and the Owner
Participant that as of the Delivery Date:
(i) each of Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to
own or hold under lease its properties, has, or had or will have on
the respective dates of execution thereof, the corporate power and
authority to enter into and perform its obligations under (i) in the
case of Lessee, the Lessee Documents, the Pass Through Trust
Agreement, the Underwriting Agreement and the other Operative
Documents to which it is a party and (ii) in the case of the
Guarantor, this Agreement, the Pass Through Trust Agreements, the
Underwriting Agreement and the other Operative Documents to which it
is a party, and is duly qualified to do business as a foreign
corporation in each state in which its operations or the nature of its
business requires other than failures to so qualify which would not
have a material adverse effect on the condition (financial or
otherwise), consolidated business or properties of it and its
subsidiaries considered as one enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Minnesota) is located at
Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as
the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement and each other Operative
Document to which Lessee or the Guarantor (as the case may be) is a
party and the performance of the obligations of Lessee or the
19
Guarantor (as the case may be) under the Lessee Documents, the Pass
Through Trust Agreements, the Underwriting Agreement and each other
Operative Document to which Lessee or the Guarantor (as the case may
be) is a party, have been duly authorized by all necessary corporate
action on the part of Lessee or the Guarantor, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of Lessee or the
Guarantor, except such as have been duly obtained and are in full
force and effect, and do not contravene any law, governmental rule,
regulation or order binding on Lessee or the Guarantor (as the case
may be) or the certificate of incorporation or bylaws of Lessee or the
Guarantor (as the case may be), or contravene the provisions of, or
constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee or the
Guarantor (as the case may be) under, any indenture, mortgage,
contract or other agreement to which Lessee or the Guarantor (as the
case may be) is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate,
would be reasonably likely to have a material adverse effect on the
condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(iv) neither the execution and delivery by Lessee or the
Guarantor (as the case may be) of the Lessee Documents, the Pass
Through Trust Agreements, the Underwriting Agreement or any other
Operative Document to which Lessee or the Guarantor (as the case may
be) is a party, nor the performance of the obligations of Lessee or
the Guarantor (as the case may be) under the Lessee Documents, the
Pass Through Trust Agreements, the Underwriting Agreement or the other
Operative Documents to which Lessee or the Guarantor (as the case may
be) is a party, requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action in
respect of, the Department of Transportation, the FAA, or any other
federal, state or foreign governmental authority having jurisdiction
over Lessee or the Guarantor, other than (A) the registration of the
Certificates under the Securities Act of 1933, as amended, and under
the securities laws of any state in which the Certificates may be
offered for sale if the laws of such state require such action, (B)
the qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, pursuant to an order of the
Securities and Exchange Commission, (C) the orders, permits, waivers,
exemptions, authorizations and approvals of the regulatory authorities
having jurisdiction over the operation of the Aircraft by Lessee or
any Sublessee required to be obtained on or prior to the Delivery
Date, which orders, permits, waivers, exemptions, authorizations and
approvals have been duly obtained and are, or on the Delivery Date
will be, in full force and effect (other than a flying time wire, all
steps to obtain the issuance of which will have been, on the Delivery
Date, taken or caused to be taken by Lessee), (D) on or prior to the
Delivery Date, the registration of the Aircraft referred to in Section
5(a)(ix)(3), (E) on or prior to the Delivery Date, the registrations
and filings referred to in Section 7(a)(vi), and (F) authorizations,
consents, approvals, actions, notices and filings required to be
obtained, taken, given or made either only after the date hereof or
the failure of which to obtain, take, give or make would not be
reasonably likely to have a material adverse effect on
20
the condition (financial or otherwise), business or properties of the
Guarantor and its subsidiaries considered as one enterprise;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee constitute the legal, valid
and binding obligations of Lessee or the Guarantor (as the case may
be) enforceable against Lessee or the Guarantor (as the case may be)
in accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in
the case of the Lease (when entered into), as limited by applicable
laws which may affect the remedies provided in the Lease, which laws,
however, do not make the remedies provided in the Lease inadequate for
practical realization of the benefits intended to be afforded thereby;
(vi) except for (A) the registration of the Aircraft pursuant to
the Federal Aviation Act, (B) the filing of the Trust Agreement
with the FAA, (C) the filing for recording pursuant to the Federal
Aviation Act of the Lease with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached
thereto and made a part thereof, the Trust Indenture with the Trust
Supplement attached thereto and made a part thereof and the FAA
▇▇▇▇ of Sale, (D) the filing of financing statements (and
continuation statements at periodic intervals) with respect to the
security interests created by such documents under the Uniform
Commercial Code of Minnesota and Utah and such other states as may
be specified in the opinions furnished pursuant to Section 5(a)(xi)
hereof, and (E) the taking of possession by the Indenture Trustee
of the original chattel paper counterpart of each of the Lease and
the Lease Supplement covering the Aircraft, no further filing or
recording of any document (including any financing statement in
respect thereof under Article 9 of the Uniform Commercial Code of
any applicable jurisdiction) is necessary under the laws of the
United States of America or any State thereof in order to perfect
the Owner Trustee's interest in the Aircraft as against Lessee and
any third parties, or to perfect the security interest in favor of
the Indenture Trustee in the Owner Trustee's interest in the
Aircraft (with respect to such portion of the Aircraft as is
covered by the recording system established by the FAA pursuant to
49 U.S.C. Section 44107) and in the Lease in any applicable
jurisdiction in the United States;
(vii) neither Lessee, the Guarantor nor any of their affiliates
has directly or indirectly offered the Certificates for sale to any
Person other than in a manner permitted by the Securities Act of 1933,
as amended, and by the rules and regulations thereunder;
(viii) neither Lessee nor the Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
21
(ix) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time;
(xi) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of
Lessee will not be unreasonably small for the conduct of the business
in which Lessee is engaged or is about to engage; Lessee has no
intention or belief that it is about to incur debts beyond its ability
to pay as they mature; and Lessee's sale of the Aircraft is made
without any intent to hinder, delay or defraud either present or
future creditors;
(xii) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as
such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System; and
(xiii) all sales or use tax then due and for which Lessee is
responsible pursuant to Section 7(b)(i) hereof shall have been paid,
other than such taxes which are being contested by Lessee in good
faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
(b) General Tax Indemnity. Exhibit R, which is a complete statement
of the provisions of Section 7(b), is incorporated herein in its entirety as if
fully set forth herein.
(c) General Indemnity. Exhibit S, which is a complete statement of
the provisions of Section 7(c), is incorporated herein in its entirety as if
fully set forth herein.
(d) Income Tax. [Intentionally Omitted.]
SECTION 8. Representations, Warranties and Covenants.
(a) [Intentionally Omitted.]
(b) [Intentionally Omitted.]
(c) First Security Bank, National Association, in its individual
capacity, represents and warrants to the other parties to this Agreement that it
is, and on the Delivery Date will be, a Citizen of the United States without
making use of any voting trust, voting powers agreement or similar arrangement.
The Owner Participant agrees, solely for the benefit of Lessee and the Loan
Participants, that if during such time as the Aircraft is registered in the
United States (or if Lessee desires to register the Aircraft in the United
States)
22
(i) it shall not be, or believes itself likely not to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore become ineligible
for registration in the name of the Owner Trustee under the Federal Aviation Act
and regulations then applicable thereunder, then the Owner Participant shall (at
its own expense and without any reimbursement or indemnification from Lessee)
promptly (A) effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft
(or, if Lessee desires to register the Aircraft in the United States, to permit
the United States registration of the Aircraft) or (B) transfer all of its
right, title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and any proceeds therefrom in accordance with Section 8(n) hereof
(substituting a 5 day prior written notice for the 30 day prior written notice
provided therein). It is agreed that the Owner Participant shall be liable to
pay on request to Lessee, any Sublessee or the Loan Participants for any damages
which may be incurred by Lessee, any Sublessee or the Loan Participants as a
result of the Owner Participant's failure to comply with its obligations
pursuant to the second sentence of this Section 8(c). Each party hereto agrees,
upon the request and at the sole expense of the Owner Participant, to cooperate
with the Owner Participant in complying with its obligations under the
provisions of the second sentence of this Section 8(c). First Security Bank,
National Association, in its individual capacity, agrees that if at any time an
officer or responsible employee of the Corporate Trust Department of First
Security Bank, National Association, shall obtain Actual Knowledge that First
Security Bank, National Association, has ceased to be a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants,
Lessee or the Owner Participant), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the
Owner Participant or First Security Bank, National Association, in its
individual capacity, does not comply with the requirements of this Section 8(c),
the Owner Trustee, the Indenture Trustee and the Participants hereby agree that
an Event of Default (or an event which would constitute an Event of Default but
for lapse of time or the giving of notice or both) shall not have occurred and
be continuing under the Lease due to non-compliance by Lessee with the
registration requirements in the Lease.
(d) First Security Bank, National Association, in its individual
capacity, represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Documents to which it is a
party are kept is Salt Lake City, Utah. First Security Bank, National
Association, in its individual capacity, agrees that it will not change the
location of such office to a location outside of Salt Lake City, Utah, without
prior written notice to all parties. First Security Bank, National Association,
in its individual capacity, further represents and warrants that (A) on the
Delivery Date the Owner Trustee shall have received whatever title to the
Aircraft as was conveyed to it by Lessee, and (B) the Trust Agreement, and,
assuming due authorization, execution and delivery of the Trust Agreement by the
Owner Participant, the other Owner Trustee Documents, when executed and
delivered,
23
shall have been duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such instruments on behalf of the Owner
Trustee. First Security Bank, National Association, in its individual
capacity, represents that it has not offered any interest in the Trust Estate or
any Secured Certificates or any similar securities for sale to, or solicited any
offer to acquire the same from, anyone, and that no officer or responsible
employee of the Corporate Trust Department of First Security Bank, National
Association, has knowledge of any such offer or solicitation by anyone other
than Lessee.
(e) Each Loan Participant represents and warrants that neither it nor
anyone acting in its behalf has offered any Secured Certificates for sale to, or
solicited any offer to buy any Secured Certificate from, any person or entity
other than in a manner in compliance with, and which does not require
registration under, the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
(f) The Owner Participant and the Indenture Trustee agree that, at
any time after the Depreciation Period, as long as no Event of Default or a
Default of the type referred to in Section 14(a), 14(b) or 14(e) of the Lease
shall have occurred and be continuing, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner Trustee approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of the
Aircraft, and if the country of registry is Taiwan, the United States maintains
diplomatic relations at least as good as those in effect on the Delivery Date;
and (ii) the Owner Trustee and the Indenture Trustee shall have received
favorable opinions (subject to customary exceptions) addressed to each such
party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft shall be
recognized under the laws of such jurisdiction, (B) the obligations of
Lessee, and the rights and remedies of the Owner Trustee, under the Lease
shall remain valid, binding and (subject to customary bankruptcy and
equitable remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction (or the
laws of the jurisdiction to which the laws of such jurisdiction would refer
as the applicable governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's right,
title and interest in and to the Aircraft and the Lease shall continue as a
valid and duly perfected first priority security interest and all filing,
recording or other action necessary to protect the same shall have been
accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is not
yet effective, (1) the opinion shall detail what filing, recording or other
action is necessary and (2) the Owner Trustee and the Indenture Trustee
shall have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action shall
have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be delivered
24
to the Owner Trustee and the Indenture Trustee on or prior to the
effective date of such change in registration), (D) it is not necessary,
solely as a consequence of such change in registration and without giving
effect to any other activity of the Owner Trustee, the Owner Participant or
the Indenture Trustee (or any Affiliate thereof), as the case may be, for
the Owner Trustee, the Owner Participant or the Indenture Trustee to
qualify to do business in such jurisdiction, (E) there is no tort liability
of the owner of an aircraft not in possession thereof under the laws of
such jurisdiction (it being agreed that, in the event such latter opinion
cannot be given in a form satisfactory to the Owner Participant, such
opinion shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee shall
have agreed to provide insurance covering the risk of requisition of use of
such Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the
loss of use of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, (a)
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom and (b) the Owner Participant shall have received assurances
satisfactory to it that such change will not result in the imposition of, or
increase the amount of, any Tax on the Owner Participant or the Owner Trustee
for which Lessee is not required to indemnify under the Operative Documents or
has not entered into a binding agreement to indemnify in a manner satisfactory
in form and substance to the Owner Participant. Lessee shall pay all costs,
expenses, fees, recording and registration taxes, including the reasonable fees
and expenses of counsel to the Owner Trustee, the Owner Participant and the
Indenture Trustee, and other charges in connection with any such change in
registration.
