Exhibit 99(b)
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PARTICIPATION AGREEMENT
[NW 1997 G]
DATED AS OF
SEPTEMBER 25, 1997
AMONG
NORTHWEST AIRLINES, INC.,
LESSEE AND INITIAL OWNER PARTICIPANT,
NORTHWEST AIRLINES CORPORATION,
GUARANTOR,
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
N507XJ
TO BE LEASED TO NORTHWEST AIRLINES, INC.
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INDEX TO PARTICIPATION AGREEMENT
Page
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SECTION 1. Participations in Lessor's Cost of the Aircraft. . . . . . . . 4
SECTION 2. Lessee's Notice of Delivery Date . . . . . . . . . . . . . . . 9
SECTION 3. Instructions to the Owner Trustee. . . . . . . . . . . . . . . 9
SECTION 4. Certificate Closing Conditions . . . . . . . . . . . . . . . . 9
(a) Conditions Precedent to the Certificate Closing . . . . . 9
(b) Certificate Closing Conditions Precedent to the
Obligations of Lessee and the Guarantor . . . . . . . . .14
SECTION 5. Delivery Date Closing Conditions . . . . . . . . . . . . . . .16
(a) Conditions Precedent to the Delivery Date Closing . . . .16
(b) Conditions Precedent to the Obligations of Lessee
and the Guarantor . . . . . . . . . . . . . . . . . . . .24
SECTION 6. Extent of Interest of Certificate Holders. . . . . . . . . . .26
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities . . . . . . . . . . . . . . . . . . . .26
(a) Representations and Warranties. . . . . . . . . . . . . .26
(b) General Tax Indemnity . . . . . . . . . . . . . . . . . .30
(c) General Indemnity . . . . . . . . . . . . . . . . . . . .30
(d) Income Tax. . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 8. Representations, Warranties and Covenants. . . . . . . . . . .30
SECTION 9. Reliance of Liquidity Provider . . . . . . . . . . . . . . . .45
SECTION 10. Other Documents. . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 11. Certain Covenants of Lessee. . . . . . . . . . . . . . . . . .46
SECTION 12. Owner for Federal Tax Purposes . . . . . . . . . . . . . . . .46
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction. . . . .47
SECTION 14. [RESERVED.]. . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 17. Refinancings . . . . . . . . . . . . . . . . . . . . . . . . .49
(i)
Page
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SECTION 18. Collateral Account . . . . . . . . . . . . . . . . . . . . . .51
(ii)
APPENDICES
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Appendix A - Definitions
SCHEDULES
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SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
SCHEDULE IV - Mandatory Economic Terms
SCHEDULE V - Mandatory Document Terms
EXHIBITS
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Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B - Form of Purchase Agreement Assignment
Exhibit C - Form of Lease Agreement
Exhibit D-1 - Form of Certificate Closing Date Opinion of Xxxxxxx Xxxxxxx
& Xxxxxxxx, special counsel for Lessee and the Guarantor
Exhibit D-2 - Form of Certificate Closing Date Opinion of Cadwalader,
Xxxxxxxxxx & Xxxx, special counsel for Lessee and the
Guarantor
Exhibit D-3 - Form of Certificate Closing Date Opinion of Lessee's Legal
Department
Exhibit E - Form of Certificate Closing Date Opinion of Ray, Xxxxxxx &
Xxxxxxx, special counsel for the Owner Trustee
Exhibit F - Form of Certificate Closing Date Opinion of Xxxxxxx, Xxxx &
Xxxxx LLP, special counsel for the Indenture Trustee
Exhibit G-1 - Form of Certificate Closing Date Opinion of Powell,
Goldstein, Xxxxxx & Xxxxxx LLP, special counsel for the
Liquidity Provider
Exhibit G-2 - Form of Certificate Closing Date Opinion of in-house counsel
for the Liquidity Provider
Exhibit H - Form of Certificate Closing Date Opinion of Xxxxxxx, Xxxx &
Xxxxx LLP, special counsel for the Pass Through Trustee
Exhibit I-1 - Form of Delivery Date Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx,
special counsel for Lessee and the Guarantor
Exhibit I-2 - Form of Delivery Date Opinion of Cadwalader, Xxxxxxxxxx &
Xxxx, 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, Xxxxxxxx &
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, Xxxxxxx & Xxxxxxx,
special counsel for the Owner Trustee
Exhibit L-1 - Form of Delivery Date Opinion of special counsel for the
Owner Participant
Exhibit L-2 - Form of Delivery Date Opinion of in-house counsel for the
Owner Participant
(iii)
Exhibit M - Form of Delivery Date Opinion of Xxxxx & Xxxxxxx P.C.
Exhibit N - Form of Delivery Date Opinion of Xxxxxxx, Xxxx & Xxxxx LLP,
special counsel for the Indenture Trustee
Exhibit O-1 - Form of Delivery Date Opinion of Powell, Goldstein, Xxxxxx &
Xxxxxx 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, Xxxxxxxxxx &
Xxxx, special counsel for Lessee, as to Section 1110 of the
U.S. Bankruptcy Code
Exhibit Q - Form of Delivery Date Opinion of Xxxxxxx, Xxxx & Xxxxx LLP,
special counsel for the Pass Through Trustee
(iv)
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT [NW 1997 G] dated as of September 25,
1997, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"
and the "INITIAL OWNER PARTICIPANT"), (ii) NORTHWEST AIRLINES CORPORATION, a
Delaware corporation (the "GUARANTOR"), (iii) 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), (iv) 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"), (v) 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 (vi) 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");
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
is to be delivered by the Manufacturer to Lessee and which is the subject of
this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Initial Owner Participant is entering into a Trust Agreement [NW
1997 G], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "TRUST
AGREEMENT", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the Trust
Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for
the use and benefit of the Initial Owner Participant;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Indenture Trustee and the Owner Trustee are entering into a Trust
Indenture and Security Agreement [NW 1997 G], dated as of the date hereof (said
Trust Indenture and Security Agreement, as the same may be amended or
supplemented from time to time, being herein called the "TRUST INDENTURE", such
term to include, unless the context otherwise requires, the Trust Supplement
referred to below) pursuant to which the Owner Trustee will issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"SECURED CERTIFICATES",
and individually, a "SECURED CERTIFICATE") in three series, which Secured
Certificates are to be secured by the 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 Guarantor is entering into a Guarantee [NW 1997 G], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of Lessee under the Operative Documents (the "GUARANTEE");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of the
Pass Through Trust Supplements set forth in Schedule III hereto (collectively,
the "PASS THROUGH TRUST AGREEMENTS"), concurrently with the execution and
delivery of this Agreement, three separate grantor trusts (collectively, the
"PASS THROUGH TRUSTS" and, individually, a "PASS THROUGH TRUST") will be created
to facilitate certain of the transactions contemplated hereby, including,
without limitation, the issuance and sale by each Pass Through Trust of pass
through certificates pursuant thereto (collectively, the "CERTIFICATES");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
on the 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, concurrently with the execution and delivery of this
Agreement, (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 will enter into the Intercreditor
Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated hereby,
Lessee and the Guarantor have entered into the Underwriting Agreement, dated as
of September 16, 1997, among Lessee, the Guarantor and the several underwriters
named therein (the "UNDERWRITING AGREEMENT");
WHEREAS, subject to the terms and conditions herein set forth, on the
Delivery Date (as hereinafter defined):
(i) Lessee and the Owner Trustee will enter into a Purchase
Agreement Assignment [NW 1997 G], dated as of the Delivery Date (herein
called the "PURCHASE AGREEMENT ASSIGNMENT"), substantially in the form of
EXHIBIT B hereto, whereby Lessee
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assigns to the Owner Trustee certain rights and interests of Lessee under
the Purchase Agreement with respect to the Aircraft;
(ii) the Manufacturer will have executed the Consent and Agreement
[NW 1997 G] (herein called the "CONSENT AND AGREEMENT"), substantially in
the form attached to the form of Purchase Agreement Assignment (herein
called the "CONSENT AND AGREEMENT");
(iii) the Owner Trustee shall execute and deliver a Trust and
Indenture Supplement substantially in the form of EXHIBIT A to the Trust
Indenture (the "TRUST SUPPLEMENT") covering the Aircraft, supplementing the
Trust Agreement and the Trust Indenture;
(iv) the Owner Trustee and Lessee will enter into the Lease
Agreement [NW 1997 G], dated as of the Delivery Date and substantially in
the form of EXHIBIT C hereto (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 Xxxx 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 G], dated as of the Delivery Date (the "TAX
INDEMNITY AGREEMENT");
WHEREAS, pursuant to the terms of the Trust Agreement, the Owner
Trustee will be authorized and directed by the Initial Owner Participant to
execute and deliver the Trust Indenture for the benefit of the Certificate
Holders, pursuant to which the Owner Trustee agrees, among other things, (A) to
deposit, mortgage and pledge with the Indenture Trustee, as part of the Trust
Indenture Estate, all of the Trust Estate other than Excluded Payments and (B)
on the Certificate Closing Date, to issue the Secured Certificates, the proceeds
of the sale of which will be held by the Indenture Trustee on behalf of the
Owner Trustee in the Collateral Account until released in accordance with the
terms hereof;
WHEREAS, on the Delivery Date, pursuant to and subject to the terms
and conditions of this Agreement, the Purchase Agreement Assignment and the
Bills 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;
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NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a)
PARTICIPATION BY PASS THROUGH TRUSTEES AND TRANSFER OF FUNDS. Subject to the
terms and conditions of this Agreement, the Pass Through Trustee for each Pass
Through Trust agrees to finance, in part, the Owner Trustee's payment of
Lessor's Cost for the Aircraft by paying to the Owner Trustee the aggregate
purchase price of the Secured Certificates being issued to such Pass Through
Trustee as set forth on SCHEDULE II opposite the name of such Pass Through
Trust. The Pass Through Trustees shall make such payments to the Indenture
Trustee on behalf of the Owner Trustee by transferring to the account of the
Indenture Trustee at State Street Bank and Trust Company, 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, ABA No. 011-00-0028, Account No. 0000-000-0,
Attention: Corporate Trust Department, Reference: Northwest/NW 1997 G, not
later than 9:30 a.m., New York City time, on the Certificate Closing Date in
immediately available funds in Dollars, the amount set forth opposite the name
of such Pass Through Trust on SCHEDULE II hereto. On the Certificate Closing
Date, the Indenture Trustee shall, on behalf of the Owner Trustee, deposit by
wire transfer or intra-bank transfer, the amounts received by it pursuant to the
preceding sentence, which amounts shall constitute the Debt Portion set forth on
SCHEDULE II hereto, in the Collateral Account pursuant to the Trust Indenture.
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, shall issue, pursuant to Article II of the Trust Indenture, to the
Subordination Agent on behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Secured Certificates of the maturity and aggregate principal
amount, bearing the interest rate and for the purchase price set forth on
SCHEDULE II hereto opposite the name of such Pass Through Trust.
On the Certificate Closing Date, concurrently with the events
specified in this Section 1(a), the parties hereto shall execute and deliver, to
the extent they are parties thereto, and consent to the execution and delivery
of (if they are not parties thereto), the Trust Indenture and the other
documents listed in Section 4(a)(iii) hereof.
(b) TRANSFER OF BENEFICIAL INTEREST. If on a date prior to the
Delivery Date, Lessee shall have identified an Owner Participant ready, willing
and able to acquire the Beneficial Ownership Interest of the Initial Owner
Participant, in consideration for such Owner Participant's agreement to
participate in Lessor's Cost of the Aircraft on the Delivery Date, the Initial
Owner Participant shall transfer its Beneficial Interest to such Owner
Participant on such date (the "TRANSFER DATE"). On the Transfer Date, the
document amendments contemplated by Section 1(c) below (subject to the
limitations set forth in such Section) shall be effected and such amended
documents delivered.
(c) AMENDMENTS ON DELIVERY DATE OR TRANSFER DATE. (i) Upon any
transfer by the Initial Owner Participant of its Beneficial Interest on the
Delivery Date (as contemplated by Section 1(d)(i) hereof, (or, if earlier, the
Transfer Date), the parties hereto shall enter into amendments and restatements
of the Trust Agreement and this Agreement and, on the Delivery
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Date, the Trust Indenture, which amendments and restatements shall reflect such
changes as shall have been requested by the Owner Participant, agreed to by
Lessee and, if modified in any material respect, as to which Rating Agency
Confirmation shall have been obtained from each Rating Agency by Lessee (to be
delivered by Lessee to the Pass Through Trustee on or before the Delivery Date
or the Transfer Date, as the case may be); PROVIDED, HOWEVER, that in any event
such amended and restated documents shall not vary the Mandatory Economic Terms
and shall contain the Mandatory Document Terms.
Lessee agrees to furnish to each Liquidity Provider and to Powell,
Goldstein, Xxxxxx & Xxxxxx LLP (the initial Liquidity Provider's counsel) at its
Atlanta, Georgia office, Attention: Xxxxx X. Xxxxxxxx, as soon as practicable
but in no event less than three (3) Business Days prior to the estimated
Delivery Date (or, if earlier, the estimated Transfer Date), true and complete
copies of drafts of any such amended and restated Participation Agreement and
amended and restated Trust Agreement and, in no event less than three (3)
Business Days prior to the estimated Delivery Date, true and complete copies of
drafts of any such amended and restated Trust Indenture. Lessee further agrees
to furnish to each Liquidity Provider and to the counsel identified in the
preceding sentence (i) each and every subsequent draft of such documents and
(ii) promptly following the execution thereof, true and complete copies of such
documents.