(g) The Owner Participant represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Subordination
Agent, the Liquidity Provider and the Owner Trustee, in its capacity as such and
in its individual capacity, as follows:
(i) it is duly incorporated, validly existing and in good standing
under the laws of Delaware and has the corporate power and authority to
carry on its present business and operations and to own or lease its
properties, and has the corporate power and authority to enter into and to
perform its obligations under the Owner Participant Documents; this
Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except
25
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity; and it has
a tangible net worth (exclusive of goodwill) greater than $75,000,000;
(ii) neither (A) the execution and delivery by the Owner Participant
of the Owner Participant Documents nor (B) compliance by it with all of the
provisions thereof, (x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on the Owner
Participant (it being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to aviation or to the
nature of the equipment owned by the Owner Trustee other than such laws,
rules or regulations relating to the citizenship requirements of the Owner
Participant under applicable law), or (y) will contravene the provisions
of, or constitutes or has constituted or will constitute a default under,
or result in the creation of any Lien (other than Liens provided for in the
Operative Documents) upon any property of the Owner Participant under, its
certificate of incorporation or bylaws or any indenture, mortgage, contract
or other agreement or instrument to which the Owner Participant is a party
or by which it or any of its property may be bound or affected;
(iii) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than as required by the Federal Aviation Act or the regulations promulgated
thereunder) is required for the due execution, delivery or performance by
it of the Owner Participant Documents;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings before any court or administrative agency or arbitrator which
would materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the Assignment and Assumption
Agreement, the Tax Indemnity Agreement and the Trust Agreement;
(v) neither the Owner Participant nor anyone authorized by it to act
on its behalf (it being understood that in proposing, facilitating and
otherwise taking any action in connection with the financing contemplated
hereby and agreed to herein by the Owner Participant, Lessee has not acted
as agent of the Owner Participant) has directly or indirectly offered any
Secured Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person; and the
Owner Participant's interest in the Trust Estate and the Trust Agreement is
being acquired for its own account and is being purchased for investment
and not with a view to any resale or distribution thereof; and
(vi) on the Delivery Date, the Trust Estate shall be free of Lessor
Liens (including for this purpose Liens which would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to the Owner
Participant.
26
(h) Each of First Security Bank, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each of First
Security Bank, National Association, in its individual capacity, and the Owner
Participant agrees that it will promptly, at its own expense, take such action
as may be necessary duly to discharge such Lessor Lien attributable to it. Each
of First Security Bank, National Association, in its individual capacity, and
the Owner Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Indenture Estate
pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted
by, or failure of the Indenture Trustee to take any action required by, the
Operative Documents to the extent such acts arise or such failure arises from or
constitutes gross negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 pursuant to said Section 7, or (D) claims
against the Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft, the Trust Estate,
the Trust Indenture Estate or the Operative Documents other than a transfer of
the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of
the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of
the Aircraft pursuant to Section 15 of the Lease while an Event of Default is
continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.
(j) [Intentionally Omitted.]
(k) Each Loan Participant represents and warrants that the Secured
Certificate issued to it pursuant to the Trust Indenture was acquired by it for
investment and not with a view to resale or distribution (it being understood
that such Loan Participant may pledge or assign as security its interest in each
Secured Certificate issued to it), provided that the disposition of its property
shall at all times be and remain within its control, except that the Loan
Participants may sell, transfer or otherwise dispose of any Secured Certificate
or any portion thereof, or grant participations therein, in a manner which in
itself does not require registration under the Securities Act of 1933, as
amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered
27
pursuant to the Trust Agreement shall be strictly limited to the Trust Estate
(excluding the Excluded Payments) and (ii) make (and hereby agree to make), with
respect to the Trust Indenture Estate, the election provided for in Section
1111(b)(2) of Title 11 of the United States Code. It is hereby agreed by the
Indenture Trustee, and by the acceptance of the Secured Certificates the
Certificate Holders hereby agree, that if (i) all or any part of the Trust
Estate becomes the property of, or the Owner Participant becomes, a debtor
subject to the reorganization provisions of the Bankruptcy Reform Act of 1978 or
any successor provision or any comparable proceeding, (ii) pursuant to such
reorganization provisions the Owner Trustee (in its individual capacity) or the
Owner Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
holder(s) of the Secured Certificates or to the Indenture Trustee, directly or
indirectly (other than the recourse liability of the Owner Participant under
this Participation Agreement), to make payment on account of any amount payable
as principal or interest on the Secured Certificates and (iii) any holder(s) of
the Secured Certificates or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner Trustee
(in its individual capacity) or the Owner Participant on account of (ii) above,
then such holder(s) or the Indenture Trustee, as the case may be, shall promptly
refund to the Owner Trustee or the Owner Participant (whichever shall have made
such payment) such Excess Payment. For purposes of this Section 8(l), "Excess
Payment" means the amount by which such payment exceeds the amount which would
have been received by the holder(s) of the Secured Certificates or the Indenture
Trustee if the Owner Trustee (in its individual capacity) or the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section 8(l) shall prevent the holder of a
Secured Certificate or the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of the Owner Trustee
(in its individual capacity) or the Owner Participant under this Agreement or
the Trust Indenture (and any exhibits or annexes thereto).
(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant as follows:
(i) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of any
voting trust, voting powers agreement or similar arrangement), will notify
promptly all parties to this Agreement if in its reasonable opinion its
status as a Citizen of the United States (without making use of any voting
trust, voting powers agreement or similar arrangement) is likely to change
and will resign as Indenture Trustee as provided in Section 8.02 of the
Trust Indenture promptly after it obtains actual knowledge that it has
ceased to be such a Citizen of the United States (without making use of a
voting trust, voting powers agreement or similar arrangement), and has, or
had on the respective dates of execution thereof, the full corporate power,
authority and legal right under the laws of the Commonwealth of
Massachusetts and the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this Agreement, the Trust
Indenture
28
and each other Operative Document to which it is a party and to carry out
its obligations under this Agreement, the Trust Indenture, each other
Operative Document to which it is a party and to authenticate the Secured
Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly authorized
by the Indenture Trustee and will not violate its articles of association
or bylaws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(iii) this Agreement and each of the other Indenture Trustee Documents
constitute the legal, valid and binding obligations of the Indenture
Trustee enforceable against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether considered
in a proceeding at law or in equity;
(iv) there are no pending or, to its knowledge, threatened actions or
proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative agency
which, if determined adversely to it, would materially adversely affect the
ability of the Indenture Trustee, in its individual capacity or as
Indenture Trustee as the case may be, to perform its obligations under the
Operative Documents to which it is a party; and
(v) there are no Indenture Trustee's Liens on the Aircraft or any
portion of the Trust Estate.
(n) The Owner Participant will not, directly or indirectly, sell,
assign, convey or otherwise transfer any of its right, title or interest in and
to this Agreement, the Trust Estate or the Trust Agreement or any proceeds
therefrom to any person or entity, unless (i) the proposed transferee is a
"Transferee" (as defined below), (ii) Lessee shall have (1) received an opinion
(in form and substance reasonably satisfactory to Lessee) of counsel to the
Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect
that such transfer will not result in any sales, use, value added or similar tax
imposed on, or indemnified by, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any sales, use, value added or similar tax
imposed on, or indemnified by, Lessee, and (iii) the Owner Participant sells,
assigns, conveys or otherwise transfers all of its right, title and interest in
and to this Agreement, the Trust Estate, the Trust Agreement and the proceeds
therefrom to a single entity. A "Transferee" shall mean either (A) a bank or
other financial institution with a combined capital, surplus and undivided
profits of at least $75,000,000 or a corporation whose tangible net worth is at
least $75,000,000, exclusive of goodwill, in either case as of the proposed date
of such transfer, as determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution or
corporation, provided that such bank, financial
29
institution or corporation furnishes to the Owner Trustee, the Indenture Trustee
and Lessee a guaranty with respect to the Transferee's obligations, in the case
of the Owner Trustee, under the Trust Agreement and, in the case of the
Indenture Trustee and Lessee, the Transferee's obligations hereunder, including
but not limited to, under Section 8(c) and Section 8(h) hereof, in form and
substance reasonably satisfactory to Lessee, the Owner Trustee and the Indenture
Trustee, or (C) any Affiliate of the Owner Participant if the transferring Owner
Participant remains liable for the obligations of the Transferee under the
Operative Documents; provided, however, that any Transferee shall not be an
airline, a commercial air carrier, an air freight forwarder, an entity engaged
in the business of parcel transport by air or other similar person or a
corporation or other entity controlling, controlled by or under common control
with such an airline, a commercial air carrier, an air freight forwarder, an
entity engaged in the business of parcel transport by air or other similar
person. Each such transfer to a Transferee shall be subject to the conditions
that (M) upon giving effect to such transfer, the Transferee is a Citizen of the
United States (without making use of a voting trust agreement, voting powers
agreement or other similar arrangement unless approved by Lessee), and has full
power and authority to enter into the transactions contemplated hereby, (N) the
Transferee has the requisite power and authority to enter into and carry out the
transactions contemplated hereby and such Transferee shall have delivered to
Lessee, the Owner Trustee and the Indenture Trustee an opinion of counsel in
form and substance reasonably satisfactory to such persons as to the due
authorization, delivery, legal, valid and binding effect and enforceability of
the agreement or agreements referred to in the next clause with respect to the
Transferee and any guaranty provided pursuant to the provisions of this Section
8(n) as to the guarantor, (O) the Transferee enters into an agreement or
agreements, in form and substance reasonably satisfactory to the Owner Trustee,
Lessee and the Indenture Trustee, whereby the Transferee confirms that it shall
be deemed a party to this Agreement and a party to the Trust Agreement and
agrees to be bound by all the terms of, and to undertake all of the obligations
of the transferor Owner Participant contained in, the Owner Participant
Documents (to the extent of the participation so transferred to it) and makes
representations and warranties equivalent to those made by the Owner Participant
thereunder and the representations required by Section 8(q) below, (P) such
transfer does not affect registration of the Aircraft under the Federal Aviation
Act, or any rules or regulations promulgated thereunder or create a relationship
which would be in violation thereof or violate any provision of the Securities
Act of 1933, as amended, or any other applicable Federal or state law, (Q) the
transferor Owner Participant assumes the risk of any sales, use, value added or
similar tax resulting from such transfer, (R) the transferor Owner Participant
pays all of the reasonable costs and expenses (including, without limitation,
fees and expenses of counsel) incurred in connection with such transfer,
including the costs and expenses of the Owner Trustee, the Indenture Trustee,
Lessee and the Loan Participants in connection therewith, and (S) the terms of
the Operative Documents and the Overall Transaction shall not be altered. Upon
any such transfer by the Owner Participant as above provided, the Transferee
shall be deemed the Owner Participant for all purposes hereof and of the other
Operative Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be to the Transferee
and the transferor Owner Participant shall be relieved, released and discharged
of all obligations of the transferor Owner Participant under the Owner
Participant Documents arising after the date of
30
such transfer except to the extent fully attributable to or arising out of
acts or events occurring prior thereto and not assumed by the Transferee (in
each case, to the extent of the participation so transferred). If the Owner
Participant intends to transfer any of its interests hereunder, it shall give 30
days prior written notice thereof to the Indenture Trustee, the Owner Trustee
and Lessee, specifying the name and address of the proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless
waived by the Loan Participants, Lessee shall not be entitled to assume the
Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of Default shall have
occurred and be continuing or any condition or event shall exist which, with the
passage of time or giving of notice or both, would become such an Event of
Default.
(p) First Security Bank, National Association, and State Street Bank
and Trust Company, each in its individual capacity, agrees for the benefit of
Lessee to comply with the terms of the Trust Indenture which it is required to
comply with in its individual capacity.
(q) The Owner Participant represents and warrants that it is not
acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA or of any "plan" within the meaning of Section
4975(e)(1) of the Code. Each Loan Participant agrees that it will not transfer
any Secured Certificate (or any part thereof) to any entity (except pursuant to
Section 2.14 of the Trust Indenture) unless such entity makes (or is deemed to
have made) a representation and warranty as of the date of transfer that either
no part of the funds to be used by it for the purchase and holding of such
Secured Certificate (or any part thereof) constitutes assets of any "employee
benefit plan" or that such purchase and holding will not result in a "prohibited
transaction" (as defined in Section 4975 of the Code and ERISA). The Owner
Participant agrees that it will not transfer any of its right, title or interest
in and to this Agreement, the Trust Estate or the Trust Agreement or any
proceeds therefrom to any entity unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer that either no
part of the funds to be used by it for the purchase of such right, title and
interest (or any part thereof) constitutes assets of any "employee benefit plan"
or that such transfer will not result in a prohibited transaction (as defined in
Section 4975 of the Code and ERISA). The Pass Through Trustee agrees that it
will not agree to any amendment, modification or waiver of Section 1.01(e)(1) of
the initial supplement to each Pass Through Trust Agreement without the prior
written consent of the Owner Participant.