(ii) The schedule of principal payments on the Secured Certificates
set forth in Schedule I to the Trust Indenture and Schedule I to each Secured
Certificate on the Certificate Closing Date have been calculated based upon a
hypothetical owner's economic return and certain assumptions regarding the
Delivery Date, Transaction Costs, tax law, Basic Term and certain other items
(the "ASSUMPTIONS"). If the Initial Owner Participant transfers its Beneficial
Interest to an Owner Participant on the Delivery Date (as contemplated by
Section 1(d)(i) hereof (or, if earlier, the Transfer Date), then, no later than
20 days following the Delivery Date (the "REOPTIMIZATION DATE"), the Owner
Trustee may elect to amend Schedule I to the Trust Indenture and such Schedules
to each Secured Certificate to reflect the actual Net Economic Return and any
changes to the Assumptions. In addition, the Owner Trustee may prepay on the
Reoptimization Date part of the Series C Secured Certificates. 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. If the Reoptimization Date occurs
later than the Delivery Date, Lessee shall cause any required filing and
recording of the affected documents with the FAA to be effected on the
Reoptimization Date.
(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
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Aircraft as provided below, (ii) unless previously transferred on the Transfer
Date, the Initial Owner Participant agrees to transfer its Beneficial Interest
to the Owner Participant in consideration for the Owner Participant's
participation in Lessor's Cost of the Aircraft through an investment in the
Trust Estate in an amount equal to the amount to be set forth in an amended
and/or restated Participation Agreement to be entered into on the Delivery Date
(or, if earlier, the Transfer Date), and (iii) Lessee shall sell the Aircraft to
the 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.
(ii) NO OBLIGATION TO INCREASE COMMITMENTS; DELAYED DELIVERY. (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 2:00 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 2:00 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 such
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 Operative Documents shall not be executed
and delivered by the respective parties thereto and/or 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, the Cut-Off Date, or (ii) Lessee has notified the
Owner Trustee (with a copy to the Owner Participant) prior to 2:00 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 the Cut-Off Date, whereupon the Owner Participant's Commitment
hereunder shall
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terminate. On such third Business Day (or such earlier date) or the Cut-Off
Date, 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
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 2:00 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.
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) POSTPONEMENT OF DELIVERY DATE. (i) If no Owner Participant
has committed to participate in the transactions contemplated hereby or an Owner
Participant shall for any reason fail or refuse to make the full amount of its
Commitment available in accordance with the terms of Section 1(d) hereof on the
Scheduled Delivery Date, Lessee shall endeavor to identify another equity
investor to whom it can assign its Beneficial Interest. If Lessee identifies an
equity investor, Lessee shall assign its interest in the Trust Estate as
provided above. In case of any such conveyance (but subject to the satisfaction
of the conditions precedent specified in an amendment hereto), the Indenture
Trustee shall release the Debt Portion or such lesser amount as may then be held
in the Collateral Account for application to the payments contemplated in the
last sentence of Section 1(d)(i) hereof. Notwithstanding the foregoing and for
the avoidance of doubt, it is understood and agreed that if the Manufacturer
Delivery shall have occurred and for any reason Lessee does not enter into the
Lease with the Owner Trustee on or prior to the Cut-Off Date, the Indenture
Trustee and the Pass Through Trustee agree that Lessee shall assume not later
than the Determination Date all of the obligations of the Owner Trustee under
the Secured Certificates upon satisfaction of the requirements set forth in
Sections 5(a)(vi), (vii)(A) and (B), (viii), (ix), (xi), (xii), (xv), (xvi),
(xvii), (xviii), (xx), (xxiii), (xxiv) and (xxv) hereof, as the same may be
modified by the provisions of Section 8(x) hereof and Section 2.13 of the Trust
Indenture and as otherwise necessary to reflect Lessee holding title to the
Aircraft and a full recourse secured aircraft financing of Lessee. In
connection with such assumption, each of the Owner Participant, the Owner
Trustee, the Indenture Trustee and Lessee agrees to execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, releasing the Owner Participant and the Owner
Trustee from all future obligations in respect of the Secured Certificates and
the Trust Indenture and all such other
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actions as are reasonably necessary to permit such assumption by Lessee. Upon
the date Lessee assumes the Secured Certificates, the Indenture Trustee shall
release the Debt Portion or such lesser amount as may then be held in the
Collateral Account to Lessee.
(ii) RELEASE OF OBLIGATIONS. If (x) the Manufacturer Delivery
shall not have occurred on or prior to the Prepayment Date, (y) (I) the
Manufacturer Delivery shall have occurred, (II) the Delivery Date shall not have
occurred on or prior to the Cut-Off Date and (III) Lessee shall not have assumed
the Secured Certificates by the Determination Date, or (z) (i) a Triggering
Event shall have occurred on or prior to the Prepayment Date, (ii) the Delivery
Date shall not have occurred and (iii) Lessee shall not have assumed the Secured
Certificates, then, in such event, the Owner Trustee shall not purchase the
Aircraft from Lessee, and the parties to the Operative Documents shall have no
further obligations or liabilities under any of said Operative Documents with
respect to the Aircraft, including the obligation of the Owner Participant to
participate in the payment of Lessor's Cost of the Aircraft, and such documents
shall terminate and have no further force or effect with respect to the
Aircraft; PROVIDED, HOWEVER, that (I) in the case of clause (x) above, Lessee
shall provide no later than the Prepayment Date notice of prepayment to the
Indenture Trustee and the Secured Certificates shall be prepaid on the 15th day
following the Prepayment Date as provided in Section 2.10(c) of the Trust
Indenture and Section 18(c) hereof, (II) in the case of clause (y) above, Lessee
shall provide no later than the Determination Date notice of prepayment to the
Indenture Trustee and the Secured Certificates shall be prepaid on the 15th day
after the Determination Date as provided in Section 2.10(d) of the Trust
Indenture and Section 18(d) hereof, and (III) in the case of clause (z) above,
Lessee shall provide no later than the date of occurrence of the Triggering
Event notice of prepayment to the Indenture Trustee and the Secured Certificates
shall be prepaid on the 15th day following the occurrence of such Triggering
Event as provided in Section 2.10(e) of the Trust Indenture and Section 18(e)
hereof; and PROVIDED FURTHER, that (i) Lessee's obligation to indemnify such
parties to the extent provided in such documents, shall not be diminished or
modified in any respect and (ii) the obligations of the Owner Trustee, the
Indenture Trustee and Lessee to return funds and pay interest, costs, expenses
and other amounts thereon or in respect thereof as provided in Section 1(d) and
Section 18 hereof shall continue.
(iii) 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 the Cut-Off Date)
for any reason, other than pursuant to Section 1(e)(i) hereof, 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 Delivery Date for the Aircraft, which Delivery Date 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
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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 Initial Owner
Participant agrees that Pass Through Trustee's payments to the Owner Trustee in
accordance with the terms of Section 1(a) shall constitute, subject to
satisfaction or waiver of the conditions set forth in Section 4(a), without
further act, authorization and direction by the Initial Owner Participant to the
Owner Trustee on the Certificate Closing Date:
(i) to borrow from the Pass Through Trustee and to execute and
deliver to the Subordination Agent on behalf of the Pass Through Trustee
for each of the Pass Through Trusts a principal amount of Secured
Certificates bearing the interest rate set forth opposite the name of such
Pass Through Trust on Schedule II hereto, which Secured Certificates shall
be in the principal amounts set forth on Schedule II hereto, pursuant
hereto and to the Trust Indenture; and
(ii) to take such other action as may be required to be taken by
the Owner Trustee on the Certificate Closing Date by the terms of any
Operative Document.
SECTION 4. CERTIFICATE CLOSING CONDITIONS. (a) CONDITIONS
PRECEDENT TO THE CERTIFICATE CLOSING. It is agreed that the obligations of each
of the Pass Through Trustee, the Initial Owner Participant, the Indenture
Trustee and the Subordination Agent to enter into the transactions to be
consummated on the Certificate Closing Date are subject to the satisfaction (or
waiver by such party) prior to or on the Certificate Closing Date of the
following conditions precedent, except that paragraphs (ii) and (xv) shall not
be a condition precedent to the obligations of the Pass Through Trustee, and
paragraph (v) (insofar as it relates to a party) shall not be a condition
precedent to the obligation of such party:
(i) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations thereof by appropriate regulatory authorities
which would make it a violation of law or regulations or guidelines for the
Pass Through Trustee or the Initial Owner Participant to participate in the
transactions to be consummated on the Certificate Closing Date.
(ii) The Pass Through Trustees shall have paid the Owner Trustee
the aggregate purchase price of the Secured Certificates in accordance with
Section 1(a) hereof.
(iii) 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, the
Initial Owner Participant and the Indenture Trustee and shall be in full
force and effect and executed counterparts shall have been delivered to the
Pass Through Trustee, the Initial Owner Participant and the Indenture
Trustee, or their respective counsel, PROVIDED that only the Subordination
Agent on behalf of each Pass Through Trustee shall receive an executed
original of such Pass Through Trustee's respective Secured Certificate:
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(1) the Trust Agreement;
(2) the Trust Indenture;
(3) the Secured Certificates; and
(4) the Guarantee.
All of the foregoing documents, together with this Agreement, are sometimes
referred to herein, collectively, as the "CERTIFICATE CLOSING DOCUMENTS"
and, individually, as a "CERTIFICATE CLOSING DOCUMENT".
In addition, the Pass Through Trustee, the Initial Owner Participant
and the Indenture Trustee each shall have received executed counterparts or
conformed copies of the following documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Class A, Class B
and Class C Trusts.
(iv) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture shall have been executed and delivered by the
Owner Trustee, and such financing statement or statements shall have been
duly filed in all places necessary or advisable, and any additional Uniform
Commercial Code financing statements deemed advisable by the Indenture
Trustee or the Pass Through Trustee shall have been executed and delivered
by the Owner Trustee and duly filed.
(v) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee 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 Pass Through Trust Agreements, the
Guarantee and any other documents to be executed on behalf of Lessee
or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby on the Certificate Closing 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 Certificate Closing Date;
and
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(3) a copy of the certificate of incorporation of Lessee
and the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of Lessee and certified by the Secretary of
State of the State of Delaware in the case of the Guarantor, a copy of
the by-laws of Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of Lessee and the Guarantor (as the case may be),
and a certificate or other evidence from the Secretary of State of 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 Certificate Closing Date, as to the due
incorporation and good standing of Lessee or the Guarantor (as the
case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture, 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
Certificate Closing 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 Certificate Closing Date;
(3) a copy of the articles of association and by-laws of
the Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Certificate Closing Date, certifying that
(a) the representations and warranties contained herein of the
Indenture Trustee to be made on the Certificate Closing Date are
correct as though made on and as of the Certificate Closing Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date) and (b) except
for the taking of possession by the Indenture Trustee of the Liquid
Collateral and maintaining possession by the Indenture Trustee thereof
as contemplated in Section 2.17(a) of the Trust Indenture, no further
filing or recording of any document is necessary in order to perfect
the security interest in favor of the Indenture Trustee in the Liquid
Collateral.
(C)(1) an incumbency certificate of the Owner Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Trust Agreement, the Trust Indenture and any other
documents to be executed on behalf of the Owner Trustee in connection
with the transactions contemplated hereby on the Certificate Closing
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
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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 Certificate
Closing 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; and
(4) a certificate signed by an authorized officer of the
Owner Trustee, dated the Certificate Closing Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) to be made on the
Certificate Closing Date are correct as though made on and as of the
Certificate Closing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which case such representations and warranties are correct on and as
of such earlier date).
(vi) All appropriate action required to have been taken prior to
the Certificate Closing Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, authorizations, exemptions and approvals of such entities
required to be in effect on the Certificate Closing Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such orders, permits, waivers, authorizations, exemptions and approvals
shall be in full force and effect on the Certificate Closing Date.
(vii) On the Certificate Closing Date the Pass Through Trustee and
the Indenture Trustee shall have received a certificate signed by an
authorized officer of Lessee and the Guarantor to the effect that:
(1) the representations and warranties contained herein of
Lessee and the Guarantor to be made on the Certificate Closing Date
are correct as though made on and as of the Certificate Closing Date,
except to the extent that such representations and warranties (other
than those contained in clause (F) of Section 7(a)(iv)) relate solely
to an earlier date (in which case such representations and warranties
were correct on and as of such earlier date); and
(2) 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.
(viii) Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements, and the Underwriters shall
have transferred to the Pass Through Trustees in immediately available
funds an amount equal to the aggregate purchase price of the Secured
Certificates to be purchased from the Owner Trustee.
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(ix) The Pass Through Trustee and the Indenture Trustee shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee, the
Initial Owner Participant and the Owner Trustee, and reasonably
satisfactory as to scope and substance to the Pass Through Trustee and the
Indenture Trustee, an opinion substantially in the form of EXHIBIT D-1
hereto from Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel for Lessee and the
Guarantor, an opinion from Cadwalader, Xxxxxxxxxx & Xxxx substantially in
the form of EXHIBIT D-2 hereto, special counsel for Lessee and the
Guarantor, and an opinion from Lessee's legal department substantially in
the form of EXHIBIT D-3 hereto.
(x) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee shall have received, addressed to the Pass Through
Trustee, the Indenture Trustee, the Initial Owner Participant, the Owner
Trustee, the Guarantor and Lessee, and reasonably satisfactory as to scope
and substance to the Pass Through Trustee, the Initial Owner Participant,
the Guarantor and Lessee, an opinion substantially in the form of EXHIBIT E
hereto from Ray, Xxxxxxx & Xxxxxxx, special counsel for the Owner Trustee.
(xi) [RESERVED.]
(xii) The Pass Through Trustee and the Initial Owner Participant
shall have received, addressed to the Pass Through Trustee, the Initial
Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Initial Owner Participant, the Guarantor and Lessee, an
opinion substantially in the form of EXHIBIT F hereto from Xxxxxxx, Xxxx &
Xxxxx LLP, special counsel for the Indenture Trustee.
(xiii) The Pass Through Trustee, the Initial Owner Participant and
the Indenture Trustee shall have received, addressed to the Pass Through
Trustee, the Indenture Trustee, the Initial Owner Participant, the Owner
Trustee, the Guarantor and Lessee, and reasonably satisfactory as to scope
and substance, to the Pass Through Trustee, the Initial Owner Participant,
the Guarantor and Lessee, an opinion substantially in the form of EXHIBIT
G-1 hereto from Powell, Goldstein, Xxxxxx & Xxxxxx LLP, special counsel for
the Liquidity Provider, and an opinion substantially in the form of EXHIBIT
G-2 hereto from in-house counsel for the Liquidity Provider.
(xiv) 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 Certificate
Closing Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(xv) The Initial Owner Participant shall have received (A) a
certificate signed by an authorized officer of the Pass Through Trustee,
dated the Certificate Closing Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are correct as
though made on and as of the Certificate Closing Date, except to the extent
that such representations and warranties relate solely to an earlier date
(in
- 13 -
which case such representations and warranties are correct on and as of
such earlier date), (B) an opinion substantially in the form of EXHIBIT H
hereto addressed to the Initial Owner Participant, the Guarantor and Lessee
of Xxxxxxx, Xxxx & Xxxxx LLP, special counsel for the Pass Through Trustee,
and reasonably satisfactory as to scope and substance to the Initial 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.
(b) CERTIFICATE CLOSING CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
LESSEE AND THE GUARANTOR. It is agreed that the obligations of Lessee and the
Guarantor to enter into the transactions to be consummated on the Certificate
Closing Date are all subject to the fulfillment to the satisfaction of Lessee
and the Guarantor prior to or on the Certificate Closing Date of the following
conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Certificate Closing Date in connection with the transactions
contemplated by this Agreement shall have been taken by the Federal
Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, and all orders,
permits, waivers, exemptions, authorizations and approvals of such entities
required to be in effect on the Certificate Closing Date in connection with
the transactions contemplated by this Agreement shall have been issued, and
all such orders, permits, waivers, exemptions, authorizations and approvals
shall be in full force and effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(i) and 4(a)(ii)
hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(iii) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee and the Guarantor) in the manner specified in
Section 4(a)(iii), shall each be satisfactory in form and substance to
Lessee and the Guarantor, shall be in full force and effect on the
Certificate Closing Date, and an executed counterpart of each thereof
(other than the Secured Certificates) shall have been delivered to Lessee
or its special counsel and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(v) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xv), 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 to be
consummated on the Certificate Closing Date, the taking of all corporate
proceedings in connection therewith and compliance with the conditions
herein set forth.
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(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(x), 4(a)(xi), 4(a)(xii), 4(a)(xiii) and 4(a)(xv)(B)
in each case addressed to Lessee and the Guarantor and dated the
Certificate Closing 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 Certificate
Closing Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee or
the Guarantor to enter into any transaction contemplated by the Certificate
Closing Documents.
(viii) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under any
of the Operative Documents.
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 (15), (xxi), (xxii) and
(xxiv) shall not be a condition precedent to the obligations of the Pass Through
Trustee, and paragraphs (iv), (vii) (insofar as it relates to the Owner
Participant) and (xiv) shall not be a condition precedent to the obligation of
the Owner Participant:
(i) The Pass Through Trustee and the Owner Participant shall have
received due notice with respect to such participation pursuant to Section
2 hereof (or shall have waived such notice either in writing or as provided
in Section 2).
(ii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations thereof by appropriate regulatory authorities
which would make it a violation of law or
- 15 -
regulations or guidelines for the Pass Through Trustee or the Owner
Participant to make its Commitment available in accordance with Section 1
hereof.
(iii) In the case of the Owner Participant, the 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 hereof.
(iv) In the case of the Pass Through Trustees, the Owner
Participant shall have made available the amount of its Commitment for the
Aircraft in accordance with Section 1 hereof.
(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, as amended and restated as of the
Delivery Date;
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement (unless delivered on the
Transfer Date);
(6) the Trust Agreement, as amended and restated as of the
Delivery Date;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the Xxxx of Sale;
(9) the FAA Xxxx of Sale;
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(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Owner Participant and Lessee (herein called the
"ACCEPTANCE CERTIFICATE") duly completed and executed by the Owner
Trustee or its agent, which may be a representative of Lessee, and by
such representative on behalf of Lessee;
(11) the Trust Indenture, as amended and restated as of the
Delivery Date;
(12) the Consent and Agreement;
(13) the Guarantee, as amended and restated as of the
Delivery Date;
(14) the Residual Agreement; and
(15) an excerpted copy of the Purchase Agreement (insofar as
it relates to the Aircraft);
unless, in the case of each of the documents listed in clauses (1) and (3)
above, such documents shall have been amended and restated as of and
delivered on the Transfer Date. All of the foregoing documents, together
with this Agreement, are sometimes referred to herein, collectively, as the
"DELIVERY DOCUMENTS" and, individually, as a "DELIVERY 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) 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
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Agreement, the Lease, the Lease Supplement covering the Aircraft, the
Xxxx of Sale, the FAA Xxxx of Sale, the Purchase Agreement Assignment,
the Tax Indemnity Agreement, the Pass Through Trust Agreements, the
Guarantee and any other documents to be executed on behalf of Lessee
or the Guarantor (as the case may be) in connection with the
transactions contemplated hereby 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 to be consummated on the Certificate Closing Date 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 by-laws of Lessee and the Guarantor, certified by the Secretary or
Assistant Secretary of Lessee and the Guarantor (as the case may be),
and a certificate or other evidence from the Secretary of State of 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) each of the documents referred to in Section 4(a)(iii)
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;
(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
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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) each of the documents referred to in Section 4(a)(iii)
to which Indenture Trustee 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.
(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) each of the documents referred to in Section 4(a)(iii)
to which Owner Trustee 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.
(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 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;
- 19 -
(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 Xxxx of Sale, the Lease, the Lease Supplement,
the Trust Indenture (as amended and restated) 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 recordation) with
the Federal Aviation Administration, and the Trust Agreement (as
amended and restated) 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
- 20 -
(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) [Intentionally Omitted.]
(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 Xxxxxxx
Xxxxxxx & Xxxxxxxx, special counsel for Lessee and the Guarantor, an
opinion substantially in the form of EXHIBIT I-2 hereto from Cadwalader,
Xxxxxxxxxx & Xxxx, 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, Xxxxxxx
& 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 Guarantor and Lessee, an opinion
substantially in the form of EXHIBIT K hereto from Ray, Xxxxxxx & Xxxxxxx,
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 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 Xxxxx & Xxxxxxx, 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
- 21 -
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
Xxxxxxx, Xxxx & Xxxxx 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,
Xxxxxx & Xxxxxx 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 not less than
$21,000,000 nor more than $22,000,000.
(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 prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(xxi) The Owner Participant shall have received from its special tax
counsel a favorable 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 Internal Revenue Code of 1986, as
amended through the date hereof, and the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service Revenue
Procedures or Revenue Rulings, or other administrative interpretations,
applicable judicial precedents or Executive Orders of the President of the
United States, all as in effect on the date 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.
- 22 -
(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, Xxxxxxxxxx & Xxxx,
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 Xxxxxxx, Xxxx & Xxxxx
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.
(xxv) No Indenture Event of Default or Indenture Default shall have
occurred and be continuing.
(xxvi) On the Delivery Date, or if earlier, the Transfer Date, in
connection with the amendments contemplated by Section 1(c)(i) hereof,
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 Certificate Closing Documents which are amended and
restated as of the Delivery Date or the Transfer Date, as the case may be,
and the Lease to be entered into on the Delivery Date do not vary the
Mandatory Economic Terms and contain the Mandatory Document Terms and (ii)
any substantive modification of such documents from those in effect on the
Certificate Closing Date and any change in the Lease from the form set
forth on EXHIBIT C hereto 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 Xxxxx & Xxxxxxx, 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
- 23 -
FAA Xxxx 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.
(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.
- 24 -
(vi) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery Date
to set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee or
the Guarantor to enter into any transaction contemplated by the Operative
Documents.
(viii) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under any
of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 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 Certificate Closing Date and 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
- 25 -
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 Agreements,
the Underwriting Agreement and the other Operative Documents to which it is
a party and (ii) in the case of the Guarantor, this Agreement, the Pass
Through Trust Agreements, the Underwriting Agreement and the other
Operative Documents to which it is a party, and is duly qualified to do
business as a foreign corporation in each state in which its operations or
the nature of its business requires other than failures to so qualify which
would not have a material adverse effect on the condition (financial or
otherwise), consolidated business or properties of it and its subsidiaries
considered as one enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief executive
office (as such term is used in Article 9 of the Uniform Commercial Code in
effect in the State of Minnesota) is located at Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, to the extent
entered into on or prior to the date this representation is made, and the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement and each other Operative Document to which Lessee or
the Guarantor (as the case may be) is a party, to the extent entered into
on or prior to the date this representation is made, have been duly
authorized by all necessary corporate action on the part of Lessee or the
Guarantor, do not require any stockholder approval, or approval or consent
of any trustee or holder of any material indebtedness or material
obligations of Lessee or the Guarantor, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on Lessee or the Guarantor
(as the case may be) or the certificate of incorporation or by-laws of
Lessee or the Guarantor (as the case may be), or contravene the provisions
of, or constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee or the Guarantor
(as the case may be) under, any indenture, mortgage, contract or other
agreement to which Lessee or the Guarantor (as the case may be) is a party
or by which it may be bound or affected which contravention, default or
Lien, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the condition (financial or otherwise),
business or properties of the Guarantor and its subsidiaries considered as
one enterprise;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, to the
extent entered into on or prior to the date this representation is made,
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, to the extent entered
into on or prior to the date
- 26 -
this representation is made, 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 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, to the extent entered into on
or prior to the date this representation is made, 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) as of the Delivery Date, except for (A) the filing for
recording pursuant to the Federal Aviation Act of the termination of any
Mortgage and any Predecessor Lease, (B) the registration of the Aircraft
pursuant to the Federal Aviation Act, (C) the filing of the Trust Agreement
with the FAA, (D) 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 Xxxx of Sale, (E) 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
- 27 -
specified in the opinion furnished pursuant to Section 5(a)(xi) hereof and
the filing of a UCC-3 termination statement relating to the financing
statement filed in connection with the Mortgage, and (F) 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;
(ix) as of the Delivery Date, 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) as of the Delivery Date, 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) as of the Delivery Date, 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 G of the Board of Governors of the Federal Reserve
System; and
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
- 28 -
(b) GENERAL TAX INDEMNITY. [Intentionally Omitted].
(c) GENERAL INDEMNITY. [Intentionally Omitted].
(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.
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 First Security Bank, National Association, in its individual
capacity, does not comply with the requirements of this Section 8(c) or if the
Owner Participant shall not be a Citizen of the United States, 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, 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
- 29 -
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, 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
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
- 30 -
jurisdiction (it being agreed that, in the event such latter opinion cannot
be given in a form satisfactory to the Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk), and (F) (unless Lessee shall
have agreed to provide insurance covering the risk of requisition of use of
such Aircraft by the government of such jurisdiction so long as such
Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the
loss of use of such Aircraft in the event of the requisition by such
government of such use.
In addition, as a condition precedent to any such change in registration, Lessee
shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom. Lessee shall pay all costs, expenses, fees, recording and
registration taxes, including the reasonable fees and expenses of counsel to the
Owner Trustee, the Owner Participant and the Indenture Trustee, and other
charges in connection with any such change in registration.
(g) [RESERVED.]
(h) First Security Bank, National Association, in its individual
capacity, 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. First Security Bank, National Association, in its
individual capacity, 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. First Security Bank, National Association, in its individual capacity,
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.
(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
- 31 -
continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.
(j) [Intentionally Omitted.]
(k) Each Loan Participant represents and warrants that the Secured
Certificate to be issued to it pursuant to the Trust Indenture is being acquired
by it for investment and not with a view to resale or distribution (it being
understood that such Loan Participant may pledge or assign as security its
interest in each Secured Certificate issued to it), PROVIDED that the
disposition of its property shall at all times be and remain within its control,
except that the Loan Participants may sell, transfer or otherwise dispose of any
Secured Certificate or any portion thereof, or grant participations therein, in
a manner which in itself does not require registration under the Securities Act
of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to 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).
- 00 -
(x) Xxxxx Xxxxxx 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 the
full corporate power, authority and legal right under the laws of the
Commonwealth of Massachusetts and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver each of this
Agreement, the Trust Indenture and each other Operative Document to which
it is a party and to carry out its obligations under this Agreement, the
Trust Indenture, each other Operative Document to which it is a party and
to authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly authorized
by the Indenture Trustee and will not violate its articles of association
or by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound;
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute, or will constitute when entered into as contemplated
hereby, 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 Liens on the Aircraft or any
portion of the Trust Estate.
(n) [RESERVED.]
- 33 -
(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) 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 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 confidential to the same extent as herein
provided) or the Owner Participant's beneficial interest in the Trust Estate and
any exercise of remedies under the Lease and the Trust Indenture), (C) with the
prior written consent of the Manufacturer and Lessee, (D) to the Owner
Trustee's, the Indenture Trustee's and each Participant's counsel or special
counsel, independent insurance brokers or other agents who agree to hold such
information confidential, or (E) in the case of the Owner Participant and/or the
Owner Trustee, it may disclose so much of the Purchase Agreement as has been
assigned to the Owner Trustee under the Purchase Agreement Assignment to bona
fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the Pass
Through Trustee pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation G 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.