(r) Each Participant, the Owner Trustee and the Indenture Trustee
agrees for the benefit of the Manufacturer and Lessee that it will not disclose
or suffer to be disclosed the terms of the Purchase Agreement to any third party
except (A) as may be required by any applicable statute, court or administrative
order or decree or governmental ruling or regulation or to any regulatory
authorities having official jurisdiction over them, (B) in connection with the
financing of the Aircraft and the other transactions contemplated by the
Operative Documents (including any transfer of Secured Certificates (including
by way of participation or assignment of an interest, provided such participant
or assignee agrees to hold such terms
31
confidential to the same extent as herein provided) or the Owner Participant's
beneficial interest in the Trust Estate and any exercise of remedies under the
Lease and the Trust Indenture), (C) with the prior written consent of the
Manufacturer and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and
each Participant's counsel or special counsel, accounting and financial
advisors, independent insurance brokers or other agents who agree to hold such
information confidential, or (E) in the case of the Owner Participant and/or the
Owner Trustee, it may disclose so much of the Purchase Agreement as has been
assigned to the Owner Trustee under the Purchase Agreement Assignment to bona
fide potential purchasers of the Aircraft or Transferees under Section 8(n)
above who agree to hold such information confidential.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the Pass
Through Trustee pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation U of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not cause
or permit to exist a Loan Participant Lien attributable to it with respect to
the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as provided
in clauses (iii) and (vii) below) and (but only as provided in clauses (iii) and
(vii) and, to the extent that it relates to the Owner Trustee, clauses (ii),
(ix) and (xi) below) as Owner Trustee, represents and warrants to Lessee, the
Guarantor, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant that:
(i) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good standing
under the laws of the United States, has full corporate power and
authority to carry on its business as now conducted, has the corporate
power and authority to execute and deliver the Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has, or had on the respective dates of execution thereof
(assuming the authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and to the extent
expressly provided herein or therein, in its individual capacity, the
corporate power and authority to execute and deliver and to carry out
the terms of this Agreement, the Trust Indenture, the Secured
Certificates, the Lease and each other Operative Document (other than
the Trust Agreement) to which it is a party;
(ii) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement, in its individual
capacity, has duly authorized, executed and delivered the Trust
Agreement and in its trust capacity, except as expressly provided
therein, has duly authorized, executed and delivered the other Owner
Trustee Documents and (assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant) this Agreement
and each of the other Owner Trustee Documents constitute, or will
constitute when entered into as contemplated hereby, the legal, valid
and binding obligations of the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, enforceable against it in its
individual capacity or as Owner Trustee, as the case may be, in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity;
(iii) assuming the due authorization, execution and delivery of the
Original Trust Agreement by the Initial Owner Participant, the Owner
Trustee has duly authorized, and on the Certificate Closing Date duly
issued, executed and delivered to the Indenture Trustee for
authentication, the Secured Certificates pursuant to the terms and
provisions of the Original Participation Agreement and of the Original
Trust Indenture, and each Secured Certificate on the Delivery Date will
constitute the valid and binding obligation of the Owner Trustee and
will be entitled to the benefits and security afforded by the Trust
Indenture in accordance with the terms of such Secured Certificate and
the Trust Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any
Owner Trustee Document, nor the consummation by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any
of the transactions contemplated thereby, nor the compliance by the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, with any of the terms and provisions thereof, (A) requires
or will require any approval of its stockholders, or approval or consent
of any trustees or holders of
33
any indebtedness or obligations of it, or (B) violates or will violate
its articles of association or bylaws, or contravenes or will contravene
any provision of, or constitutes or will constitute a default under, or
results or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the Operative
Documents) upon its property under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any
law, governmental rule or regulation of the United States of America or
the State of Utah governing the trust powers of the Owner Trustee, or
any judgment or order applicable to or binding on it;
(v) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in
respect of, any Utah state or local governmental authority or agency or
any United States federal governmental authority or agency regulating
the trust powers of the Owner Trustee in its individual capacity is
required for the execution and delivery of, or the carrying out by, the
Owner Trustee, in its individual capacity or as Owner Trustee, as the
case may be, of any of the transactions contemplated hereby or by the
Trust Agreement, the Participation Agreement, the Trust Indenture, the
Lease or the Secured Certificates, or any other Operative Document to
which it is a party or by which it is bound, other than any such
consent, approval, order, authorization, registration, notice or action
as has been duly obtained, given or taken or which is described in
Section 7(iv);
(vi) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity;
(vii) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease;
(viii) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of
Utah or any political subdivision thereof in connection with the
issuance of the Secured Certificates, or the execution and delivery in
its individual capacity or as Owner Trustee, as the case may be, of any
of the instruments referred to in clauses (i), (ii), (iii) and (iv)
above, that, in each case, would not have been imposed if the Trust
Estate were not located in the State of Utah and First Security Bank,
National Association had not (a) had its principal place of business in,
(b) performed (in its individual capacity or as Owner Trustee) any or
all of its duties under the Operative Documents in, and (c) engaged in
any activities unrelated to the transactions contemplated by the
Operative Documents in, the State of Utah;
(ix) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Trustee, either in its individual
capacity or as Owner Trustee, before any court or administrative agency
which, if determined adversely to it,
34
would materially adversely affect the ability of the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, to
perform its obligations under any of the instruments referred to in
clauses (i), (ii), (iii) and (iv) above;
(x) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under
all documents relating to the Trust Estate, are located in Salt Lake
City, Utah;
(xi) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Secured Certificate or
Certificate or any interest in or to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Pass Through Trustee
and the Owner Participant; and the Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in arranging and
proposing the refinancing contemplated hereby and agreed to herein by
the Owner Trustee, the Lessee has not acted as agent of the Owner
Trustee) to offer directly or indirectly any Secured Certificate, any
Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person;
(xii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar
arrangements); and
(xiii) there has not occurred any event which constitutes (or, to
the best of its knowledge would, with the passing of time or the giving
of notice or both, constitute) an Event of Default as defined in the
Trust Indenture which has been caused by or relates to the Owner
Trustee, in its individual capacity, and which is presently continuing.
(w) The Owner Participant covenants and agrees that if (i) Lessee
has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease
by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and
(ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to
Lessee written notice of Lessor's election to retain title to the Aircraft
and (iii) the Owner Trustee has failed to make, on or before the Termination
Date, any payment required to be made by the Owner Trustee pursuant to
Section 9(c) in connection with its retention of title to the Aircraft, the
Owner Participant will indemnify Lessee for any losses, damages, costs or
expenses of any kind (including any additional rents paid by Lessee and any
reasonable fees and expenses of lawyers, appraisers, brokers or accountants)
incurred as a consequence of such failure by the Owner Trustee. The Owner
Participant further covenants and agrees to pay those costs and expenses
specified to be paid by the Owner Participant pursuant to Exhibit E to the
Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Indenture
Trustee and Lessee covenants and agrees that if Lessee elects (a) to purchase
the Aircraft pursuant to Section 19(b) of the Lease or (b) to terminate the
Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, then
each of the parties will execute and deliver appropriate
35
documentation transferring all right, title and interest in the Aircraft to
Lessee (including, without limitation, such bills of sale and other
instruments and documents as Lessee shall reasonably request to evidence (on
the public record or otherwise) such transfer and the vesting of all right,
title and interest in and to the Aircraft in Lessee), and if Lessee, in
connection with such purchase, elects to assume the obligations of the Owner
Trustee pursuant to the Trust Indenture and the Secured Certificates each of
the parties will execute and deliver appropriate documentation permitting
Lessee to assume such obligations on the basis of full recourse to Lessee,
maintaining the security interest in the Aircraft created by the Trust
Indenture, releasing the Owner Participant and the Owner Trustee from all
future obligations and liabilities in respect of the Secured Certificates,
the Trust Indenture and all other Operative Documents and all such other
actions as are reasonably necessary to permit such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of the Owner Trustee in respect of the Secured
Certificates unless Lessee causes to be delivered to the Indenture Trustee an
opinion of counsel to the effect that (i) the Lien of the Trust Indenture
continues to be a valid and duly perfected first priority security interest
in and to the Aircraft and (ii) the Indenture Trustee should be entitled to
the benefits of 11 U.S.C. Section 1110; provided that the opinion required by
subclause (ii) need only be given if immediately prior to such assumption the
Owner Trustee should have been entitled to the benefits of 11 U.S.C. Section
1110.
(y) (A) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as
an entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall be
a Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall
execute and deliver to the Owner Trustee, the Indenture Trustee and the
Owner Participant an agreement in form and substance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
containing an assumption by such successor corporation or Person of the
due and punctual performance and observance of each covenant and
condition of this Agreement, the Lease, the Purchase Agreement
Assignment and the Tax Indemnity Agreement to be performed or observed
by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and the Owner Participant a certificate signed by the
President, any Executive Vice
36
President, any Senior Vice President or any Vice President and by the
Secretary or an Assistant Secretary of Lessee, and an opinion of counsel
reasonably satisfactory to the Indenture Trustee and the Owner
Participant, each stating that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement mentioned in clause (ii)
above comply with this subparagraph (A) of Section 8(y) and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, Lessee
under this Agreement with the same effect as if such successor corporation or
Person had been named as Lessee herein. No such conveyance, transfer or
lease of substantially all of the assets of Lessee as an entirety shall have
the effect of releasing Lessee or any successor corporation or Person which
shall theretofore have become such in the manner prescribed in this
subparagraph (A) of Section 8(y) from its liability in respect of any
Operative Document to which it is a party.
(B) Lessee shall at all times maintain its corporate
existence except as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of
the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture,
the Trust Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in
effect, the perfection of the security interests created by the Trust
Indenture and any security interest that may be claimed to have been created
by the Lease and the interest of the Owner Trustee in the Aircraft or will
furnish to the Owner Trustee and the Indenture Trustee timely notice of the
necessity of such action, together with such instruments, in execution form,
and such other information as may be required to enable them to take such
action. Lessee will notify the Owner Trustee, the Owner Participant and the
Indenture Trustee of any change in the location of its chief executive office
(as such term is used in Article 9 of the Uniform Commercial Code) promptly
after making such change or in any event within the period of time necessary
under applicable law to prevent the lapse of perfection (absent refiling) of
financing statements filed under the Operative Documents.
(aa) Each Loan Participant hereby represents, warrants and agrees
that it shall not transfer any interest in any Secured Certificate unless and
until the transferee agrees in writing (copies of which shall be provided by
the Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant)
to make the representations contemplated to be made by a Loan Participant in
this Agreement and to be bound by the terms of this Agreement and the Trust
Indenture (including, without limitation, the representations and covenants
set forth in
37
Sections 8(e), 8(k), 8(l), 8(q), and 8(t) hereof and this Section 8(aa) and
Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(bb) The Pass Through Trustee represents and warrants to Lessee,
the Guarantor, the Indenture Trustee, the Subordination Agent, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as
such and in its individual capacity, as follows:
(i) the Pass Through Trustee is duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and has, or had on the respective dates of execution
thereof, the full corporate power, authority and legal right under the
laws of the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the Intercreditor
Agreement and this Agreement and to perform its obligations under the
Pass Through Trust Agreements, the Intercreditor Agreement and this
Agreement;
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Pass Through Trustee
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this Agreement, the purchase by the Pass
Through Trustee of the Secured Certificates pursuant to this Agreement,
or the issuance of the Certificates pursuant to the Pass Through Trust
Agreements, contravenes any law, rule or regulation of the Commonwealth
of Massachusetts or any United States governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers
or any judgment or order applicable to or binding on the Pass Through
Trustee and does not contravene or result in any breach of, or
constitute a default under, the Pass Through Trustee's articles of
association or bylaws or any agreement or instrument to which the Pass
Through Trustee is a party or by which it or any of its properties may
be bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement
or this Agreement, nor the consummation by the Pass Through Trustee of
any of the transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any
38
Massachusetts governmental authority or agency or any federal
governmental authority or agency regulating the Pass Through
Trustee's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Pass Through Trustee imposed
by the Commonwealth of Massachusetts or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of the
Pass Through Trust Agreements or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of the Pass
Through Trust Agreements), and there are no Taxes payable by the Pass
Through Trustee imposed by the Commonwealth of Massachusetts or any
political subdivision thereof in connection with the acquisition,
possession or ownership by the Pass Through Trustee of any of the
Secured Certificates (other than franchise or other taxes based on or
measured by any fees or compensation received by the Pass Through
Trustee for services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements), and, assuming
that the trusts created by the Pass Through Trust Agreements will not be
taxable as corporations, but, rather, each will be characterized either
as a grantor trust under subpart E, Part I of Subchapter J of the Code
or as a partnership, such trusts will not be subject to any Taxes
imposed by the Commonwealth of Massachusetts or any political
subdivision thereof;
(vi) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the Pass Through
Trustee to perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(vii) except for the issue and sale of the Certificates contemplated
by the Original Participation Agreement, the Pass Through Trustee has
not directly or indirectly offered any Secured Certificate for sale to
any Person or solicited any offer to acquire any Secured Certificates
from any Person, nor has the Pass Through Trustee authorized anyone to
act on its behalf to offer directly or indirectly any Secured
Certificate for sale to any Person, or to solicit any offer to acquire
any Secured Certificate from any Person; and the Pass Through Trustee is
not in default under any Pass Through Trust Agreement; and
(viii) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the
Guarantor.