- 34 -
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual
capacity, covenants and agrees that it shall not cause or permit to exist any
Indenture Trustee's Liens with respect to the Trust Indenture Estate or the
Trust Estate. State Street Bank and Trust Company, in its individual capacity,
agrees that it will promptly, at its own expense, take such action as may be
necessary duly to discharge such Indenture Trustee's Liens. State Street Bank
and Trust Company, in its individual capacity, agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Indenture
Estate or the Trust Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent that it relates to the Owner Trustee, clauses
(ii), (ix) and (xi) below) as Owner Trustee, represents and warrants to Lessee,
the Guarantor, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant that:
(i) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good standing
under the laws of the United States, has full corporate power and authority
to carry on its business as now conducted, has the corporate power and
authority to execute and deliver the Trust Agreement, has the corporate
power and authority to carry out the terms of the Trust Agreement, and has
(assuming the authorization, execution and delivery of the Trust Agreement
by the other party thereto), 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
- 35 -
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in equity;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the other party thereto, the Owner Trustee has duly
authorized, and on the Certificate Closing Date shall have duly issued,
executed and delivered to the Indenture Trustee for authentication, the
Secured Certificates pursuant to the terms and provisions hereof and of the
Trust Indenture, and each Secured Certificate on the Certificate Closing
Date and the Delivery Date will constitute the valid and binding obligation
of the Owner Trustee and will be entitled to the benefits and security
afforded by the Trust Indenture in accordance with the terms of such
Secured Certificate and the Trust Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any
Owner Trustee Document, nor the consummation by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of the
transactions contemplated thereby, nor the compliance by the Owner Trustee,
in its individual capacity or as Owner Trustee, as the case may be, with
any of the terms and provisions thereof, (A) requires or will require any
approval of its stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B) violates or will
violate its articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute a default
under, or results or will result in any breach of, or results or will
result in the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sale contract, bank loan or
credit agreement, license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of America or the
State of Utah governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(v) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Utah state or local governmental authority or agency or any United
States federal governmental authority or agency regulating the trust powers
of the Owner Trustee in its individual capacity is required for the
execution and delivery of, or the carrying out by, the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust Agreement, the
Participation Agreement, the Trust Indenture, the Lease or the Secured
Certificates, or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly obtained,
given or taken or which is described in Section 7(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, other
than any Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor
- 36 -
Liens) (A) the existence of which poses no material risk of the sale,
forfeiture or loss of the Aircraft, Airframe or any Engine or any interest
therein, (B) the existence of which does not interfere in any way with the
use or operation of the Aircraft by the Lessee (or any Sublessee), (C) the
existence of which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (D) which the Owner
Trustee is diligently contesting by appropriate proceedings and (E) the
existence of which does not result in actual interruption in the receipt
and distribution by the Indenture Trustee in accordance with the Trust
Indenture of Rent assigned to the Indenture Trustee for the benefit of the
Certificate Holders;
(vii) as of the Delivery Date, 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, other than any Lessor Liens (including
for this purpose Liens which would be Lessor Liens but for the proviso in
the definition of Lessor Liens) (A) the existence of which poses no
material risk of the sale, forfeiture or loss of the Aircraft, Airframe or
any Engine or any interest therein, (B) the existence of which does not
interfere in any way with the use or operation of the Aircraft by the
Lessee (or any Sublessee), (C) the existence of which does not affect the
priority or perfection of, or otherwise jeopardize, the Lien of the Trust
Indenture, (D) which the Owner Trustee is diligently contesting by
appropriate proceedings and (E) the existence of which does not result in
actual interruption in the receipt and distribution by the Indenture
Trustee in accordance with the Trust Indenture of Rent assigned to the
Indenture Trustee for the benefit of the Certificate Holders;
(viii) there are no Taxes payable by the Owner Trustee, either in its
individual capacity or as Owner Trustee, imposed by the State of Utah or
any political subdivision thereof in connection with the issuance of the
Secured Certificates, or the execution and delivery in its individual
capacity or as Owner Trustee, as the case may be, of any of the instruments
referred to in clauses (i), (ii), (iii) and (iv) above, that, in each case,
would not have been imposed if the Trust Estate were not located in the
State of Utah and First Security Bank, National Association had not (a) had
its principal place of business in, (b) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in any activities unrelated to the
transactions contemplated by the Operative Documents in, the State of Utah;
(ix) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Trustee, either in its individual capacity
or as Owner Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect the ability
of the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, to perform its obligations under any of the instruments
referred to in clauses (i), (ii), (iii) and (iv) above;
(x) both its chief executive office, and the place where its
records concerning the Aircraft and all its interests in, to and under all
documents relating to the Trust Estate, are located in Salt Lake City,
Utah;
- 37 -
(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) [RESERVED.]
(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 documentation
transferring all right, title and interest in the Aircraft to Lessee (including,
without limitation, such bills of sale and other instruments and documents as
Lessee shall reasonably request to evidence (on the public record or otherwise)
such transfer and the vesting of all right, title and interest in and to the
Aircraft in Lessee), and if Lessee, in connection with such purchase, elects to
assume the obligations of the Owner Trustee pursuant to the Trust Indenture and
the Secured Certificates each of the parties will execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, maintaining the security interest in the
Aircraft created by the Trust Indenture, releasing the Owner Participant and the
Owner Trustee from all future obligations in respect of the Secured
Certificates, the Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to assume
the obligations of the Owner Trustee in respect of the Secured Certificates
unless Lessee causes to be delivered to the Indenture Trustee an opinion of
counsel to the effect that (i) the Lien of the Trust Indenture continues to be a
valid and duly perfected first priority security interest in and to the Aircraft
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.
- 38 -
(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 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
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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
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 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
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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 by-laws or any agreement
or instrument to which the Pass Through Trustee is a party or by which it
or any of its properties may be bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement or
this Agreement, nor the consummation by the Pass Through Trustee of any of
the transactions contemplated hereby or thereby, requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any 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
hereby, 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
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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:
(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 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 by-laws or any
agreement or instrument to which the Subordination Agent is a party or by
which it or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any Connecticut
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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 acquisition, possession or ownership by the
Subordination Agent of any of the Secured Certificates (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor Agreement or any of
the Liquidity Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the Intercreditor Agreement
or any Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly offered
any Secured Certificate for sale to any Person or solicited any offer to
acquire any Secured Certificates from any Person, nor has the Subordination
Agent authorized anyone to act on its behalf to offer directly or
indirectly any Secured Certificate for sale to any Person, or to solicit
any offer to acquire any Secured Certificate from any Person; and the
Subordination Agent is not in default under any Liquidity Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
SECTION 9. RELIANCE OF LIQUIDITY PROVIDER. 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
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 Initial 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
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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 and the Indenture Trustee. Notwithstanding the
foregoing, so long as the Lease has not been terminated, the Indenture Trustee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (i) amend or modify Article III or IX of the
Trust Indenture, (ii) make any amendment which will affect the stated principal
amount or interest on the Secured Certificates or (iii) amend or modify the
provisions of Sections 2.05 or 10.14 of the Trust Indenture. The Indenture
Trustee and the Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative Documents
to which Lessee is not a party. Notwithstanding anything to the contrary
contained herein, in the Trust Agreement or in any other Operative Document, the
Owner Participant will not consent to or direct a change in the situs of the
Trust Estate without the prior written consent of Lessee. Each Loan Participant
agrees that it will not take any action in respect of the Trust Indenture Estate
except through the Indenture Trustee pursuant to the Trust Indenture or as
otherwise permitted by the Trust Indenture.
SECTION 11. CERTAIN COVENANTS OF LESSEE. Lessee covenants and
agrees with each of the Loan Participants, the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other Operative
Documents; PROVIDED that any instrument or other document so executed by Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act, or shall furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to make
application for such registration, and shall promptly furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to
timely file any reports required to be filed by it as the lessor under the Lease
or as the owner of the Aircraft with any governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments to
the Trust Indenture and this Agreement to be promptly filed and recorded, or
filed for recording, to the extent permitted under the Federal Aviation Act, or
required under any other applicable law. Upon the execution and delivery of the
FAA Xxxx 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 Xxxx of Sale, SECOND, the Lease,
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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.
(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, Xxxxxxxxxx &
Xxxx, 100
- 00 -
Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, 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. [RESERVED.]
SECTION 15. MISCELLANEOUS. (a) [RESERVED.]
(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
purchase of the Secured Certificates 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 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
- 46 -
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. Each of the parties hereto shall promptly
submit to Lessee for its 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 sixty (60) days following the Certificate Closing Date or
the Delivery Date, as the case may be). Lessee (or, following a transfer of the
Initial Owner Participant's Beneficial Interest, the Owner Participant) agrees
to transfer to the Owner Trustee promptly 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 Lessee promptly upon receipt
thereof.
SECTION 17. REFINANCINGS.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than all)
of the Secured Certificates no more than three times by giving written notice to
the Owner Participant and the Owner Trustee that there be effected a voluntary
redemption of the Secured Certificates by the Owner Trustee, whereupon the Owner
Participant agrees to negotiate promptly in good faith to conclude an agreement
with Lessee as to the terms of such refinancing operation (including the terms
of any debt to be issued in connection with such refinancing); PROVIDED that no
such refinancing shall require an increase in the amount of the Owner
Participant's investment in the beneficial ownership of the Aircraft or in the
principal amount of the Secured Certificates.
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
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outstanding Secured Certificates will be redeemed, any new debt will be issued
and the other aspects of such refinancing will be consummated (such date, the
"REFINANCING DATE") and (ii) the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on the
Refinancing Date, (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
decreased and (D) the proposed revised schedules of Basic Rent percentages, debt
amortization, Stipulated Loss Value percentages and Termination Value
percentages. The Refinancing Certificate shall not provide for a debt/equity
ratio of more than 4:1. Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification pursuant to EXHIBIT E to the Lease
of the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such verification
procedures), as to the debt/equity ratio, the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date and the revised Basic Rent
percentages, debt amortization, Stipulated Loss Value percentages and
Termination Value percentages (such information, whether as set forth or as so
determined, the "REFINANCING INFORMATION") the appropriate parties will take the
actions specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale 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 (i) the issuance and sale by the
Owner Trustee to such institution or institutions on the Refinancing Date of
debt securities in an aggregate principal amount specified in the Refinancing
Information which amount shall be equal to the aggregate principal amount of all
Secured Certificates outstanding on the Refinancing Date (such debt securities,
the "NEW DEBT") except that the principal amount of New Debt may exceed the
principal amount of all outstanding Secured Certificates in connection with the
first refinancing under this Section 17, (ii) the application of the proceeds of
the sale of the New Debt to the redemption of all such Secured Certificates on
the Refinancing Date and (iii) the payment of the excess, if any, of such
proceeds over the amounts necessary to effect such redemption to the
Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the period
from and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of 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;
- 48 -
(5) the Owner Participant shall pay all of the expenses (other
than those of Lessee) of such refinancing (including, but not limited to, the
fees, expenses and disbursements of counsel and any placement or underwriting
fees) and such expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set
forth in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date in
connection with an adjustment to Rents pursuant to Section 3(d) of the Lease or
such assumptions are the subject of the recalculations being conducted by the
Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee
to the extent possible consistent with clause (A). 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.
(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 earlier of the Delivery Date, the date of
assumption of the Secured Certificates by Lessee, or the date of redemption of
the Secured Certificates occurring pursuant to Section 2.10(c), 2.10(d) or
2.10(e) of the Trust Indenture 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 (A) on each Payment
Date prior to the Delivery Date an amount equal to the aggregate amount of
interest accrued on the Secured Certificates from (and including) the
Certificate Closing Date or previous Payment Date, as the case may be, to, but
excluding, such Payment Date and (B) 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 clause
(B) in a non-interest bearing account for payment to Certificate Holders on the
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) If the Manufacturer Delivery shall not have occurred on or
prior to the Prepayment Date, Lessee agrees to pay to the Indenture Trustee, on
the 15th day following the
- 49 -
Prepayment Date, the excess, if any, of the amounts payable under Section
2.10(c) of the Trust Indenture over the amounts released from the Collateral
Account under Section 2.19 of the Trust Indenture.
(d) If (i) the Manufacturer Delivery shall have occurred, (ii) the
Delivery Date shall not have occurred on or prior to the Cut-Off Date and (iii)
Lessee shall not have assumed the Secured Certificates by the Determination
Date, Lessee agrees to pay to the Indenture Trustee, on the 15th day after the
Determination Date, the excess, if any, of the amounts payable under Section
2.10(d) of the Trust Indenture over the amounts released from the Collateral
Account under Section 2.19 of the Trust Indenture.
(e) If (i) a Triggering Event shall have occurred on or prior to
the Prepayment Date, (ii) the Delivery Date shall not have occurred and (iii)
Lessee shall not have assumed the Secured Certificates, Lessee agrees to pay to
the Indenture Trustee, on behalf of the Owner Trustee, on the 15th date
following the date of occurrence of the applicable Triggering Event, the excess,
if any, of the amounts payable under Section 2.10(e) of the Trust Indenture over
the amounts released from the Collateral Account under Section 2.19 of the Trust
Indenture.
(f) On the Delivery Date immediately upon transfer of title to the
Aircraft to the Owner Trustee, or immediately upon assumption of the Secured
Certificates by Lessee pursuant to Section 1(e)(i) of this Agreement, or upon
prepayment of the Secured Certificates pursuant to Section 1(e)(ii) of this
Agreement, 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, 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, ABA No. 011-00-0028, Account No.
0000-000-0, Attention: Corporate Trust Department, Reference: Northwest/NW
1997 G, 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 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 earliest of (i) the
Delivery Date, (ii) the date of assumption of the Secured Certificates by Lessee
or (iii) the date of redemption of the Secured Certificates pursuant to Section
2.10(c), 2.10(d) or 2.10(e) of the Trust Indenture and (B) the Owner Trustee or
the Lessee shall be treated as the borrower with respect to the Secured
Certificates on and after the date specified in clauses (A)(i) or (A)(ii) of
this Section 18(h) respectively.
- 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/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President-Finance
and Assistant Treasurer
Address: U.S. MAIL
---------
0000 Xxxxxxxxx Xxxxx (X0000)
Xx. Xxxx, Xxxxxxxxx
00000-0000
OVERNIGHT COURIER
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (000) 000-0000
NORTHWEST AIRLINES CORPORATION,
GUARANTOR
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President-Finance
and Assistant Treasurer
Address: U.S. MAIL
---------
0000 Xxxxxxxxx Xxxxx (X0000)
Xx. Xxxx, Xxxxxxxxx
00000-0000
OVERNIGHT COURIER
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (000) 000-0000
- Signature Page -
NORTHWEST AIRLINES, INC.,
INITIAL OWNER PARTICIPANT
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President-Finance
and Assistant Treasurer
Address: U.S. MAIL
---------
0000 Xxxxxxxxx Xxxxx (X0000)
Xx. Xxxx, Xxxxxxxxx
00000-0000
OVERNIGHT COURIER
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000
Attn: Senior Vice President-Finance
and Treasurer
Telecopy No.: (000) 000-0000
STATE STREET BANK AND
TRUST COMPANY,
INDENTURE TRUSTEE
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Address: Xxx Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
- Signature Page -
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee,
OWNER TRUSTEE
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Address: 00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
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/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Address: Xxx Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
- Signature Page -
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/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Address: x/x Xxxxx Xxxxxx Xxxx and
Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
- Signature Page -
SCHEDULE I
NAMES AND ADDRESSES
-------------------
Lessee: Northwest Airlines, Inc.
U.S. MAIL
---------
0000 Xxxxxxxxx Xxxxx (X0000)
Xx. Xxxx, Xxxxxxxxx 00000-0000
OVERNIGHT COURIER
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000
Attn: Senior Vice President-Finance and
Treasurer
Telecopy No.: (000) 000-0000
WIRE TRANSFER
-------------
First Bank, N.A., Minneapolis
ABA No. 000000000
Acct. No. 150250099440
Initial Owner Participant: Northwest Airlines, Inc.
U.S. MAIL
---------
0000 Xxxxxxxxx Xxxxx (X0000)
Xx. Xxxx, Xxxxxxxxx 00000-0000
OVERNIGHT COURIER
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000
Attn: Senior Vice President-Finance and
Treasurer
Telecopy No.: (000) 000-0000
WIRE TRANSFER
-------------
First Bank, N.A., Minneapolis
ABA No. 000000000
Acct. No. 150250099440
Indenture Trustee: State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
WIRE TRANSFER
-------------
State Street Bank and Trust Company
ABA No. 011-00-0028
for credit to State Street Bank and
Trust Company
Acct. No. 0000-000-0
Attn: Corporate Trust Department
Reference: Northwest/NW 1997 G
Owner Trustee: First Security Bank, National
Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Department
Telecopy No.: (000) 000-0000
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. 000-0000-00
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW 1997 G
Loan Participants:
SCHEDULE I - PAGE 2
SCHEDULE II
COMMITMENTS
INTEREST RATE
PURCHASERS AND MATURITY PURCHASE PRICE
---------- ------------- --------------
Northwest Airlines
Pass Through Trust
1997-1A 7.068% Series A Secured Certificates due G $10,369,024.29
January 2, 2016
[H 10,369,450.52
I 10,560,952.07
J 10,574,426.83
K 10,583,770.00
L 10,568,876.29]
1997-1B 7.248% Series B Secured Certificates due
January 2, 2012 [G, H];
January 2, 2013 [I, J, K, L] G $ 3,169,029.45
[H 3,112,327.96
I 3,538,462.47
J 3,474,730.05
K 3,419,603.59
L 3,393,846.48]
1997-1C 7.039% Series C Secured Certificates due
January 2, 2006 [G];
July 2, 2006 [H];
January 2, 2007 [I, J, K, L] G $ 1,963,999.98
[H 1,967,999.99
I 1,980,000.00
J 1,983,999.99
K 1,988,000.02
L 1,990,500.02]
Debt Portion $_____________
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.
SCHEDULE IV
MANDATORY ECONOMIC TERMS
------------------------
SECURED CERTIFICATES
--------------------
Loan to Aircraft Value Ratio on any July 2 Payment Date (with the values of the
Aircraft set forth in the Prospectus Supplement (as defined in the Pass Through
Agreement) in "Description of the Equipment Notes - Loan to Value Ratios of
Equipment Notes") shall be as follows:
Series A: not in excess of 43.0%
Series B: not in excess of 61.0%
Series C: not in excess of 69.0%
AVERAGE LIFE:
The average life may not be more than 13.73 years in the case of the Series A
Certificates and 13.40 in the case of the Series B Certificates and in the case
of the Series C Certificates may not be so great as to cause the average life of
the Pass Through Certificates, 1997-1-C, to be more than 6.00 years (but in each
case may be decreased by any amount); and the average life of the Pass Through
Certificates, 1997-1-A may not be more than 12.69 years, the average life of the
Pass Through Certificates, 1997-1-B may not be more than 10.94 years and the
average life of the Pass Through Certificates 1997-1-C may not be more than 6.00
years.
FINAL MATURITY DATE:
Series A: may not be extended beyond January 2, 2016
Series B: may not be extended beyond January 2, 2013
Series C: may not be extended beyond January 2, 2007
Debt Rate (computed on the basis of a 360-day year consisting of twelve 30-day
months, payable semi-annually in arrears) shall be as follows:
Series A: 7.068%
Series B: 7.248%
Series C: 7.039%
PAST DUE RATE: Debt Rate plus 2% per annum.
PAYMENT DATES: January 2 and July 2.
MAKE-WHOLE AMOUNT: As provided in the Trust Indenture.
REDEMPTION
AND PURCHASE: As provided in the Trust Indenture.
LEASE
LEASE PERIOD DATES: January 2 and July 2.
MINIMUM RENT: Basic Rent due and payable on each Lease Period Date
shall, together with the amount of Excess Amount
payable on such date, be at least sufficient to pay
in full, as of such Lease Period Date (assuming
timely payment of the Secured Certificates prior to
such
Date), the aggregate principal amount of scheduled
installments due on the Secured Certificates
outstanding on such Lease Period Date.
SUPPLEMENTAL RENT: Shall be sufficient to cover the sum described in the
definition of such term in Annex A to the
Participation Agreement.
STIPULATED LOSS VALUE: At all times shall be equal to or greater than the
outstanding principal amount of the Secured
Certificates together with accrued interest thereon.
TERMINATION VALUE: At all times shall be equal to or greater than the
outstanding principal amount of the Secured
Certificates together with accrued interest thereon.
ALL-RISK HULL INSURANCE: Shall not be less than Stipulated Loss Value, subject
to Lessee's right to self-insure on terms no more
favorable to Lessee in any material respect than
those set forth in Section 11(d) of the form of Lease
attached as EXHIBIT C to the Participation Agreement.
MINIMUM LIABILITY
INSURANCE AMOUNT: $150,000,000 per occurrence.
PAST DUE RATE: As set forth in the definition thereof in Annex A to
the Participation Agreement.
SCHEDULE IV - PAGE 2
SCHEDULE V
MANDATORY DOCUMENT TERMS
Any amendment and restatement, or initial execution and delivery, of
the Operative Documents on the Delivery Date or, if earlier, the Transfer Date:
1. May not modify in any material adverse respect the Granting
Clause of the Trust Indenture so as to deprive the Certificate
Holders of a first priority security interest in and mortgage
lien on the Aircraft and the Lease or to eliminate any of the
obligations secured thereby or otherwise modify, in any material
adverse respect as regards the interests of the Certificate
Holders, the Subordination Agent, the Liquidity Provider or the
Indenture Trustee, the provisions of Article II or III or Section
4.02, 4.03, 4.04, 4.08. 5.01, 5.06, 9.01, or the first sentence
of Section 10.11 of the Trust Indenture;
2. May not modify in any material adverse respect as regards the
interests of the Certificate Holders, the Subordination Agent,
the Liquidity Provider or the Indenture Trustee the provisions of
Section 3(d)(v), Section 3(f), the second sentence of Section
11(a)(I), the second sentence of Section 16, Section 18, the
third sentence of Section 20, or the third and sixth sentences of
Section 24 of the form of Lease attached as EXHIBIT C to the
Participation Agreement or otherwise modify the terms of the form
of Lease attached as EXHIBIT C to the Participation Agreement so
as to deprive the Indenture Trustee of rights expressly
contemplated to be granted to the "Indenture Trustee" therein;
3. May not modify in any material adverse respect as regards the
interests of the Certificate Holders, the Subordination Agent,
the Liquidity Providers or the Indenture Trustee the provisions
of Section 5(a)(vi), Section 5(a)(ix)(1) and (2), Section 9,
Section 11(b), Section 12, the fifth sentence of Section 15(c),
Section 15(e) or Section 18 of the Participation Agreement or of
the provisions of Sections 5(a)(xi), (xii), (xiii), (xiv), (xv)
and (xvi) of the Participation Agreement so as to eliminate the
requirement to deliver to the Indenture Trustee the legal
opinions to be provided to the Indenture Trustee thereunder
(recognizing that the lawyers rendering such opinions may be
changed) or otherwise modify the terms of the Participation
Agreement to deprive the Subordination Agent, the Liquidity
Provider or the Indenture Trustee of any indemnity or right of
reimbursement in its favor for Expenses or Taxes;
4. May not modify in any material adverse respect as regards the
interests of the holders of the Pass Through Certificates, the
Subordination Agent, the Liquidity Provider or the Indenture
Trustee, the definition of "Make-Whole Amount" or "Supplemental
Rent" in Annex A to the Participation Agreement; and
5. Shall contain representations, warranties and covenants of the
Owner Participant substantially similar to those set forth on
EXHIBIT A attached hereto.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, PROVIDED that any such action
shall not materially adversely affect the interests of the Certificate Holders,
the Subordination Agent, the Liquidity Provider, the Indenture Trustee or the
holders of the Pass Through Certificates.
SCHEDULE V - PAGE 2
Exhibit A
to
Schedule V
Section ________. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER
PARTICIPANT. (a) REPRESENTATIONS AND WARRANTIES. In addition to and without
limiting its other representations and warranties provided for in this Section
8, the Owner Participant represents and warrants that:
(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of ____________ and has the corporate power and
authority to carry on its present business and operations and to own or
lease its properties, and has the corporate power and authority to enter
into and to perform its obligations under the Owner Participant Documents;
this Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity; and it has a tangible net worth (exclusive of goodwill) greater
than $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 by-laws or
any indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property may
be bound or affected;
(iii) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than as required by the Federal Aviation Act or the regulations promulgated
thereunder) is required for the due execution, delivery or performance by
it of the Owner Participant Documents;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability to
perform its obligations under
SCHEDULE V - PAGE A-1
this Agreement, the Participation Agreement, the Tax Indemnity Agreement
and the Trust Agreement;
(v) neither the Owner Participant nor anyone authorized by it to
act on its behalf (it being understood that in proposing, facilitating and
otherwise taking any action in connection with the financing contemplated
hereby and agreed to herein by the Owner Participant, Lessee has not acted
as agent of the Owner Participant) has directly or indirectly offered any
Secured Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person; the Owner
Participant's interest in the Trust Estate and the Trust Agreement is being
acquired for its own account and is being purchased for investment and not
with a view to any resale or distribution thereof;
(vi) on the Delivery Date, the Trust Estate shall be free of Lessor
Liens attributable to the Owner Participant other than any Lessor Liens
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens);
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement);
and
(viii) it is not acquiring its interest in the Trust Estate or any
interests represented thereby with the assets of any "employee benefit
plan" as defined in Section 3(3) of ERISA or of any "plan" within the
meaning of Section 4975(e)(1) of the Code. 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).
(b) The Owner Participant agrees, solely for the benefit of Lessee
and the Loan Participants, that if (i) it shall cease to be, or believes itself
likely to cease to be, a Citizen of the United States and (ii) the Aircraft
shall or would therefore become ineligible for registration in the name of the
Owner Trustee under the Federal Aviation Act and regulations then applicable
thereunder, then the Owner Participant shall (at its own expense and without any
reimbursement or indemnification from Lessee) promptly effect a voting trust,
voting powers agreement or other similar arrangement or take any other action as
may be necessary to prevent any deregistration and to maintain the United States
registration of the Aircraft. It is agreed that: (A) the Owner Participant
shall be liable to pay on request to each of the other parties to the
Participation Agreement and to each holder of a Secured Certificate for any
damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant that it is a Citizen of the
United States without making use of any voting trust, voting powers agreement or
other arrangement proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee and
the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan
SCHEDULE V - PAGE A-2
Participants as a result of the Owner Participant's failure to comply with its
obligations pursuant to the preceding sentence.
(c) 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. 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. 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.