(cc) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the
Liquidity Provider, the Owner Participant and the Owner Trustee, in its
capacity as such and in its individual capacity, as follows:
39
(i) the Subordination Agent is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States and has, or had on
the respective dates of execution thereof, the full corporate power,
authority and legal right under the laws of the United States pertaining
to its banking, trust and fiduciary powers to execute and deliver each
of the Liquidity Facilities, the Intercreditor Agreement and this
Agreement and to perform its obligations under this Agreement, the
Liquidity Facilities and the Intercreditor Agreement;
(ii) this Agreement, each of the Liquidity Facilities and the
Intercreditor Agreement have been duly authorized, executed and
delivered by the Subordination Agent; this Agreement, each of the
Liquidity Facilities and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement contravenes any law, rule or
regulation of the State of Connecticut or any United States governmental
authority or agency regulating the Subordination Agent's banking, trust
or fiduciary powers or any judgment or order applicable to or binding on
the Subordination Agent and do not contravene or result in any breach
of, or constitute a default under, the Subordination Agent's articles of
association or bylaws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut governmental
authority or agency or any federal governmental authority or agency
regulating the Subordination Agent's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Subordination Agent imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered
in connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities), and there are no Taxes
payable by the Subordination Agent imposed by the State of Connecticut
or any political subdivision thereof in connection with the
40
acquisition, possession or ownership by the Subordination Agent of any
of the Secured Certificates (other than franchise or other taxes based
on or measured by any fees or compensation received by the Subordination
Agent for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the Liquidity
Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative
agency which individually or in the aggregate, if determined adversely
to it, would materially adversely affect the ability of the
Subordination Agent to perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly
offered any Secured Certificate for sale to any Person or solicited any
offer to acquire any Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Secured Certificate for sale to any Person,
or to solicit any offer to acquire any Secured Certificate from any
Person; and the Subordination Agent is not in default under any
Liquidity Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the
Guarantor.
(dd) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of
Basic Rent, Stipulated Loss Value percentages, Termination Value percentages
and the Special Purchase Price, and the Owner Participant hereby agrees to
make such recalculations as and when contemplated by the Lease and subject to
all the terms and conditions of the Lease and promptly to take such further
actions as may be necessary or desirable to give effect to and to cause the
Owner Trustee to give effect to the provisions of Section 3 of the Lease.
(ee) The Owner Participant hereby agrees with Lessee that it will
pay, or cause to be paid, all costs and expenses that are for the account of
the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. In
addition, in furtherance of the provisions of the last sentence of the first
paragraph of Section 5(a) of the Lease, the Owner Participant authorizes
Lessee, with the participation of the Owner Trustee, to negotiate the
Half-Life Adjustment under the Residual Agreement or any Successor Residual
Agreement and any amount to be deducted from the Agreed Residual Value (as
such term is used in the Residual Agreement or any comparable term is used in
any Successor Residual Agreement) directly with the Manufacturer or any
Person who is the counterparty to any Successor Residual Agreement.
SECTION 9. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein
by such party, and that the Liquidity Provider may rely on such
representations and
41
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. Lessee agrees and acknowledges that
the Liquidity Provider shall be a third party beneficiary of the indemnities
contained in Section 7(c) hereof, and may rely on such indemnities to the
same extent as if such indemnities were made to the Liquidity Provider
directly.
SECTION 10. Other Documents. Each of the Owner Participant and
the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to
comply with all of the terms of the Trust Agreement (as the same may
hereafter be amended or supplemented from time to time in accordance with the
terms thereof) applicable to it; (B) agrees with Lessee and the Indenture
Trustee not to amend, supplement or otherwise modify any provision of the
Trust Agreement in a manner adversely affecting such party without the prior
written consent of such party; and (C) agrees with Lessee and the Loan
Participants not to revoke the Trust Agreement without the prior written
consent of Lessee (so long as the Lease remains in effect) and the Indenture
Trustee (so long as the Lien of the Trust Indenture remains in effect or
there are any Secured Certificates outstanding). Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture
Trustee and the Owner Trustee hereby agree for the benefit of Lessee that
without the consent of Lessee they will not (i) amend or modify Article III
or IX of the Trust Indenture, (ii) make any amendment which will affect the
stated principal amount or interest on the Secured Certificates or (iii)
amend or modify the provisions of Sections 2.05 or 10.14 of the Trust
Indenture. The Indenture Trustee and the Owner Trustee agree to promptly
furnish to Lessee copies of any supplement, amendment, waiver or modification
of any of the Operative Documents to which Lessee is not a party.
Notwithstanding anything to the contrary contained herein, in the Trust
Agreement or in any other Operative Document, the Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without the
prior written consent of Lessee. Each Loan Participant agrees that it will
not take any action in respect of the Trust Indenture Estate except through
the Indenture Trustee pursuant to the Trust Indenture or as otherwise
permitted by the Trust Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and
agrees with each of the Loan Participants, the Owner Participant, the
Indenture Trustee and the Owner Trustee, in its capacity as such and in its
individual capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall
reasonably require for accomplishing the purposes of this Agreement and the
other Operative Documents; provided that any instrument or other document so
executed by Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative
Documents. Lessee, forthwith upon delivery of the Aircraft under the Lease,
shall cause the Aircraft to be duly registered, and at all times thereafter
to remain duly registered, in the name of the Owner Trustee, except as
otherwise required or permitted hereunder or under the Lease, under the
Federal Aviation Act, or shall furnish to the Owner Trustee such information
as may be required to enable the Owner Trustee to make application for such
registration, and shall promptly furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to timely file
42
any reports required to be filed by it as the lessor under the Lease or as
the owner of the Aircraft with any governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments
to the Trust Indenture and this Agreement to be promptly filed and recorded,
or filed for recording, to the extent permitted under the Federal Aviation
Act, or required under any other applicable law. Upon the execution and
delivery of the FAA ▇▇▇▇ of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA ▇▇▇▇ of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement attached, and third, the Trust Indenture, with the Trust
Supplement attached.
SECTION 12. Owner for Federal Tax Purposes. It is hereby agreed
among Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft
to be delivered under the Lease and Lessee will be the lessee thereof, and
each party hereto agrees to characterize the Lease as a lease for Federal
income tax purposes.
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings set forth or referred to in Appendix
A hereto. The term "Trust Office" shall have the meaning set forth in the
Trust Agreement. Unless the context otherwise requires, any reference herein
to any of the Operative Documents refers to such document as it may be
amended from time to time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier, or by
prepaid courier service, and shall be deemed to be given for purposes of this
Agreement on the day that such writing is delivered or sent to the intended
recipient thereof in accordance with the provisions of this Section 13(b).
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 13(b), notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties hereto at their respective addresses (or to their
respective telecopier numbers) as follows: (A) if to Lessee, the Guarantor,
the Owner Trustee, the Pass Through Trustee, the Subordination Agent, the
Indenture Trustee or the Owner Participant, to the respective addresses set
forth below the signatures of such parties at the foot of this Agreement, or
(B) if to a subsequent Owner Participant, addressed to such subsequent Owner
Participant at such address as such subsequent Owner Participant shall have
furnished by notice to the parties hereto, or (C) if to any subsequent
Certificate Holder, addressed to such Certificate Holder at its address set
forth in the Secured Certificate register maintained pursuant to Section 2.07
of the Trust Indenture.
43
(c) Each of the parties hereto (A) hereby irrevocably submits
itself to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and to the non-exclusive jurisdiction
of the Supreme Court of the State of New York, New York County, for the
purposes of any suit, action or other proceeding arising out of this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or
their successors or assigns, and (B) hereby waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, to the extent permitted by applicable law, that the suit, action
or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper, or that this Agreement, the Lease,
the Tax Indemnity Agreement or any other Operative Document or the subject
matter of any thereof or any of the transactions contemplated hereby or
thereby may not be enforced in or by such courts. Lessee hereby generally
consents to service of process at Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Managing Attorney, or such office
of Lessee in New York City as from time to time may be designated by Lessee
in writing to the Owner Participant, the Owner Trustee and the Indenture
Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes
for which it is indemnified pursuant to Section 7(b) hereof and if, as a
consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is
then located, the situs of the trust may be moved with the written consent of
the Owner Participant (which consent shall not be unreasonably withheld) and
the Owner Participant will take, at Lessee's expense, whatever action may be
necessary to accomplish such removal; provided that (A) Lessee shall provide
such additional tax indemnification as the Owner Participant and the
Indenture Trustee may reasonably request, (B) the rights and obligations
under the Operative Documents of the Owner Participant and the Indenture
Trustee shall not be altered as a result of the taking of such action, (C)
the Lien of the Trust Indenture on the Trust Indenture Estate shall not be
adversely affected by such action, and (D) the Owner Participant and the
Indenture Trustee shall have received an opinion or opinions of counsel
(satisfactory to the Owner Participant and the Indenture Trustee), in scope,
form and substance satisfactory to the Owner Participant and the Indenture
Trustee to the effect that (I) the trust, as thus removed, shall remain a
validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms,
(III) such removal will not result in the imposition of, or increase in the
amount of, any Tax for which Lessee is not required to indemnify the Owner
Participant, the Indenture Trustee, the Owner Trustee or the Trust Estate
pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any loss of Interest Deductions or MACRS
Deductions or an Inclusion Event (as each such term is defined in the Tax
Indemnity Agreement) with respect to which Lessee is not required to
indemnify the Owner Participant pursuant to Section 4 of the Tax Indemnity
Agreement (taking into account any additional indemnification provided by
Lessee pursuant to clause (A) of this sentence) and
44
(V) if such removal involves the replacement of the Owner Trustee, an opinion
of counsel to such successor Owner Trustee in form and substance reasonably
satisfactory to the Indenture Trustee and to the Owner Participant covering
the matters described in the opinion delivered pursuant to Section 5(a)(xiii)
hereof and such other matters as the Indenture Trustee and the Owner
Participant may reasonably request, and (E) Lessee shall indemnify and hold
harmless the Owner Participant and the Indenture Trustee on a net after-tax
basis against any and all reasonable and actual costs and expenses including
reasonable counsel fees and disbursements, registration fees, recording or
filing fees and taxes incurred by the Owner Trustee, the Owner Participant
and the Indenture Trustee in connection with such change of situs.
SECTION 15. Miscellaneous. (a) The Owner Participant covenants
and agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Trustee, as Lessor, under the terms of the Lease which
by its terms is not to be unreasonably withheld by the Owner Trustee, as
Lessor.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant
provided for in this Agreement, and Lessee's, the Guarantor's, the Owner
Trustee's, the Indenture Trustee's, the Subordination Agent's, the Pass
Through Trustee's and the Owner Participant's obligations under any and all
thereof, shall survive the release of the Debt Portion by the Pass Through
Trustee, the making available of the Commitment by the Owner Participant, the
delivery or return of the Aircraft, the transfer of any interest of the Owner
Participant in the Trust Estate or the Aircraft or any Engine or the transfer
of any interest by any Loan Participant in any Secured Certificate or the
Trust Indenture Estate and the expiration or other termination of this
Agreement or any other Operative Document.
(c) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument. Neither this Agreement nor any of the terms hereof may
be terminated, amended, supplemented, waived or modified, except by an
instrument in writing signed by the party against which the enforcement of
the termination, amendment, supplement, waiver or modification is sought; and
no such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall
be binding upon, and inure to the benefit of, Lessee and, subject to the
terms of this Agreement, its successors and permitted assigns, the Guarantor,
the Pass Through Trustee and its successors as Pass Through Trustee (and any
additional trustee appointed) under any of the Pass Through Trust Agreements,
the Owner Participant and, subject to the terms of this Agreement, its
successors and permitted assigns, each Certificate Holder and its successors
and registered assigns, the Indenture Trustee and its successors as Indenture
Trustee under the Trust Indenture and the Owner Trustee and its successors as
Owner Trustee under the Trust Agreement. The terms of this Agreement shall
inure to the benefit of the Liquidity Provider, its successors and permitted
assigns. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN
45
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when
made in such capacity) contained in this Agreement and any agreement referred
to herein other than the Trust Agreement, unless expressly otherwise stated,
are made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except
for any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however,
that this Section 15(d) shall not be construed to prohibit any action or
proceeding against any party hereto for its own willful misconduct or grossly
negligent conduct for which it would otherwise be liable; and provided,
further, that nothing contained in this Section 15(d) shall be construed to
limit the exercise and enforcement in accordance with the terms of this
Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 15(d) shall survive the
termination of this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of
any reorganization of Lessee under such Section.