(d) The Owner Participant will not, directly or indirectly, sell,
assign, convey or otherwise transfer any of its right, title or interest in and
to this Agreement, the Trust Estate or the Trust Agreement or any proceeds
therefrom to any person or entity, unless (i) the proposed transferee is a
"Transferee" (as defined below), (ii) Lessee shall have (1) received an opinion
(in form and substance reasonably satisfactory to Lessee) of counsel to the
Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect
that such transfer will not result in any risk of loss of tax benefits to, or
any increase in the tax liability of, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any loss of tax benefits to, and increase in
the tax liability of, Lessee, and (iii) the Owner Participant sells, assigns,
conveys or otherwise transfers all of its right, title and interest in and to
this Agreement, the Trust Estate, the Trust Agreement and the proceeds therefrom
to a single entity. A "TRANSFEREE" shall mean either (A) a bank or other
financial institution with a combined capital, surplus and undivided profits of
at least $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 institution or corporation
furnishes to the Owner Trustee, the Indenture Trustee and Lessee a guaranty with
respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Indenture Trustee and
Lessee, the Owner Participant's obligations hereunder, including but not limited
to, under Section 8(c) and Section 8(h) hereof, in form and substance reasonably
satisfactory to Lessee, the Owner Trustee and the Indenture Trustee; PROVIDED,
HOWEVER, that any Transferee shall not be an airline, a commercial air carrier,
an air freight forwarder, an entity 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
SCHEDULE V - PAGE A-3
Lessee, the Owner Trustee and the Indenture Trustee an opinion of counsel in
form and substance reasonably satisfactory to such persons as to the due
authorization, delivery, legal, valid and binding effect and enforceability of
the agreement or agreements referred to in the next clause with respect to the
Transferee and any guaranty provided pursuant to the provisions of this Section
8(n) as to the guarantor, (O) the Transferee enters into an agreement or
agreements, in form and substance reasonably satisfactory to the Owner Trustee,
Lessee and the Indenture Trustee, whereby the Transferee confirms that it shall
be deemed a party to this Agreement and a party to the Trust Agreement and
agrees to be bound by all the terms of, and to undertake all of the obligations
of the transferor Owner Participant contained in, the Owner Participant
Documents (to the extent of the participation so transferred to it) and makes
the representations and warranties made by the Owner Participant thereunder, (P)
such transfer does not affect registration of the Aircraft under the Federal
Aviation Act, or any rules or regulations promulgated thereunder or create a
relationship which would be in violation thereof or violate any provision of the
Securities Act of 1933, as amended, or any other applicable Federal or state
law, (Q) the transferor Owner Participant assumes the risk of any loss of
Interest Deductions, Amortization Deductions and MACRS Deductions and the risk
of any Inclusion Event (each as defined in the Tax Indemnity Agreement)
resulting from such transfer, (R) the transferor Owner Participant pays all of
the costs and expenses (including, without limitation, fees and expenses of
counsel) incurred in connection with such transfer, including the costs and
expenses of the Owner Trustee, the Indenture Trustee, Lessee and the Loan
Participants in connection therewith, and (S) the terms of the Operative
Documents and the Overall Transaction shall not be altered. Upon any such
transfer by the Owner Participant as above provided, the Transferee shall be
deemed the Owner Participant for all purposes hereof and of the other Operative
Documents and each reference herein to the transferor Owner Participant shall
thereafter be deemed for all purposes to be to the Transferee and the transferor
Owner Participant shall be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents arising after the date of such
transfer except to the extent fully attributable to or arising out of acts or
events occurring prior thereto and not assumed by the Transferee (in each case,
to the extent of the participation so transferred). If the Owner Participant
intends to transfer any of its interests hereunder, it shall give 30 days prior
written notice thereof to the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee.
(e) 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 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.
(f) MISCELLANEOUS. The Owner Participant covenants and agrees
that it shall not unreasonably withhold its consent to any consent requested of
the Owner Trustee, as Lessor,
SCHEDULE V - PAGE A-4
under the terms of the Lease which by its terms is not to be unreasonably
withheld by the Owner Trustee, as Lessor.
(g) CHANGE IN SITUS OF OWNER TRUST. The Owner Participant agrees
that if, at any time, the Trust Estate becomes subject to any Taxes for which it
is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof,
Lessee should request that the situs of the trust be moved to another state in
the United States from the state in which it is then located, the situs of the
trust may be moved with the written consent of the Owner Participant (which
consent shall not be unreasonably withheld) and the Owner Participant will take
whatever action may be reasonably necessary to accomplish such removal; PROVIDED
that (A) Lessee shall provide such additional tax indemnification as the Owner
Participant and the Indenture Trustee may reasonably request, (B) the rights and
obligations under the Operative Documents of the Owner Participant and the
Indenture Trustee shall not be altered as a result of the taking of such action,
(C) the lien of the Trust Indenture on the Trust Indenture Estate shall not be
adversely affected by such action, 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 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 (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 opinions delivered pursuant to Sections 4(a)(xiii) and
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.
SCHEDULE V - PAGE A-5
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW 1997 G]
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 G]
DEFINITIONS
Unless the context otherwise requires, the following terms shall have
the following meanings for all purposes of the Operative Documents referred to
below which are being executed and delivered on or prior to the Certificate
Closing Date (as such term is defined below) 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.
"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.
Prior to delivery of the Lease, references in the Operative Documents to
Aircraft shall mean the British Aerospace Avro 146-R585A airframe bearing
manufacturer's serial number E2316 and anticipated to bear FAA registration
number N507XJ, together with four AlliedSignal LF507 type engines.
"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.
"ASSUMPTIONS" has the meaning set forth in Section 1(c)(ii) of the
Participation Agreement.
"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" means the term for which the Aircraft is to be leased
under the Lease pursuant to Section 3(a) of the Lease commencing on the Delivery
Date and ending on a date approximately 20 years later, or such earlier date as
the Lease may be terminated in accordance with the provisions of 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.
"XXXX OF SALE" means a full warranty xxxx 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 Xxxx of Sale
shall contain, among other things, a statement that such Xxxx of Sale thereby
conveys to the Owner Trustee good title to the Airframe and each Engine
described in such Xxxx 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.
-3-
"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 earliest to occur of (i) the
Delivery Date, (ii) the date of assumption by Lessee of the Secured Certificates
and (iii) the date of redemption of the Secured Certificates pursuant to Section
2.10(c), (d) or (e) of the Trust Indenture, 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 date specified in clause (i) above, shall
mean the investments specified in Section 22(a) of the form of Lease attached as
EXHIBIT C to the Participation Agreement.
"CERTIFICATE CLOSING" means the closing of the transactions to be
consummated on the Certificate Closing Date.
"CERTIFICATE CLOSING DATE" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees contemplated
by Section 1(a) of the Participation Agreement.
"CERTIFICATE CLOSING DOCUMENTS" has the meaning specified in Section
4(a)(iii) of the Participation Agreement.
"CERTIFICATE HOLDER" shall mean any holder from time to time of one or
more Secured Certificates.
"CERTIFICATED AIR CARRIER" means a Citizen of the United States
holding a carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49, United States Code, for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of 11 U.S.C. Section 1110 or any analogous successor
provision of the Bankruptcy Code.
"CITIZEN OF THE UNITED STATES" has the meaning specified in Section
40102(a)(15) of Title 49 of the United States Code or any similar legislation of
the United States of America enacted in substitution or replacement therefor.
"CIVIL RESERVE AIR FLEET PROGRAM" means the Civil Reserve Air Fleet
Program currently administered by the United States Air Force Air Mobility
Command pursuant to Executive Order No. 11490, as amended, or any substantially
similar program.
-4-
"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 Trust Indenture.
"COLLATERAL ACCOUNT CONTROL AGREEMENT" means the Collateral Account
Control Agreement [NW 1997 G], 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 the Consent and Agreement [NW 1997 G],
substantially in the form attached to the form of Purchase Agreement Assignment
attached as EXHIBIT B to the Participation Agreement to be dated as of and
entered into on the Delivery Date, 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 00 Xxxxx Xxxx Xxxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000, 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 Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Corporate Trust Department, or such other office
at which the Indenture Trustee's corporate trust business shall be administered
which the Indenture Trustee shall have specified by notice in writing to Lessee,
the Owner Trustee, the Loan Participants and each Certificate Holder.
"CUT-OFF DATE" means the earlier of (x) the Prepayment Date and (y)
the 90th day after the last day of the calendar month in which the Manufacturer
Delivery occurs.
"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.
-5-
"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 any event which with the giving of notice or the lapse of
time or both would become an Event of Default (as defined for purposes of the
Operative Documents other than the Trust Indenture) 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 DATE CLOSING" means the closing of the transactions to be
consummated on the Delivery Closing Date.
"DELIVERY DOCUMENTS" has the meaning specified in Section 5(a)(v) of
the Participation Agreement.
"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)(iii) of the Participation Agreement.
"DEPRECIATION PERIOD" means the period commencing on the Delivery Date
and ending on the eighth December 31st thereafter, or such earlier date as the
Lease may be terminated in accordance with the provisions thereof.
"DETERMINATION DATE" means the earlier of (i) the 30th day following
the Cut-Off Date and (ii) the Prepayment Date.
"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 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.
-6-
"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 each of the
following events (whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) so long as, but only as long as,
such event shall not have been remedied:
(x) Lessee shall have failed to make any payment under the Participation
Agreement after the same shall have become due and such failure shall
continue for ten (10) Business Days after Lessee's receipt of written
demand therefor by the party entitled thereto (PROVIDED that any
failure of Lessee to pay to Lessor when due any Excluded Payments (as
defined in the Trust Indenture) shall not constitute an Event of
Default unless notice is given by the Owner Participant to Lessee and
the Indenture Trustee that such failure shall constitute an Event of
Default); or
(y) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or
agreement to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of
thirty (30) days after receipt by Lessee of written notice thereof
from the Indenture Trustee; or
(z) any representation or warranty made by Lessee in the Participation
Agreement or any document or certificate furnished by Lessee in
connection therewith or pursuant thereto (except for representations
or warranties contained in the Pass Through Trust Agreement or the
Underwriting Agreement or any document or instrument furnished
pursuant to either thereof) shall prove to have been incorrect
-7-
in any material respect at the time made and such incorrectness shall
not have been cured (to the extent of the adverse impact of such
incorrectness on the interests of the Owner Trustee or the Certificate
Holders) within thirty (30) days after the receipt by Lessee of a
written notice from the Indenture Trustee advising Lessee of the
existence of such incorrectness.
"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, in the case of a requisition
of title, the requisition of title shall not have been reversed within 90 days
from the date of such requisition of title; (iv) as a result of any law, rule,
regulation, order or other action by the Federal Aviation Administration or
other governmental body of the government of registry of the Aircraft having
jurisdiction, the use of such property in the normal course of the business of
air transportation shall have been prohibited for a period of 180 consecutive
days, unless 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), but in any event if such use shall have been prohibited for a
period of three 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.
-8-
"EXCESS AMOUNT", for purposes of the Trust Indenture, shall have the
meaning specified in Section 2.03(b) of the Trust Indenture and, for purposes of
the Operative Documents other than the Trust Indenture, means for a Lease Period
Date an amount equal to the amount determined by multiplying Lessor's Cost by
the percentage set forth in EXHIBIT B to the Lease under the heading "Excess
Amount" opposite such Lease Period Date.
"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 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 XXXX OF SALE" means a xxxx of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"FEDERAL AVIATION ACT" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.
"FEDERAL AVIATION ADMINISTRATION" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the United
States government succeeding to their functions.
"FOREIGN AIR CARRIER" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and inspections
for the Aircraft, Airframe and/or any Engine or engine to standards which are
approved by, or which are substantially equivalent to those required by, the
Federal Aviation Administration, the Civil Aviation Authority of the United
Kingdom, the Direction Generale de l'Aviation Civile of the French Republic, the
Luftfahrt Bundesamt of the Federal Republic of Germany, the
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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.
"GUARANTEE" means the Guarantee [NW 1997 G], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable provisions
thereof.
"GUARANTOR" means Northwest Airlines Corporation, a Delaware
corporation.
"INDEMNITEE" means (i) the 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), (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).
"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.
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"INDENTURE TRUSTEE'S LIENS" means any Lien which arises as a result of
(A) claims against the Indenture Trustee not related to its interest in the
Aircraft or the administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the
Indenture Trustee to take any action required by, the Operative Documents to the
extent such acts arise or such failure arises from or constitutes gross
negligence or willful misconduct, (C) claims against the Indenture Trustee
relating to Taxes or Expenses which are excluded from the indemnification
provided by Section 7 of the Participation Agreement pursuant to said Section 7,
or (D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than a
transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article
IV or V of the Trust Indenture, or a transfer of the Aircraft pursuant to
Section 15 of the Lease while an Event of Default is continuing and prior to the
time that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"INITIAL OWNER PARTICIPANT" means Lessee.
"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 G], substantially in the form of
EXHIBIT C to the Participation Agreement, to be dated as of and entered into on
the Delivery Date, 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 a "Default" as defined in clause (a) of the
definition of "Default".
"LEASE EVENT OF DEFAULT" shall mean an "Event of Default" as defined
in clause (b) of the definition of "Event of Default".
"LEASE PERIOD DATE" means the first January 2 or July 2 after the
Delivery Date and each January 2 and July 2 thereafter, 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.
"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 Xxxx of Sale, the Xxxx of Sale, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
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"LESSEE OPERATIVE DOCUMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase
Agreement Assignment, the FAA Xxxx of Sale and the Xxxx of Sale.
"LESSOR LIENS" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank, National
Association, in its individual capacity, or the Owner Participant not related to
the transactions contemplated by the Operative Documents, (ii) any act or
omission of the Owner Participant, Lessor, or First Security Bank, National
Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against the Owner
Participant, Lessor, or First Security Bank, National Association, in its
individual capacity, with respect to Taxes or Expenses against which Lessee is
not required to indemnify the Owner Participant, Lessor or First Security Bank,
National Association, in its individual capacity, pursuant to Section 7 of the
Participation Agreement or (iv) claims against Lessor or the Owner Participant
arising out of any transfer by Lessor or the Owner Participant of all or any
portion of the respective interests of Lessor or the Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the transfer
pursuant to the Trust Indenture or a transfer of the Aircraft pursuant to
Section 9, 10 or 19 of the Lease or pursuant to the exercise of the remedies set
forth in Section 15 thereof, PROVIDED, HOWEVER, that any Lien which is
attributable solely to First Security Bank, National Association or the Owner
Participant and would otherwise constitute a Lessor Lien hereunder shall not
constitute a Lessor Lien hereunder so long as (1) the existence of such Lien
poses no material risk of the sale, forfeiture or loss of the Aircraft, (2) the
existence of such Lien does not interfere in any way with the use, possession,
operation, or quiet enjoyment of the Aircraft by Lessee (or any Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Trust Indenture, (4) First Security Bank,
National Association or the Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner Participant, as
appropriate).