SECTION 16. Expenses. (a) Invoices and Payment. Each of the
parties hereto shall promptly submit to the Owner Trustee and Lessee for
their prompt approval (which shall not be unreasonably withheld) copies of
invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than June 30, 1998). In the event that the transactions contemplated
hereunder close on or prior to May 7, 1998, the Owner Participant agrees to
transfer to the Owner Trustee promptly but in any event no later than July
15, 1998 such amount as shall be necessary in order to enable the Owner
Trustee to pay Transaction Expenses. To the extent of funds received by it,
the Owner Trustee agrees to pay all invoices of Transaction Expenses that
have been approved by it and Lessee promptly upon receipt thereof.
Notwithstanding the foregoing, to the extent that Transaction Expenses exceed
2.085% of Lessor's Cost, Lessee at its sole option shall have the right to
pay directly any or all Transaction Expenses which are in excess of 2.085% of
Lessor's Cost.
(b) Payment of Other Expenses. In the event that the leasing
transaction contemplated by this Participation Agreement fails to close as a
result of the Owner Participant's failure to negotiate in good faith or to
satisfy on or prior to May 7, 1998 any of
46
the conditions to closing specified in Section 5 which are required to be
satisfied by the Owner Participant on or prior to the Delivery Date, the
Owner Participant will be responsible for all of its fees and expenses,
including but not limited to the fees, expenses and disbursements of its
special counsel. In the event that the leasing transaction contemplated by
this Participation Agreement fails to close for any other reason Lessee will
be responsible for such fees and expenses.
SECTION 17. Refinancings.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates no more than two times by giving written
notice to the Owner Participant and the Owner Trustee that there be effected
a voluntary redemption of the Secured Certificates by the Owner Trustee,
whereupon the Owner Participant agrees to negotiate promptly in good faith to
conclude an agreement with Lessee as to the terms of such refinancing
operation (including the terms of any debt to be issued in connection with
such refinancing); provided that no such refinancing shall require an
increase in the amount of the Owner Participant's investment in the
beneficial ownership of the Aircraft or in the principal amount of the
Secured Certificates; provided further that no such refinancing shall subject
the Owner Participant to any unindemnified adverse tax consequences unless
Lessee agrees to indemnify the Owner Participant for such unindemnified
adverse tax consequences.
Upon such agreement:
(1) within ten Business Days after the reaching of such agreement,
the Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "Refinancing Certificate")
setting forth (i) the proposed date on which the outstanding Secured
Certificates will be redeemed, any new debt will be issued and the other
aspects of such refinancing will be consummated (such date, the "Refinancing
Date") and (ii) the following information calculated pursuant to the
provisions of paragraph (6) of this Section 17(a): (A) the principal amount
of debt to be issued by the Owner Trustee on the Refinancing Date and (B) the
proposed revised schedules of Basic Rent percentages, debt amortization,
Initial Installment, Remaining Installments, Stipulated Loss Value
percentages and Termination Value percentages (calculated in accordance with
Section 3(d) of the Lease). Within fourteen days of its receipt of the
Refinancing Certificate, Lessee may demand a verification pursuant to Exhibit
E to the Lease of the information set forth in the Refinancing Certificate.
Upon the acceptance by Lessee of the accuracy of the information set forth in
the Refinancing Certificate (or the determination pursuant to such
verification procedures), as to the principal amount of debt to be issued by
the Owner Trustee on the Refinancing Date and the revised Basic Rent
percentages, debt amortization, Initial Installment, Remaining Installments,
Stipulated Loss Value percentages and Termination Value percentages (such
information, whether as set forth or as so determined, the "Refinancing
Information") the appropriate parties will take the actions specified in
paragraphs (2) through (5) below;
47
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate
and/or the Aircraft and its resale to the Owner Trustee) with the institution
or institutions to be named therein providing for the issuance and sale by
the Owner Trustee to such institution or institutions on the Refinancing Date
of debt securities in an aggregate principal amount specified in the
Refinancing Information which amount shall be equal to the aggregate
principal amount of all Secured Certificates outstanding on the Refinancing
Date (such debt securities, the "New Debt") provided that the maturity of the
New Debt shall not extend beyond January 2, 2016 and the weighted average
life of the New Debt as of the Refinancing Date shall not exceed by more than
six (6) months the weighted average life of the Secured Certificates as of
the Refinancing Date;
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the
period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of Stipulated
Loss Value and Termination Value from and after the Refinancing Date shall be
as provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses (other
than those of Lessee) of the first refinancing (including, but not limited
to, the fees, expenses and disbursements of counsel and any placement or
underwriting fees) and such expenses shall be treated as Transaction Expenses
(subject to a cap of 5% of the principal amount of the Secured Certificates
which are being refinanced) and, unless otherwise agreed by the Owner
Participant, Lessee shall pay all other expenses of the first refinancing and
all of the expenses of the second refinancing; and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the
Lease or such assumptions are the subject of the recalculations being
conducted by the Owner Participant), and (B) minimizes the Net Present Value
of Rents to Lessee to the extent possible consistent with clause (A). All
adjustments to Basic Rent shall also be in compliance with the tests of
Sections 4.02(5) and 4.07 of Rev. Proc. 75-28 and no such adjustment shall
cause the Lease to constitute a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code.
48
(b) The Secured Certificates shall not be subject to voluntary
redemption by the Owner Trustee without the consent of Lessee except as set
forth in Section 2.14 of the Trust Indenture.
SECTION 18. Collateral Account.
(a) The Indenture Trustee shall notify the Owner Trustee and Lessee
of any losses incurred on the Cash Equivalents in the Collateral Account
promptly upon the realization thereof, as well as any fees, commissions and
other costs, Taxes (other than income taxes) and expenses, if any, incurred
by the Indenture Trustee in connection with its administration of the
Collateral Account (collectively, "Losses"). Promptly upon receipt of such
notification but, in any event, no later than the Delivery Date, Lessee shall
pay to the Indenture Trustee for deposit into the Collateral Account, an
amount equal to such Losses (net of any investment earnings).
(b) Lessee shall pay to the Indenture Trustee on the Delivery
Date, interest accrued on the Secured Certificates from and including the
last Payment Date (or, if none, the Certificate Closing Date), to, but
excluding, the Delivery Date. The Indenture Trustee shall deposit all
payments made by Lessee pursuant to this Section 18(b) in a non-interest
bearing account for payment to Certificate Holders on the first Payment Date.
In addition, Lessee will pay to the Indenture Trustee all amounts owed by
the Owner Trustee pursuant to clause (b) of the third paragraph of Section
2.02 of the Trust Indenture.
(c) [Intentionally Omitted.]
(d) [Intentionally Omitted.]
(e) [Intentionally Omitted.]
(f) On the Delivery Date immediately upon transfer of title to the
Aircraft to the Owner Trustee, the Indenture Trustee will transfer to Lessee
by wire transfer, in immediately available funds, cash equal to any amount
then remaining in the Collateral Account.
(g) Amounts payable by Lessee pursuant to this Section 18 shall be
paid to the Indenture Trustee at State Street Bank and Trust Company, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA No. 011-00-0028, Account
No. ▇▇▇▇-▇▇▇-▇, Attention: Corporate Trust Department, Reference:
Northwest/NW 1997 L, not later than 10:30 a.m., New York City time, by wire
transfer of immediately available funds in Dollars on the due date of such
payment. All amounts payable to Lessee pursuant to this Section 18 shall be
paid to Lessee in accordance with Schedule I hereto, not later than 10:30
a.m., New York City time, by wire transfer of immediately available funds in
Dollars on the due date of such payment.
(h) Each of the parties hereto agrees that, for Federal income tax
purposes, (A) Lessee shall be treated as the initial borrower with respect to
the Secured Certificates and shall report as income all interest and gains on
the Collateral Account and shall deduct as its
49
interest expense all interest paid or payable to each Pass Through Trustee
for this period in a manner consistent with a short-term loan to Lessee
maturing on the Delivery Date, and (B) the Owner Trustee shall be treated as
the borrower with respect to the Secured Certificates on and after the
Delivery Date.
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as
of the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Finance and
Assistant Treasurer
Address: U.S. Mail
---------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
-----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Finance and
Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
NORTHWEST AIRLINES CORPORATION,
Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Senior Vice President - Finance and
Treasurer
Address: U.S. Mail
---------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
-----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Finance and
Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
- Signature Page -
SUMITOMO BANK CAPITAL MARKETS,
INC.,
Owner Participant
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity, except
as otherwise provided herein, but solely as Pass
Through Trustee,
Pass Through Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity,
except as otherwise provided herein, but solely
as Subordination Agent,
Subordination Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address: ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and
Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I
Names and Addresses
-------------------
Lessee: Northwest Airlines, Inc.
U.S. Mail
---------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇)
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Overnight Courier
-----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ (A4010)
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Vice President-Finance and Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer
-------------
First Bank, N.A., Minneapolis
ABA No. ▇▇▇▇▇▇▇▇▇
Acct. No. 150250099440
Owner Participant: Sumitomo Bank Capital Markets, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Payments made to the Owner Participant as provided
in Section 3.06 of the Trust Indenture shall be
made to:
Chase Manhattan Bank
ABA No. ▇▇▇▇▇▇▇▇▇
Credit to: Sumitomo Bank Capital Markets, Inc.
Acct. No. 544778005
Ref: Northwest Airlines N512XJ
Indenture Trustee: State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer
-------------
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and Trust Company
Acct. No. ▇▇▇▇-▇▇▇-▇
Attn: Corporate Trust Department
Reference: Northwest/NW 1997 L
Owner Trustee: First Security Bank, National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
First Security Bank, National Association
ABA No. ▇▇▇-▇▇▇▇-▇▇
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1997 L
Loan Participant: State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I - PAGE 2
Subordination Agent: State Street Bank and Trust Company
of Connecticut, National Association
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I - PAGE 3
SCHEDULE II
Commitments
-----------
Interest Rate
Purchasers and Maturity Purchase Price
---------- ------------- --------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due
January 2, 2016 $10,568,876.29
1997-1B 7.248% Series B Secured Certificates due
January 2, 2013 $3,393,846.48
1997-1C 7.039% Series C Secured Certificates due
January 2, 2007 $1,990,500.02
Debt Portion $15,953,222.79
Owner Participant Equity Investment
----------------- -----------------
Sumitomo Bank Capital Markets, Inc. $5,146,777.21
SCHEDULE III
Pass Through Trust Agreements
-----------------------------
1. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1997-1A, dated as of September 25, 1997.
2. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1997-1B, dated as of September 25, 1997.
3. Pass Through Trust Agreement, dated as of June 3, 1996, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and State
Street Bank and Trust Company, as supplemented by Trust Supplement
No. 1997-1C, dated as of September 25, 1997.
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
----------------------------------------
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
--------------------
EXHIBIT A-1
ANNEX A [NW 1997 L]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings and shall be equally applicable to both the singular
and the plural forms of the terms herein defined. In the case of any
conflict between the provisions of this Annex A and the provisions of any
Operative Document, the provisions of such Operative Document shall control
the construction of such Operative Document. References to any agreement are
deemed to include such agreement as amended, modified or supplemented from
time to time.
"Acceptance Certificate" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee or
Indenture Trustee, as the case may be, actual knowledge of a Responsible
Officer in the Trust Office of the Owner Trustee or in the Corporate Trust
Office of the Indenture Trustee, as the case may be, and (ii) as it applies
to the Owner Participant, actual knowledge of a vice president or other
higher officer of the Owner Participant having responsibility for the
transactions contemplated by the Operative Documents.
"Affiliate" means, with respect to any person, any other person directly
or indirectly controlling, controlled by or under common control with such
person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies
of such person whether through the ownership of voting securities or by
contract or otherwise.
"Aircraft" means the Airframe to be delivered and leased under the Lease
(or any airframe from time to time substituted for such Airframe pursuant to
Section 10(a) of the Lease) together with the four Engines initially leased
under the Lease (or any engine substituted for either of such Engines
pursuant to the terms of the Lease), whether or not any of such initial or
substituted Engines may from time to time be installed on such initial or
substituted Airframe or may be installed on any other airframe or on any
other aircraft.
"Airframe" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified in
the initial Lease Supplement, which aircraft shall be leased by Lessor to
Lessee under the Lease and under such Lease Supplement, and any aircraft
(except Engines or engines from time to time installed thereon) which may
from time to time be substituted for such aircraft (except Engines or engines
from time to time installed thereon) pursuant to clause (ii) of the first
paragraph of Section 10(a) of the Lease; and (ii) any and all Parts (A) so
long as the same shall be incorporated or installed in or attached to such
aircraft (except Engines or engines from time to time installed thereon), or
(B) so long as title thereto shall remain vested in Lessor in accordance with
the terms of Section 8 of the Lease after removal from such aircraft (except
Engines or engines from time to time installed thereon); provided, however,
that at such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased under the
Lease in substitution for the Airframe pursuant to the applicable provisions
of the Lease, the replaced Airframe shall cease to be an Airframe under the
Lease.
"Amortization Amount" shall mean, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Date on the Amortization
Schedule.
"Amortization Schedule" shall mean the amortization schedule for the
Secured Certificates delivered pursuant to Section 2.02 of the Trust
Indenture. "Applicable Rate" means as of any date the weighted average of the
interest rates borne by the Secured Certificates then outstanding and, if no
Secured Certificates shall be outstanding, the Base Rate.
"Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement [NW 1997 L], dated as of May 1, 1998, between the
Initial Owner Participant and the Owner Participant, as such Assignment and
Assumption Agreement may be amended or supplemented from time to time
pursuant to the applicable provisions thereof.
"Average Life Date" for each Secured Certificate to be redeemed shall be
the date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Secured Certificate.
"Remaining Weighted Average Life" of such Secured Certificate, at the
redemption date of such Secured Certificate, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of each of the
products obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity date of
such Secured Certificate, by (ii) the number of days from and including the
redemption date to but excluding the scheduled payment date of such principal
installment; by (b) the then unpaid principal amount of such Secured
Certificate.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended,
or any subsequent legislation that amends, supplements or supersedes such
provisions.
"Base Rate" means the rate of interest announced publicly by Citibank,
N.A. in New York, New York from time to time as its base rate.
"Basic Rent" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) of the Lease as adjusted as provided in
Section 3(d) of the Lease but subject always to the provisions of Section
3(d)(v) of the Lease and, for any Renewal Term, Basic Rent determined
pursuant to Section 19 of the Lease.
"Basic Term" has the meaning specified in the Lease. "Beneficial
Interest" means the interest of the Owner Participant (or the Initial Owner
Participant, as the case may be) under the Trust Agreement.
ANNEX A-2
"▇▇▇▇ of Sale" means a full warranty ▇▇▇▇ of sale covering the Aircraft,
executed by Lessee in favor of the Owner Trustee, dated the Delivery Date,
specifically referring to the Airframe and each Engine, which ▇▇▇▇ of Sale
shall contain, among other things, a statement that such ▇▇▇▇ of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such ▇▇▇▇ of Sale, free and clear of all liens, encumbrances and
rights of others except Liens permitted by clause (v) of Section 6 of the
Lease.
"Business Day" means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized to close in the City of New
York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"Cash Equivalents" (i) on or prior to the Delivery Date, shall mean (a)
direct obligations of the United States or obligations fully guaranteed by
the United States, (b) commercial paper rated A-1/P-1 by S&P and Moody's,
respectively, or, if such ratings are unavailable, rated by any nationally
recognized rating organization in the United States equal to the highest
rating assigned by such rating organization, (c) investments in negotiable
certificates of deposit, time deposits, banker's acceptances, commercial
paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with
issuer ratings of at least B/C by Thomson Bankwatch, having maturities no
later than eight months following the date of such investment, (d) overnight
federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, or (e) overnight repurchase agreements
with respect to the securities described in clause (a) above entered into
with an office of a bank or trust company which is located in the United
States or any bank or trust company which is organized under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million, and (ii) after the Delivery Date,
shall mean the investments specified in Section 22(a) of the Lease.
"Certificate Closing Date" means September 25, 1997.
"Certificate Holder" shall mean any holder from time to time of one or
more Secured Certificates.
"Certificated Air Carrier" means a Citizen of the United States holding
a carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable
of carrying ten or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required to fall within
the purview of 11 U.S.C. Section 1110 or any analogous successor provision of
the Bankruptcy Code.
"Citizen of the United States" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation
of the United States of America enacted in substitution or replacement
therefor.
ANNEX A-3
"Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any
substantially similar program.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Account" means the deposit account established and
maintained pursuant to Section 2.16 of the Original Trust Indenture.
"Collateral Account Control Agreement" means that certain Collateral
Account Control Agreement [NW 1997 L], dated as of September 25, 1997, among
State Street Bank and Trust Company, the Indenture Trustee and the Owner
Trustee.
"Commitment" means the amount of the Owner Participant's participation
in Lessor's Cost for the Aircraft required to be made available or paid as
provided in Section 1(d) of the Participation Agreement.
"Consent and Agreement" means that certain Consent and Agreement
[NW 1997 L], dated as of May 1, 1998, executed by the Manufacturer, as the
same may be amended, modified or supplemented from time to time in accordance
with the applicable provisions thereof.
"Continuous Stay Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Contract Rights" means all of Lessee's right, title and interest in and
to Part H and Part J of the Manufacturer Support Agreement, as and to the
extent that the same relate to the warranties with respect to the Aircraft,
including, without limitation, (a) all claims for damages in respect of the
Aircraft arising as a result of any default by the Manufacturer under Part H
or Part J of the Manufacturer Support Agreement, including, without
limitation, all warranty, service life policy and indemnity provisions in
Part H and Part J of the Manufacturer Support Agreement in respect of the
Aircraft and all claims thereunder and (b) any and all rights of Lessee to
compel performance of the terms of Part H and Part J of the Manufacturer
Support Agreement in support thereof.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of the Owner Trustee located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, or such
other office at which the Owner Trustee's corporate trust business shall be
administered which the Owner Trustee shall have specified by notice in
writing to Lessee, the Indenture Trustee, the Owner Participant and each
Certificate Holder.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Department, or such other
office at which the Indenture Trustee's corporate
ANNEX A-4
trust business shall be administered which the Indenture Trustee shall have
specified by notice in writing to Lessee, the Owner Trustee, the Loan
Participants and each Certificate Holder.
"Debt" shall mean any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property,
goods or services.
"Debt Portion" means the amount specified as such on Schedule II to the
Participation Agreement.
"Debt Rate" shall mean, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to
the Trust Indenture.
"Default" (a) for purposes of the Operative Documents other than the
Trust Indenture, means a Lease Default and (b) for purposes of the Trust
Indenture, means any condition or event that with the giving of notice or the
lapse of time or both would become an Event of Default pursuant to Section
4.02 of the Trust Indenture or Lease Event of Default (excluding Lease Events
of Default relating to Excluded Payments).
"Delivery Date" means the date of the initial Lease Supplement for the
Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee under the Lease.
"Delivery Notice" means notice of the Aircraft's Delivery Date, given by
the Lessee as provided in Section 2 of the Participation Agreement and
including any notice with respect to a postponed Delivery Date given by
Lessee pursuant to Section 1(e) of the Participation Agreement.
"Depreciation Period" means the period commencing on the Delivery Date
and ending on December 31, 2005, or such earlier date as the Lease may be
terminated in accordance with the provisions thereof.
"Dollars" and "$" means the lawful currency of the United States of
America.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with a corporate trust
department of a depository institution with corporate trust powers organized
under the laws United States or any state thereof or the District of
Columbia, and whose deposits are insured by the Federal Deposit Insurance
Corporation, provided that such institution also has a combined capital and
surplus of at least $100,000,000 and a rating of A or better from the Thomson
Bank Watch.
"Eligible Institution" means a depository institution organized under
the laws of the United States or any one of the states thereof, or the
District of Columbia, or any domestic branch of a foreign bank, which in any
case at all times (a) has either (x) a long-term unsecured debt rating of Aa2
by Moody's or (y) a short-term certificate of deposit rating of P-1
ANNEX A-5
by Moody's, (b) has either (x) a long-term unsecured debt rating of at least
AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P
and (c) is a member of the Federal Deposit Insurance Corporation.
"Enforcement Date" shall have meaning specified in Section 4.03 of the
Trust Indenture.
"Engine" means (i) each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the initial Lease Supplement,
whether or not from time to time thereafter installed on the Airframe or
installed on any other airframe or on any other aircraft; and (ii) any engine
which may from time to time be substituted, pursuant to the terms of the
Lease, for either of such four engines, together in each case with any and
all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 8 of the Lease after removal
from such Engine; provided, however, that at such time as an engine shall be
deemed part of the property leased under the Lease in substitution for an
Engine pursuant to the applicable provisions of the Lease, the replaced
Engine shall cease to be an Engine hereunder. The term "Engines" means, as
of any date of determination, all Engines then leased under the Lease.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the
date of the Participation Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"Event of Default" (a) for purposes of the Trust Indenture, has the
meaning specified in Section 4.02 of the Trust Indenture and (b) for purposes
of the Operative Documents other than the Trust Indenture, means a Lease
Event of Default.
"Event of Loss" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the
loss of such property or of the use thereof due to the destruction of or
damage to such property which renders repair uneconomic or which renders such
property permanently unfit for normal use by Lessee (or any Sublessee) for
any reason whatsoever; (ii) any damage to such property which results in an
insurance settlement with respect to such property on the basis of a total
loss, or a constructive or compromised total loss; (iii) the theft or
disappearance of such property, or the confiscation, condemnation, or seizure
of, or requisition of title to, or use of, such property (other than a
requisition for use by the United States Government or any other government
of registry of the Aircraft, or any agency or instrumentality of any thereof)
which in the case of any event referred to in this clause (iii) (other than a
requisition of title) shall have resulted in the loss of possession of such
property by Lessee (or any Sublessee) for a period in excess of 180
consecutive days or, if earlier, until the end of the Term, or, in the case
of a requisition of title, the requisition of title shall not have been
reversed within 90 days from the date of such requisition of title or, if
earlier, at the end of the Term; (iv) as a result of any law, rule,
ANNEX A-6
regulation, order or other action by the Federal Aviation Administration or
other governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business
of air transportation shall have been prohibited for a period of 180
consecutive days, unless Lessee (or any Sublessee), prior to the expiration
of such 180 day period, shall have undertaken and shall be diligently
carrying forward all steps which are necessary or desirable to permit the
normal use of such property by Lessee (or such Sublessee), but in any event
if such use shall have been prohibited for a period of two consecutive years,
provided that no Event of Loss shall be deemed to have occurred if such
prohibition has been applicable to the entire U.S. registered fleet of
British Aerospace Avro 146-RJ85A aircraft of Lessee (or any Sublessee) and
Lessee (or a Sublessee), prior to the expiration of such two-year period,
shall have conformed at least one such aircraft in its fleet to the
requirements of any such law, rule, regulation, order or other action and
commenced regular commercial use of the same in such jurisdiction and shall
be diligently carrying forward, in a manner which does not discriminate
against the Aircraft in so conforming the Aircraft, all steps which are
necessary or desirable to permit the normal use of the Aircraft by Lessee (or
such Sublessee), provided, further that, notwithstanding any of the
foregoing, such prohibition shall constitute an Event of Loss if such use
shall have been prohibited for a period of three consecutive years or such
use shall be prohibited at the expiration of the Term; (v) the requisition
for use by the United States Government or any other government of registry
of the Aircraft or any instrumentality or agency of any thereof, which shall
have occurred during the Basic Term (or any Renewal Term) and shall have
continued for thirty (30) days beyond the Term, provided, however, that no
Event of Loss pursuant to this clause (v) shall exist if Lessor shall have
furnished to Lessee the written notice specified in Section 10(d) of the
Lease; and (vi) any divestiture of title to or interest in an Engine treated
as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss
with respect to the Aircraft shall be deemed to have occurred if an Event of
Loss occurs with respect to the Airframe.
"Excess Amount" shall have the meaning specified in Section 2.03(b) of
the Trust Indenture.
"Excluded Payments" shall mean (i) indemnity payments paid or payable by
Lessee to or in respect of the Owner Participant or the Owner Trustee in its
individual capacity, their respective Affiliates, successors and permitted
assigns and their directors, officers, employees, servants and agents
(collectively, the "Owner Indemnitees") pursuant to Sections 7(b), 7(c), 16
and 17 of the Participation Agreement, (ii) proceeds of public liability
insurance in respect of the Aircraft payable as a result of insurance claims
made, or losses suffered, by the Owner Trustee or the Indenture Trustee in
their respective individual capacities or by any of the Owner Indemnitees,
(iii) proceeds of insurance maintained with respect to the Aircraft by the
Owner Participant (whether directly or through the Owner Trustee) or any
other Owner Indemnitee and permitted under Section 11(e) of the Lease, (iv)
all payments required to be made under the Tax Indemnity Agreement by Lessee
and all payments of Supplemental Rent by Lessee in respect of any amounts
payable under the Tax Indemnity Agreement, (v) fees payable to the Owner
Trustee or the Indenture Trustee pursuant to the last sentence of Section
7(c) of the Participation Agreement, (vi) provided that the Secured
Certificates shall have been duly assumed by Lessee pursuant to Section 2.13
of the
ANNEX A-7
Trust Indenture, the amounts payable to the Owner Trustee pursuant to the
third sentence of Section 19(d) of the Lease plus all reasonable expenses
incurred by the Owner Trustee and the Owner Participant in connection with
such assumption, as applicable, (vii) any payment of the foregoing under the
Guarantee, (viii) interest accrued on any of the above, and (ix) any right to
enforce the payment of any amount described in clauses (i) through (viii)
above and the right to declare an Event of Default in respect of any of the
foregoing amounts.