"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.
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"LIQUIDITY PROVIDER" means The 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.
"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.
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"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 Participation Agreement.
"MANDATORY ECONOMIC TERMS" means the terms set forth on SCHEDULE IV to
the Participation Agreement.
"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 is 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 the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MORTGAGE" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"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.
"OPERATIVE DOCUMENTS" and "OPERATIVE DOCUMENT" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust Agreement, an
acceptance certificate covering the Aircraft in the form agreed to by the
Participants and Lessee, the Tax Indemnity Agreement, the Lease Supplement
covering the Aircraft, the Trust Supplement covering the Aircraft, the Secured
Certificates, the Xxxx of Sale, the FAA Xxxx of Sale, the Purchase Agreement
(insofar as it relates to the Aircraft), the Guarantee, the Residual Agreement,
the Collateral Account Control Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"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 to whom on the Delivery
Date (or, if earlier, the Transfer Date) the Initial Owner Participant shall
transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such corporation
transfers all or any portion 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, and the Tax Indemnity Agreement.
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"OWNER TRUSTEE" means the entity executing the Participation Agreement
as Owner Trustee and any entity appointed as successor Owner Trustee pursuant to
Section 9.01 of the Trust Agreement, and references to a predecessor Owner
Trustee in its individual capacity by name in the Operative Documents shall
include such successor Owner Trustee in its individual capacity from and after
such succession.
"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, the
Initial Owner Participant and the Owner Participant.
"PARTICIPATION AGREEMENT" means that certain Participation Agreement
[NW 1997 G], 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 may
be amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"PARTIES" means the Owner Trustee, the Indenture Trustee and the
Participants.
"PARTS" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines, (b) any items leased by Lessee from a third party
(other than Lessor) and (c) cargo containers) which may from time to time be
incorporated or installed in or attached to the Airframe or any Engine or so
long as title thereto shall remain vested in Lessor in accordance with Section 8
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.
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"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.
"PREDECESSOR LEASE" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"PREPAYMENT DATE" means [for NW 1997 G and H: June 15, 1998] [for 1997
I/J/K/L: August 31, 1998].
"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 the 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 the Purchase Agreement
Assignment [NW 1997 G], dated as of the Delivery Date and substantially in the
form of EXHIBIT B to the Participation Agreement, 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 Xxxxx'x.
"RATING AGENCY CONFIRMATION" means, with respect to any Operative
Document that is to be modified in any material respect on the Delivery Date or
the Transfer Date, if applicable, 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
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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" shall mean any Fixed Renewal Term or Fair Market
Renewal Term as those terms are defined in Section 19 of the Lease.
"RENT" means Basic Rent and Supplemental Rent, collectively.
"REOPTIMIZATION DATE" has the meaning set forth in Section 1(c)(ii) of
the Participation Agreement.
"REPLACEMENT AIRFRAME" shall mean any airframe substituted for the
Airframe pursuant to Section 5.06 of the Trust Indenture.
"REPLACEMENT ENGINE" shall mean any engine substituted for an Engine
pursuant to Section 5.06 of the Trust Indenture.
"RESIDUAL AGREEMENT" means the Residual Value Agreement (N507XJ),
dated as of the Delivery Date, 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."
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"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" shall mean the amount denominated as such in
EXHIBIT B to the Lease.
"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.
"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
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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.
"TAX INDEMNITY AGREEMENT" means that certain Tax Indemnity Agreement
[NW 1997 G], to be dated as of the Delivery Date, 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 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) Xxxxxxx, Xxxx & Xxxxx LLP, special counsel for the Pass
Through Trustee and the Indenture Trustee, (B) Ray, Xxxxxxx & Xxxxxxx, special
counsel for the Owner Trustee, (C) Shearman & Sterling, special counsel for the
Underwriters, and (D) Xxxxx & Xxxxxxx, 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;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of
special counsel to the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee;
(8) the fees, expenses and disbursements of Xxxxxxx Xxxxxxx
& Xxxxxxxx and Xxxxxxxxxx, Xxxxxxxxxx & Xxxx, special counsel for Lessee;
-19-
(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, Xxxxxx & Xxxxxx LLP, special counsel to the Liquidity
Provider;
(11) the reasonable fees, expenses and disbursements of
Vedder, Price, Xxxxxxx & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements
of Xxxxxxx and Xxxxx Financial Corporation.
"TRANSACTIONS" means the transactions contemplated by the
Participation Agreement and the other Operative Documents.
"TRANSFER DATE" has the meaning specified in Section 1(b) of the
Participation Agreement.
"TRIGGERING EVENT" has the meaning specified in the Intercreditor
Agreement.
"TRUST AGREEMENT" means that certain Trust Agreement [NW 1997 G],
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 or as modified, amended or supplemented pursuant to the
applicable provisions thereof, including, without limitation, supplementation
thereof by one or more Trust Supplements entered into pursuant to the applicable
provisions thereof.
"TRUST AGREEMENT AND INDENTURE SUPPLEMENT" or "TRUST SUPPLEMENT" shall
mean 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.
"TRUST INDENTURE", "THE TRUST INDENTURE", "INDENTURE", AND "THE
INDENTURE" shall mean the Trust Indenture and Security Agreement [NW 1997 G],
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, including supplementing by the Trust Agreement and
Indenture Supplement pursuant thereto.
"TRUST INDENTURE ESTATE" shall mean all estate, right, title and
interest of the Indenture Trustee in and to the properties referred to in the
Granting Clause of the Trust Indenture, 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
-20-
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.
-21-
EXHIBIT C TO PARTICIPATION
AGREEMENT [NW 1997 __]
================================================================================
LEASE AGREEMENT
[NW 1997 __]
DATED AS OF
_________ __, 199_
BETWEEN
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE,
LESSOR
AND
NORTHWEST AIRLINES, INC.,
LESSEE
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
================================================================================
As set forth in Section 20 hereof, Lessor has assigned to the Indenture Trustee
(as defined herein) certain of its right, title and interest in and to this
Lease. To the extent, if any, that this Lease constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction) no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the original
executed counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
thereof.
TABLE OF CONTENTS TO LEASE AGREEMENT
Page
----
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2. Acceptance and Lease. . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. Term and Rent . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Basic Term . . . . . . . . . . . . . . . . . . . . . . . 14
(b) [Intentionally Omitted]. . . . . . . . . . . . . . . . . 14
(c) Basic Rent . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Adjustments to Basic Rent. . . . . . . . . . . . . . . . 15
(e) Supplemental Rent. . . . . . . . . . . . . . . . . . . . 16
(f) Payments in General. . . . . . . . . . . . . . . . . . . 17
(g) Prepayment of Certain Rent Payments. . . . . . . . . . . 18
SECTION 4. Lessor's Representations and Warranties . . . . . . . . . . . 18
SECTION 5. Return of the Aircraft. . . . . . . . . . . . . . . . . . . . 19
(a) Condition Upon Return. . . . . . . . . . . . . . . . . . 19
(b) Return of the Engines. . . . . . . . . . . . . . . . . . 20
(c) Fuel; Manuals. . . . . . . . . . . . . . . . . . . . . . 21
(d) Storage Upon Return. . . . . . . . . . . . . . . . . . . 21
SECTION 6. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia . . . . . . . . . . . . . . . . . . . . . 22
(a) Registration and Maintenance . . . . . . . . . . . . . . 22
(b) Possession and Subleases . . . . . . . . . . . . . . . . 23
(c) Insignia . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions . . . . . . . . . . . . . . . . . 27
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . 27
(b) Pooling of Parts . . . . . . . . . . . . . . . . . . . . 28
(c) Alterations, Modifications and Additions . . . . . . . . 29
SECTION 9. Voluntary Termination . . . . . . . . . . . . . . . . . . . . 30
(a) Termination Event. . . . . . . . . . . . . . . . . . . . 30
(b) [Intentionally Omitted]. . . . . . . . . . . . . . . . . 30
(c) Optional Sale of the Aircraft. . . . . . . . . . . . . . 30
(i)
Page
----
(d) Termination as to Engines. . . . . . . . . . . . . . . . 32
SECTION 10. Loss, Destruction, Requisition, etc.. . . . . . . . . . . . . 32
(a) Event of Loss with Respect to the Aircraft . . . . . . . 32
(b) Event of Loss with Respect to an Engine. . . . . . . . . 34
(c) Application of Payments from Governmental
Authorities for Requisition of Title, etc. . . . . . . . 35
(d) Requisition for Use of the Aircraft by the
United States Government or the Government of
Registry of the Aircraft . . . . . . . . . . . . . . . . 36
(e) Requisition for Use of an Engine by the United
States Government or the Government of Registry
of the Aircraft. . . . . . . . . . . . . . . . . . . . . 37
(f) Application of Payments During Existence of
Event of Default . . . . . . . . . . . . . . . . . . . . 37
SECTION 11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Public Liability and Property Damage Insurance . . . . . 37
(b) Insurance Against Loss or Damage to the Aircraft . . . . 39
(c) Reports, etc.. . . . . . . . . . . . . . . . . . . . . . 41
(d) Self-Insurance . . . . . . . . . . . . . . . . . . . . . 42
(e) Additional Insurance by Lessor and Lessee. . . . . . . . 42
(f) Indemnification by Government in Lieu of Insurance . . . 43
(g) Application of Payments During Existence of an
Event of Default . . . . . . . . . . . . . . . . . . . . 43
SECTION 12. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 13. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 14. Events of Default . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 15. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 16. Lessee's Cooperation Concerning Certain Matters . . . . . . . 49
SECTION 17. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 18. No Set-Off, Counterclaim, etc.. . . . . . . . . . . . . . . . 51
SECTION 19. Renewal Options; Purchase Options; Valuation. . . . . . . . . 51
(a) Renewal Options. . . . . . . . . . . . . . . . . . . . . 51
(b) Purchase Options . . . . . . . . . . . . . . . . . . . . 53
(c) Valuation. . . . . . . . . . . . . . . . . . . . . . . . 53
(d) Special Purchase Option. . . . . . . . . . . . . . . . . 54
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 21. Lessor's Right to Perform for Lessee. . . . . . . . . . . . . 55
SECTION 22. Investment of Security Funds; Liability of Lessor Limited . . 55
(ii)
Page
----
(a) Investment of Security Funds . . . . . . . . . . . . . . 55
(b) Liability of Lessor Limited. . . . . . . . . . . . . . . 56
SECTION 23. Service of Process. . . . . . . . . . . . . . . . . . . . . . 56
SECTION 24. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 25. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 26. Covenant of Quiet Enjoyment . . . . . . . . . . . . . . . . . 57
(iii)
EXHIBITS
--------
EXHIBIT A - Form of Lease Supplement
EXHIBIT B - Basic Rent, Excess Amount, Lessor's Cost
and Special Purchase Price Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation and Indemnification Verification
EXHIBIT F - Schedule of Domiciles of Permitted Sublessees
EXHIBIT G - Return Conditions
EXHIBIT H - Return Conditions (EBT)
(iv)
LEASE AGREEMENT
[NW 1997 __]
This LEASE AGREEMENT [NW 1997 __], dated as of ___________, 199_,
between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Section 1 hereof) (in such capacity,
"LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing
pursuant to the laws of the State of Minnesota ("LESSEE");
W I T N E S S E T H:
SECTION 1. DEFINITIONS. Unless the context otherwise requires,
the following terms shall have the following meanings for all purposes of this
Lease Agreement [NW 1997 __] and shall be equally applicable to both the
singular and the plural forms of the terms herein defined:
"AFFILIATE" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control
with such person. For the purposes of this definition, "control"
(including "controlled by" and "under common control with") shall mean the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such person whether through the ownership of
voting securities or by contract or otherwise.
"AIRCRAFT" means the Airframe to be delivered and leased hereunder (or
any airframe from time to time substituted for such Airframe pursuant to
Section 10(a) hereof) together with the four Engines initially leased
hereunder (or any engine substituted for either of such Engines pursuant to
the terms hereof), whether or not any of such initial or substituted
Engines may from time to time be installed on such initial or substituted
Airframe or may be installed on any other airframe or on any other
aircraft.
"AIRFRAME" means: (i) the British Aerospace Avro 146-RJ85A aircraft
(except Engines or engines from time to time installed thereon) specified
in the initial Lease Supplement, which aircraft shall be leased by Lessor
to Lessee hereunder and under such Lease Supplement, and any aircraft
(except Engines or engines from time to time installed thereon) which may
from time to time be substituted for such aircraft (except Engines or
engines from time to time installed thereon) pursuant to clause (ii) of the
first paragraph of Section 10(a); and (ii) any and all Parts (A) so long as
the same shall be incorporated or installed in or attached to such aircraft
(except Engines or engines from time to time installed thereon), or (B) so
long as title thereto shall remain vested in Lessor in accordance with the
terms of Section 8 after removal from such aircraft (except Engines or
engines from time to time installed thereon); PROVIDED, HOWEVER, that at
such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe
pursuant to the applicable provisions hereof, the replaced Airframe shall
cease to be an Airframe hereunder.
"APPLICABLE RATE" means as of any date the weighted average of the
interest rates borne by the Secured Certificates then outstanding and, if
no Secured Certificates shall be outstanding, the Base Rate.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as amended,
or any subsequent legislation that amends, supplements or supersedes such
provisions.
"BASE RATE" means the rate of interest announced publicly by Citibank,
N.A. in New York, New York from time to time as its base rate.
"BASIC RENT" means, for the Basic Term, the rent payable for the
Aircraft pursuant to Section 3(c) as adjusted as provided in Section 3(d)
but subject always to the provisions of Section 3(d)(v) hereof and, for any
Renewal Term, Basic Rent determined pursuant to Section 19.