"Expenses" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA ▇▇▇▇ of Sale" means a ▇▇▇▇ of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"Federal Aviation Act" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act
of 1958, as amended, or any subsequent legislation that amends, supplements
or supersedes such provisions.
"Federal Aviation Administration" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the
United States government succeeding to their functions.
"First Amendment to Trust Indenture" means that certain First Amendment
to Trust Indenture and Security Agreement [NW 1997 L], dated as of May 1,
1998, between Lessor and the Indenture Trustee, amending the Original Trust
Indenture.
"Foreign Air Carrier" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and
inspections for the Aircraft, Airframe and/or any Engine or engine to
standards which are approved by, or which are substantially equivalent to
those required by, the Federal Aviation Administration, the Civil Aviation
Authority of the United Kingdom, the Direction Generale de l'Aviation Civile
of the French Republic, the Luftfahrt Bundesamt of the Federal Republic of
Germany, the Rijflauchtraatdienst of the Kingdom of the Netherlands, the
Ministry of Transportation of Japan or the Federal Ministry of Transport of
Canada (and any agency or instrumentality of the applicable government
succeeding to the functions of any of the foregoing entities).
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Documents
or relating to the observance or performance of the obligations of any of the
parties to the Operative Documents.
ANNEX A-8
"Guarantee" means that certain Amended and Restated ▇▇▇▇▇▇▇▇▇ [▇▇ ▇▇▇▇ L],
dated as of May 1, 1998, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof, which Guarantee amended and restated in its entirety the
Original Guarantee.
"Guarantor" means Northwest Airlines Corporation, a Delaware corporation.
"Indemnitee" means (i) the Owner Trustee, in its individual capacity and
as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii) the
Owner Participant, (iv) the Trust Estate, (v) the Loan Participants and each
other Certificate Holder, (vi) the Subordination Agent, (vii) the Liquidity
Provider, (viii) the Pass Through Trustees, (ix) each Affiliate of the
Persons described in clauses (i) through (iv), inclusive, (x) each Affiliate
of the Persons described in clauses (vi), (vii) and (viii) inclusive, (xi)
the respective directors, officers, employees, agents and servants of each of
the Persons described in clauses (i) through (viii), inclusive, (xii) the
successors and permitted assigns of the Persons described in clauses (i)
through (iv), inclusive, and (xiii) the successors and permitted assigns of
the Persons described in clauses (v), (vi), (vii) and (viii) inclusive.
"Indenture Agreements" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Guarantee, the Bills of Sale and any other contract, agreement
or instrument from time to time assigned or pledged under the Trust Indenture.
"Indenture Default" means any event or condition that with the giving of
notice or the lapse of time or both would become an Indenture Event of
Default or Lease Event of Default (excluding Lease Events of Default related
to Excluded Payments).
"Indenture Event of Default" shall mean an "Event of Default" as defined
in clause (a) of the definition of "Event of Default". "Indenture Trustee"
means the Indenture Trustee under the Trust Indenture, and any entity which
may from time to time be acting as indenture trustee under the Trust
Indenture.
"Indenture Trustee Documents" means the Participation Agreement and the
Trust Indenture.
"Indenture Trustee Event" means either (i) the Secured Certificates
shall have become due and payable pursuant to Section 4.04(b) of the Trust
Indenture or (ii) the Indenture Trustee has taken action or notified Owner
Trustee that it intends to take action to foreclose the Lien of the Trust
Indenture or otherwise commence the exercise of any significant remedy under
the Trust Indenture or the Lease.
"Indenture Trustee's Liens" means any Lien which arises as a result of
(A) claims against the Indenture Trustee not related to its interest in the
Aircraft or the administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture
ANNEX A-9
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Documents to the extent such acts arise or
such failure arises from or constitutes gross negligence or willful
misconduct, (C) claims against the Indenture Trustee relating to Taxes or
Expenses which are excluded from the indemnification provided by Section 7 of
the Participation Agreement pursuant to said Section 7, or (D) claims against
the Indenture Trustee arising out of the transfer by the Indenture Trustee of
all or any portion of its interest in the Aircraft, the Trust Estate, the
Trust Indenture Estate or the Operative Documents other than a transfer of
the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V
of the Trust Indenture, or a transfer of the Aircraft pursuant to Section 15
of the Lease while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due pursuant to the Trust
Indenture.
"Initial Owner Participant" means Northwest Airlines, Inc., a Minnesota
corporation.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the Subordination
Agent.
"Law" shall mean (a) any constitution, treaty, statute, law, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of
the foregoing.
"Lease Agreement", "the Lease Agreement", "the Lease", or "the
Agreement", mean the Lease Agreement [NW 1997 L], dated as of May 1, 1998, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof and in accordance with the Trust Agreement and
the Trust Indenture, including, without limitation, supplementation thereof
by one or more Lease Supplements entered into pursuant to the applicable
provisions thereof.
"Lease Default" shall mean any event which with the giving of notice or
the lapse of time or both would become a Lease Event of Default.
"Lease Event of Default" has the meaning which the term "Event of
Default" has in the Lease.
"Lease Period Date" means July 2, 1998 and each succeeding January 2 and
July 2 to and including January 2, 2017, [April 27, 2017], and each
succeeding [October 27] and [April 27], to and including the last such date
in the Term.
"Lease Supplement" means a Lease Supplement, substantially in the form
of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant
to the terms of the Lease Agreement, and any subsequent Lease Supplement
entered into in accordance with the terms thereof.
"Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation.
ANNEX A-10
"Lessee Documents" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as it
relates to the Aircraft), the FAA ▇▇▇▇ of Sale, the ▇▇▇▇ of Sale, the
Purchase Agreement Assignment, the Assignment and Assumption Agreement and
the Tax Indemnity Agreement.
"Lessee Person" means Lessee, any sublessee, or any other user or Person
in possession of the Aircraft, any Engine, or any Part, and any Affiliate of
any of the foregoing, but shall not include the Owner Participant, the Owner
Trustee or any of their successors or assigns or any other Person claiming
from or through the Owner Participant or the Owner Trustee (except pursuant
to the Lease).
"Lessor Liens" has the meaning specified in the Lease.
"Lessor's Cost" for the Aircraft means the amount denominated as such in
Exhibit B to the Lease.
"Lien" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease, sublease, sub-sublease or security interest.
"Liquid Collateral" means all amounts and securities deposited from time
to time in the Collateral Account and all of the products, investments,
earnings and proceeds of the foregoing, including, but not limited to, all
proceeds of the investment or conversion thereof, voluntary or involuntary,
into cash, Cash Equivalents or other property, all rights to payment of any
and every kind, and other forms of obligations, and instruments and other
property which at any time constitute all or part or are included in the
proceeds of any of the foregoing.
"Liquidity Facilities" means the three Revolving Credit Agreements
between the Subordination Agent, as borrower, and the Liquidity Provider, and
any replacement thereof, in each case as the same may be amended, modified or
supplemented.
"Liquidity Provider" means Royal Bank of Canada, as Class A Liquidity
Provider, Class B Liquidity Provider and Class C Liquidity Provider under the
Liquidity Facilities, or any successor thereto.
"Loan Participant" means each Purchaser and its respective successors
and registered assigns, including any Certificate Holder.
"Loan Participant Liens" means any Lien which arises from acts or claims
against any Loan Participant not related to the transactions contemplated by
the Operative Documents.
"Loss Payment Date" has the meaning specified in Section 10(a) of the
Lease.
"Losses" has the meaning specified in Section 18 of the Participation
Agreement.
ANNEX A-11
"Majority in Interest of Certificate Holders" as of a particular date of
determination shall mean the holders of more than a majority in aggregate
unpaid Principal Amount of all Secured Certificates outstanding as of such
date (excluding any Secured Certificates held by the Owner Trustee or the
Owner Participant or any interests of the Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Secured Certificates then outstanding shall be held by the Owner Trustee or
the Owner Participant) or Lessee or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Secured Certificate, the
amount (as determined by an independent investment banker selected by Lessee
and reasonably acceptable to the Indenture Trustee and the Owner Participant)
by which (a) the present value of the remaining scheduled payments of
principal and interest from the redemption date to maturity of such Secured
Certificate computed by discounting each such payment on a semiannual basis
from its respective Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield exceeds (b) the
outstanding principal amount of such Secured Certificate plus accrued
interest. For purposes of determining the Make-Whole Amount, "Treasury
Yield" at the time of determination with respect to any Secured Certificate
means the interest rate (expressed as a semiannual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the
Average Life Date of such Secured Certificate and trading in the public
securities market either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States
Treasury securities, trading in the public securities markets, (A) one
maturing as close as possible to, but earlier than, the Average Life Date of
such Secured Certificate and (B) the other maturing as close as possible to,
but later than, the Average Life Date of such Secured Certificate, in each
case as published in the most recent H.15(519) or, if a weekly average yield
to maturity for United States Treasury securities maturing on the Average
Life Date of such Secured Certificate is reported on the most recent
H.15(519), such weekly average yield to maturity as published in such
H.15(519). "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable redemption date and
the "most recent H.15(519)" means the H.15(519) published prior to the close
of business on the third Business Day prior to the applicable redemption date.
"Make-Whole Termination Date" with respect to the Series A Secured
Certificates, means July 2, 2010; with respect to the Series B Secured
Certificates, means July 2, 2008; and with respect to the Series C Secured
Certificates, means October 2, 2003.
"Mandatory Document Terms" means the terms set forth on Schedule V to
the Original Participation Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule IV to
the Original Participation Agreement.
ANNEX A-12
"Manufacturer" means British Aerospace (Operations) Limited, a limited
company incorporated under the laws of England and Wales, and its successors
and assigns.
"Manufacturer Delivery" means the date the Aircraft was delivered by the
Manufacturer to Lessee, and accepted by Lessee, pursuant to the Purchase
Agreement.
"Manufacturer Documents" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"Manufacturer Support Agreement" means that certain Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgaged Property" shall have the meaning specified in Section 3.03 of
the Trust Indenture.
"Net Economic Return" shall have the meaning ascribed to such term in
paragraph 2 of Exhibit E to the Lease.
"Net Present Value of Rents" shall have the meaning ascribed to such
term in the Lease.
"Operative Documents" and "Operative Document" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement,
the Acceptance Certificate, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the
Secured Certificates, the ▇▇▇▇ of Sale, the FAA ▇▇▇▇ of Sale, the Purchase
Agreement (insofar as it relates to the Aircraft), the Guarantee, the
Residual Agreement, the Collateral Account Control Agreement, the Assignment
and Assumption Agreement, the Purchase Agreement Assignment and the Consent
and Agreement.
"Original Guarantee" means that certain Guarantee [NW 1997 L], dated as
of the Certificate Closing Date, made by the Guarantor, as such Guarantee may
have been amended or supplemented from time to time pursuant to the
applicable provisions thereof prior to the Delivery Date.
"Original Participation Agreement" means that certain Participation
Agreement [NW 1997 L], dated as of the Certificate Closing Date, among
Lessee, the Guarantor, the Purchasers, the Indenture Trustee, the
Subordination Agent, the Initial Owner Participant and Owner Trustee, as such
Participation Agreement was amended or supplemented from time to time prior
to the Delivery Date pursuant to the applicable provisions thereof.
"Original Trust Agreement" means that certain Trust Agreement [NW 1997 L],
dated as of the Certificate Closing Date, between the Initial Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed
ANNEX A-13
or as modified, amended or supplemented prior to the Delivery Date pursuant
to the applicable provisions thereof.
"Original Trust Indenture" means that certain Trust Indenture and
Security Agreement [NW 1997 L], dated as of the Certificate Closing Date,
between Lessor and the Indenture Trustee, as originally executed or as
modified, amended or supplemented in accordance with its terms but prior to
being amended by the First Amendment to Trust Indenture.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" shall have the meaning specified in the definition of
Excluded Payments herein.
"Owner Participant" shall mean the corporation executing the
Participation Agreement as the Owner Participant, and thereafter any Person
to which such corporation transfers all of its right, title and interest in
and to the Trust Agreement, the Trust Estate and the Participation Agreement,
to the extent permitted by Section 8.01 of the Trust Agreement and Section 8
of the Participation Agreement.
"Owner Participant Documents" means the Participation Agreement, the
Trust Agreement, the Assignment and Assumption Agreement, the Residual
Agreement and the Tax Indemnity Agreement.
"Owner Trustee" means the entity executing the Original Participation
Agreement as Owner Trustee and any entity appointed as successor Owner
Trustee pursuant to Section 9.01 of the Trust Agreement, and references to a
predecessor Owner Trustee in its individual capacity by name in the Operative
Documents shall include such successor Owner Trustee in its individual
capacity from and after such succession.
"Owner Trustee Documents" means the Participation Agreement, the Trust
Agreement, the Trust Supplement covering the Aircraft, the Lease, the Lease
Supplement covering the Aircraft, the Purchase Agreement Assignment, the
Residual Agreement, the Trust Indenture and the Secured Certificates.
"Participants" shall mean and include the Loan Participants and the
Owner Participant.
"Participation Agreement" means that certain Amended and Restated
Participation Agreement [NW 1997 L], dated as of May 1, 1998, among Lessee,
the Guarantor, the Owner Participant, the Purchasers, the Indenture Trustee,
the Subordination Agent and the Owner Trustee, as such Participation
Agreement may be amended or supplemented from time to time pursuant to the
applicable provisions thereof, which Participation Agreement amended and
restated in its entirety the Original Participation Agreement.
ANNEX A-14
"Parties" means the Owner Trustee, the Indenture Trustee and the
Participants.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
(a) complete Engines or engines, (b) any items leased by Lessee from a third
party (other than Lessor) and (c) cargo containers) which may from time to
time be incorporated or installed in or attached to the Airframe or any
Engine or so long as title thereto shall remain vested in Lessor in
accordance with Section 8 of the Lease after removal therefrom.
"Pass Through Certificates" means the pass through certificates to be
issued by the Pass Through Trustee in connection with the Overall
Transaction. "Pass Through Trust Agreement" means the pass through trust
agreement and each of the three separate pass through trust supplements
referred to on Schedule I to the Participation Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as trustee under each Pass
Through Trust Agreement, and each other person that may from time to time be
acting as successor trustee under any such Pass Through Trust Agreement.
"Past Due Rate" (A) with respect to the Secured Certificates, means the
rate per annum equal to 2% over the Debt Rate as in effect from time to time
and (B) for purposes of the Lease, means (i) with respect to the portion of
any payment of Rent that may be required by the Trust Indenture to be paid by
the Indenture Trustee to the Loan Participants, or the holders of any
outstanding Secured Certificates, the rate per annum equal to 2% over the
Debt Rate as in effect from time to time and (ii) with respect to the
remaining portion of any payment of Rent (and the entire amount of any
payment of Rent after the satisfaction and discharge of the Trust Indenture),
a rate per annum equal to 1% over the Base Rate.
"Payment Date" shall mean each January 2 and July 2, commencing on
January 2, 1998 (or, if any such day is not a Business Day, the immediately
succeeding Business Day) until the Secured Certificates have been paid in
full. "Permitted Lien" means any Lien referred to in clauses (i) through
(viii) of Section 6 of the Lease.
"Permitted Sublessee" means any entity domiciled in a country listed in
Exhibit F to the Lease.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
ANNEX A-15
"Principal Amount" with respect to a Secured Certificate means the
stated original principal amount of such Secured Certificate and, with
respect to all Secured Certificates, means the aggregate stated original
principal amounts of all Secured Certificates.
"Principal Amount Repayment Date" shall mean each Payment Date on which
any portion of the Principal Amount is due and payable in accordance with the
Amortization Schedule.
"Purchase Agreement" means that certain Sale and Purchase Agreement,
dated as of February 5, 1997, between the Manufacturer and Lessee relating to
the purchase by Lessee of the Aircraft (including the Manufacturer Support
Agreement), as originally executed or as modified, amended or supplemented in
accordance with the terms thereof, but only insofar as the foregoing relates
to the Aircraft.
"Purchase Agreement Assignment" means that certain Purchase Agreement
Assignment [NW 1997 L], dated as of May 1, 1998, between Lessee and Lessor,
as the same may be amended, supplemented or modified from time to time, with
a form of Consent and Agreement to be executed by the Manufacturer attached
thereto.
"Purchasers" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"QIB" shall have the meaning specified in Section 2.08 of the Trust
Indenture.
"Rating Agencies" means collectively, at any time, each nationally
recognized agency which shall have been requested to rate the Pass Through
Certificates and which shall then be rating the Pass Through Certificates.
The initial Rating Agencies shall be S&P and ▇▇▇▇▇'▇. "Rating Agency
Confirmation" means, with respect to any Operative Document that is to be
modified in any material respect on the Delivery Date, a written confirmation
from each of the Rating Agencies that the use of such Operative Document with
such modifications would not result in (i) a reduction of the rating for any
class of Pass Through Certificates below the then current rating for such
class of Pass Through Certificates or (ii) a withdrawal or suspension of the
rating of any class of Pass Through Certificates.
"Related Indemnitee Group" means, with respect to any Indemnitee, any
officer, director, servant, employee, agent or Affiliate thereof.
"Renewal Term" has the meaning specified in the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Replacement Airframe" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
ANNEX A-16
"Replacement Engine" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"Residual Agreement" means that certain Agreement (N512XJ), dated as of
May 1, 1998, among the Manufacturer, the Owner Participant and the Owner
Trustee.
"Responsible Officer" means with respect to the Owner Trustee, a
responsible officer in the Trust Office of the Owner Trustee (including,
without limitation, any authorized officer in the Trust Office of the Owner
Trustee), and with respect to the Indenture Trustee, a responsible officer in
the Corporate Trust Office of the Indenture Trustee.
"S&P" means Standard & Poor's Ratings Group.
"Scheduled Delivery Date" means the delivery date specified in the
Delivery Notice pursuant to Section 2 of the Participation Agreement.
"Section 1110 Period" shall have the meaning specified in Section
4.04(a) of the Trust Indenture.
"Secured Certificates" shall mean and include any Secured Certificates
issued under the Trust Indenture, and issued in exchange therefor or
replacement thereof.
"Secured Obligations" shall have the meaning specified in Section 2.06
of the Trust Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Holder" shall have the meaning specified in Section 2.15(c) of
the Trust Indenture.
"Series A" or "Series A Secured Certificates" means Secured Certificates
issued and designated as "Series A" under the Trust Indenture, in the
Principal Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series A."
"Series B" or "Series B Secured Certificates" means Secured Certificates
issued and designated as "Series B" under the Trust Indenture, in the
Principal Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series B."
"Series C" or "Series C Secured Certificates" means Secured Certificates
issued and designated as "Series C" under the Trust Indenture, in the
Principal Amount and maturities and bearing interest as specified in Schedule
I to the Trust Indenture under the heading "Series C."
"Special Purchase Price" means the amount denominated as such in Exhibit
B to the Lease.
ANNEX A-17
"State Street" means State Street Bank and Trust Company, a
Massachusetts trust company, not in its capacity as Indenture Trustee under
the Trust Indenture, but in its individual capacity.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including the last day of the Basic Term, shall mean, but subject
always to the provisions of Section 3(d)(v) of the Lease, the amount
determined by multiplying Lessor's Cost for the Aircraft by the percentage
specified in Exhibit C to the Lease opposite the Stipulated Loss Value Date
with respect to which the amount is determined (as such Exhibit C may be
adjusted from time to time as provided in Section 3(d) of the Lease and in
Section 7 of the Tax Indemnity Agreement). "Stipulated Loss Value" as of any
date after the last day of the Basic Term shall be the amount determined as
provided in Section 19(a) of the Lease.
"Sublease" means any sublease permitted by the terms of Section 7(b)(x)
of the Lease.
"Sublessee" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the
terms of a Sublease which is then in effect pursuant to Section 7(b)(x) of
the Lease.
"Subordination Agent" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor
thereto.
"Successor Residual Agreement" has the meaning specified in the Lease.
"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Lessee Document to or on behalf of Lessor
or any other Person, (b) amounts payable by Lessor pursuant to clause (b) of
the third paragraph of Section 2.02 of the Trust Indenture, (c) Lessor's pro
rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Lessee under the Pass Through Trust Agreements, and
(d) Lessor's pro rata share of all compensation and reimbursement of expenses
and disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by
the Subordination Agent in connection with the transactions contemplated by
the Intercreditor Agreement. As used herein, "Lessor's pro rata share" means
as of any time a fraction, the numerator of which is the principal balance
then outstanding of Secured Certificates and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as
such term is defined in the Intercreditor Agreement).
"Tax Indemnitee" means (i) the Owner Participant, the Owner Trustee, in
its individual capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Trustee, (ii) the respective Affiliates, successors and
permitted assigns of each of the entities described in the preceding clause
(i), and (iii) the Trust Indenture Estate.
ANNEX A-18
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
[NW 1997 L], dated as of May 1, 1998, between the Owner Participant and
Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Taxes" means any and all fees (including, without limitation, license,
recording, documentation and registration fees), taxes (including, without
limitation, income, gross receipts, sales, rental, use, turnover, value
added, property (tangible and intangible), excise and stamp taxes), license,
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, together with any and all penalties, fines, additions to tax and
interest thereon (each, individually a "Tax").
"Term" means the Basic Term and, if actually entered into, any Renewal
Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date through
and including the last day of the Basic Term, means, but subject always to
the provisions of Section 3(d)(v) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in
Exhibit D to the Lease opposite the Termination Date with respect to which
the amount is determined (as such Exhibit D may be adjusted from time to time
as provided in Section 3(d) of the Lease and in Section 7 of the Tax
Indemnity Agreement).
"Transaction Expenses" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the Owner
Participant, the Pass Through Trustee, the Subordination Agent and the
Indenture Trustee in connection with the transactions contemplated by the
Participation Agreement, the other Operative Documents, the Pass Through
Trust Agreements, the Intercreditor Agreement, the Liquidity Facilities and
the Underwriting Agreement (except, in each case, as otherwise provided
therein) including, without limitation:
(1) the reasonable and actual fees, expenses and disbursements of
(A) ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, special counsel for the Pass Through Trustee
and the Indenture Trustee, (B) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the
Owner Trustee, (C) Shearman & Sterling, special counsel for the Underwriters,
and (D) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City, Oklahoma;
(2) the initial fees and reasonable and actual disbursements of
the Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual disbursements of the
Indenture Trustee under the Trust Indenture;
(4) the initial fees and expenses of the Liquidity Provider, the
Pass Through Trustee and the Subordination Agent;
ANNEX A-19
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of the
Aircraft;
(7) the reasonable fees, expenses and disbursements of Thelen,
Marrin, ▇▇▇▇▇▇▇ & Bridges LLP, special counsel to the Owner Participant, such
fees not to exceed the amount previously agreed to by the Owner Participant
and Lessee;
(8) the reasonable fees, expenses and disbursements of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, special counsel for
Lessee;
(9) the costs of filing and recording documents with the FAA and
filing Uniform Commercial Code statements in the United States;
(10) the reasonable fees, expenses and disbursements of Powell,
Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel to the Liquidity Provider;
(11) the reasonable fees, expenses and disbursements of Vedder,
Price, ▇▇▇▇▇▇▇ & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements of
▇▇▇▇▇▇▇ and ▇▇▇▇▇ Financial Corporation.
"Transactions" means the transactions contemplated by the Participation
Agreement and the other Operative Documents.
"Trust Agreement" means that certain Amended and Restated Trust
Agreement [NW 1997 L], dated as of May 1, 1998, between the Owner Participant
and First Security Bank, National Association, in its individual capacity, as
originally executed or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the
applicable provisions thereof, which Trust Agreement amended and restated in
its entirety the Original Trust Agreement and continued the trusts thereby
created.
"Trust Agreement and Indenture Supplement" or "Trust Supplement" means a
supplement to the Trust Agreement and to the Trust Indenture, 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
the Trust Agreement. The initial Trust Agreement and Indenture Supplement
shall be dated the Delivery Date.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
ANNEX A-20
"Trust Indenture", "the Trust Indenture", "Indenture", and "the
Indenture" shall mean the Original Trust Indenture, as originally executed or
as modified, amended or supplemented in accordance with its terms (including,
without limitation, by the First Amendment to Trust Indenture).
"Trust Indenture Estate" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, excluding Excluded Payments.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor and the
underwriters named therein.
"United States" or "U.S." means the United States of America.
"U.S. Air Carrier" means any Certificated Air Carrier as to which there
is in force an air carrier operating certificate issued pursuant to Part 121
of the regulations under the Federal Aviation Act, or which may operate as an
air carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"Wet Lease" means any arrangement whereby the Lessee (or any Sublessee)
agrees to furnish the Airframe and Engines or engines installed thereon to a
third party pursuant to which such Airframe and Engines or engines (i) shall
be operated solely by regular employees of Lessee (or any Sublessee)
possessing all current certificates and licenses that would be required under
the Federal Aviation Act or, if the Aircraft is not registered in the United
States, all certificates and licenses required by the laws of the
jurisdiction of registry, for the performance by such employees of similar
functions within the United States of America or such other jurisdiction of
registry (it is understood that cabin attendants need not be regular
employees of Lessee (or any Sublessee)) and (ii) shall be maintained by
Lessee (or any Sublessee) in accordance with its normal maintenance practices.
ANNEX A-21
EXHIBIT R
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
Section 7(b) - General Tax Indemnity
[Intentionally Omitted.]
EXHIBIT R-1
EXHIBIT S
TO PARTICIPATION
AGREEMENT
[NW 1997 L]
Section 7(c) - General Indemnity
[Intentionally Omitted.]
EXHIBIT S-1