"BASIC TERM" means the term for which the Aircraft is leased hereunder
pursuant to Section 3(a) hereof commencing on the Delivery Date and ending
on _________, 201_, or such earlier date as this Lease may be terminated in
accordance with the provisions hereof.
"BENEFICIAL INTEREST" means the interest of the Owner Participant (or
the Initial Owner Participant, as the case may be) under the Trust
Agreement.
"XXXX OF SALE" means a full warranty xxxx 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 Xxxx of Sale shall contain, among other things, a statement that such
Xxxx of Sale thereby conveys to the Owner Trustee good title to the
Airframe and each Engine described in such Xxxx of Sale, free and clear of
all liens, encumbrances and rights of others except Liens permitted by
clause (v) of Section 6 of the Lease.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which commercial banks are required or authorized to close in the City
of New York, New York; Boston, Massachusetts; or Minneapolis, Minnesota.
"CERTIFICATE CLOSING DATE" means the date of closing with respect to
the purchase of Secured Certificates by the Pass Through Trustees
contemplated by Section 1(a) of the Participation Agreement.
"CERTIFICATE HOLDER" means Certificate Holder as defined in the Trust
Indenture.
"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.
- 2 -
"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" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means the commitment of a Pass Through Trustee or of the
Owner Participant, as the case may be, to finance the Owner Trustee's
payment of Lessor's Cost for the Aircraft.
"CONSENT AND AGREEMENT" means the Consent and Agreement [NW 1997 __],
dated as of the date hereof, executed by the Manufacturer, as the same may
be amended, modified or supplemented from time to time in accordance with
the applicable provisions thereof.
"CONTRACT RIGHTS" means all of Lessee's right, title and interest in
and to 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.
"DEFAULT" means any event which with the giving of notice or the lapse
of time or both would become an Event of Default.
"DELIVERY DATE" means the date of the initial Lease Supplement for the
Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee hereunder.
"DEPRECIATION PERIOD" means the period commencing on the Delivery Date
and ending on December 31, 200_, or such earlier date as this Lease may be
terminated in accordance with the provisions hereof.
"DOLLARS" and "$" means the lawful currency of the United States of
America.
"ENGINE" means (i) each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the initial Lease Supplement,
whether or not from time to time thereafter installed on the Airframe or
installed on any other airframe or on any other aircraft; and (ii) any
engine which may from time to time be substituted, pursuant to the terms
hereof, for 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 after removal from such
Engine; PROVIDED, HOWEVER, that at such time as an engine shall be deemed
part of the property leased hereunder in substitution for an Engine
pursuant to the applicable provisions hereof, the replaced Engine shall
cease to be an Engine
- 3 -
hereunder. The term "ENGINES" means, as of any date of determination, all
Engines then leased hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect
at the date of the Participation Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"EVENT OF DEFAULT" has the meaning specified in Section 14 hereof.
"EVENT OF LOSS" with respect to the Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the
loss of such property or of the use thereof due to the destruction of or
damage to such property which renders repair uneconomic or which renders
such property permanently unfit for normal use by Lessee (or any Sublessee)
for any reason whatsoever; (ii) any damage to such property which results
in an insurance 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, in the case of a requisition of title,
the requisition of title shall not have been reversed within 90 days from
the date of such requisition of title; (iv) as a result of any law, rule,
regulation, order or other action by the Federal Aviation Administration or
other governmental body of the government of registry of the Aircraft
having jurisdiction, the use of such property in the normal course of the
business of air transportation shall have been prohibited for a period of
180 consecutive days, unless 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), but in any event if such use shall
have been prohibited for a period of three 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
- 4 -
registry of the Aircraft or any instrumentality or agency of any thereof,
which shall have occurred during the Basic Term (or any Renewal Term) and
shall have continued for thirty (30) days beyond the Term, PROVIDED,
HOWEVER, that no Event of Loss pursuant to this clause (v) shall exist if
Lessor shall have furnished to Lessee the written notice specified in
Section 10(d) hereof; and (vi) any divestiture of title to or interest in
an Engine treated as an Event of Loss pursuant to Section 7(b) hereof. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to the Airframe.
"EXCESS AMOUNT" for a Lease Period Date means an amount equal to the
amount determined by multiplying Lessor's Cost by the percentage set forth
in EXHIBIT B hereto under the heading "Excess Amount" opposite such Lease
Period Date.
"EXPENSES" has the meaning specified in Section 7(c) of the
Participation Agreement.
"FAA XXXX OF SALE" means a xxxx of sale for the Aircraft on AC Form
8050-2 or such other form as may be approved by the Federal Aviation
Administration on the Delivery Date for the Aircraft, executed by Lessee in
favor of the Owner Trustee and dated the Delivery Date.
"FEDERAL AVIATION ACT" means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation
Act of 1958, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"FEDERAL AVIATION ADMINISTRATION" and "FAA" mean the United States
Federal Aviation Administration and any agency or instrumentality of the
United States government succeeding to their functions.
"FOREIGN AIR CARRIER" means any air carrier which is not a U.S. Air
Carrier and which performs maintenance, preventative maintenance and
inspections for the Aircraft, Airframe and/or any Engine or engine to
standards which are approved by, or which are substantially equivalent to
those required by, the Federal Aviation Administration, the Civil Aviation
Authority of the United Kingdom, the Direction Generale de l'Aviation
Civile of the French Republic, the Luftfahrt Bundesamt of the Federal
Republic of Germany, the 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).
"GUARANTEE" means the Guarantee [NW 1997 __], dated as of the
Certificate Closing Date, made by the Guarantor, as such Guarantee may be
amended or supplemented from time to time pursuant to the applicable
provisions thereof.
"GUARANTOR" means Northwest Airlines Corporation, a Delaware
corporation.
"HALF-LIFE ADJUSTMENT" has the meaning specified in EXHIBIT H hereto.
"INDEMNITEE" means (i) the Owner Trustee, in its individual capacity
and as trustee under the Trust Agreement, (ii) the Indenture Trustee, (iii)
the Owner
- 5 -
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), (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).
"INDENTURE TRUSTEE" means the Indenture Trustee under the Trust
Indenture, and any entity which may from time to time be acting as
indenture trustee under the Trust Indenture.
"INDENTURE TRUSTEE DOCUMENTS" means the Participation Agreement and
the Trust Indenture.
"INDENTURE TRUSTEE'S LIENS" means any Lien which arises as a result of
(A) claims against the Indenture Trustee not related to its interest in the
Aircraft or the administration of the Trust Estate pursuant to the Trust
Indenture, (B) acts of the Indenture Trustee not permitted by, or failure
of the Indenture Trustee to take any action required by, the Operative
Documents to the extent such acts arise or such failure arises from or
constitutes gross negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 of the Participation Agreement
pursuant to said Section 7, or (D) claims against the Indenture Trustee
arising out of the transfer by the Indenture Trustee of all or any portion
of its interest in the Aircraft, the Trust Estate, the Trust Indenture
Estate or the Operative Documents other than a transfer of the Aircraft
pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the
Trust Indenture, or a transfer of the Aircraft pursuant to Section 15 of
the Lease while an Event of Default is continuing and prior to the time
that the Indenture Trustee has received all amounts due pursuant to the
Trust Indenture.
"INITIAL OWNER PARTICIPANT" means Lessee.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Provider and the
Subordination Agent.
"LEASE AGREEMENT", "THIS LEASE AGREEMENT", "THIS LEASE", "THIS
AGREEMENT", "HEREIN", "HEREOF", "HEREUNDER", "HEREBY" or other like words
mean this Lease Agreement [NW 1997 __] as originally executed or as
modified, amended or supplemented pursuant to the applicable provisions
hereof and in accordance with the Trust Agreement and the Trust Indenture,
including, without limitation, supplementation hereof by one or more Lease
Supplements entered into pursuant to the applicable provisions hereof.
"LEASE PERIOD" means each of the consecutive periods throughout the
Basic Term and any Renewal Term ending on a Lease Period Date, the first
such period commencing on and including the Delivery Date.
- 6 -
"LEASE PERIOD DATE" means ____________, 199_ and each succeeding
January 2 and July 2, to and including the last such date in the Term.
"LEASE SUPPLEMENT" means a Lease Supplement, substantially in the form
of EXHIBIT A hereto, to be entered into between Lessor and Lessee on the
Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of this Lease Agreement, and any subsequent Lease Supplement
entered into in accordance with the terms hereof.
"LESSEE DOCUMENTS" means the Participation Agreement, the Lease, the
Lease Supplement covering the Aircraft, the Purchase Agreement (insofar as
it relates to the Aircraft), the FAA Xxxx of Sale, the Xxxx of Sale, the
Purchase Agreement Assignment and the Tax Indemnity Agreement.
"LESSOR LIENS" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, First Security Bank,
National Association, in its individual capacity, or the Owner Participant
not related to the transactions contemplated by the Operative Documents,
(ii) any act or omission of the Owner Participant, Lessor, or First
Security Bank, National Association, in its individual capacity, which is
not related to the transactions contemplated by the Operative Documents or
is in violation of any of the terms of the Operative Documents, (iii)
claims against the Owner Participant, Lessor, or First Security Bank,
National Association, in its individual capacity, with respect to Taxes or
Expenses against which Lessee is not required to indemnify the Owner
Participant, Lessor or First Security Bank, National Association, in its
individual capacity, pursuant to Section 7 of the Participation Agreement
or (iv) claims against Lessor or the Owner Participant arising out of any
transfer by Lessor or the Owner Participant of all or any portion of the
respective interests of Lessor or the Owner Participant in the Aircraft,
the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to this Agreement, the
transfer pursuant to the Trust Indenture or a transfer of the Aircraft
pursuant to Section 9, 10 or 19 hereof or pursuant to the exercise of the
remedies set forth in Section 15 hereof, PROVIDED, HOWEVER, that any Lien
which is attributable solely to First Security Bank, National Association
or the Owner Participant and would otherwise constitute a Lessor Lien
hereunder shall not constitute a Lessor Lien hereunder so long as (1) the
existence of such Lien poses no material risk of the sale, forfeiture or
loss of the Aircraft, (2) the existence of such Lien does not interfere in
any way with the use, possession, operation, or quiet enjoyment of the
Aircraft by Lessee (or any Sublessee), (3) the existence of such Lien does
not affect the priority or perfection of, or otherwise jeopardize, the Lien
of the Trust Indenture, (4) First Security Bank, National Association or
the Owner Participant, as appropriate, is diligently contesting such Lien
and (5) the existence of such Lien does not pose a material threat of
interference with the payment of Rent (other than Excluded Payments in
favor of First Security Bank, National Association or the Owner
Participant, as appropriate).
"LESSOR'S COST" for the Aircraft means the amount denominated as such
in EXHIBIT B to the Lease.
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"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease, sublease, sub-sublease or security interest.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
between the Subordination Agent, as borrower, and the Liquidity Provider,
and any replacement thereof, in each case as the same may be amended,
modified or supplemented.
"LIQUIDITY PROVIDER" means 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) hereof.
"MAJORITY IN INTEREST OF CERTIFICATE HOLDERS" has the meaning set
forth in the Trust Indenture.
"MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust
Indenture.
"MANUFACTURER" means British Aerospace (Operations) Limited, a limited
company incorporated under the laws of England and Wales, and its
successors and assigns.
"MANUFACTURER DOCUMENTS" means the Purchase Agreement, the Residual
Agreement and the Consent and Agreement.
"MANUFACTURER SUPPORT AGREEMENT" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and Lessee.
"MORTGAGE" means any mortgage entered into by Lessee with respect to
the Aircraft prior to the Delivery Date.
"NET ECONOMIC RETURN" shall have the meaning ascribed to such term in
paragraph 2 of EXHIBIT E to the Lease.
"NET PRESENT VALUE OF RENTS" means the net present value, as of the
Delivery Date, of Basic Rent set forth in EXHIBIT B hereto, discounted at
an annual interest rate of _____ percent on a semi-annual basis.
"OPERATIVE DOCUMENTS" and "OPERATIVE DOCUMENT" means each of the
Participation Agreement, the Lease, the Trust Indenture, the Trust
Agreement, an acceptance certificate covering the Aircraft in the form
agreed to by the Participants and Lessee, the Tax Indemnity Agreement, the
Lease Supplement covering the Aircraft, the Trust Supplement covering the
Aircraft, the Secured Certificates, the Xxxx of Sale, the FAA Xxxx of Sale,
the Purchase Agreement (insofar as it relates to the Aircraft), the
Guarantee, the Residual Agreement, the Purchase Agreement Assignment and
the Consent and Agreement.
"OVERALL TRANSACTION" means all the transactions contemplated by the
Operative Documents.
- 8 -
"OWNER PARTICIPANT" means the corporation to whom on the Delivery Date
(or, if earlier, the Transfer Date) the Initial Owner Participant shall
transfer its Beneficial Interest pursuant to Section 1(b) or 1(d) of the
Participation Agreement, and thereafter any Person to which such
corporation transfers all or any portion 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, and the Tax Indemnity Agreement.
"OWNER TRUSTEE" means the entity executing the Participation Agreement
as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a
predecessor Owner Trustee in its individual capacity by name in the
Operative Documents shall include such successor Owner Trustee in its
individual capacity from and after such succession.
"OWNER TRUSTEE DOCUMENTS" means the Participation Agreement, the Trust
Agreement, the Trust Supplement covering the Aircraft, the Lease, the Lease
Supplement covering the Aircraft, the Purchase Agreement Assignment, the
Residual Agreement, the Trust Indenture and the Secured Certificates.
"PARTICIPANTS" means and includes the Loan Participants and the Owner
Participant.
"PARTICIPATION AGREEMENT" means that certain Participation Agreement
[NW 1997 __], 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 may be amended or supplemented from time to time pursuant to the
applicable provisions thereof.
"PARTIES" means the Owner Trustee, the Indenture Trustee and the
Participants.
"PARTS" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than
(a) complete Engines or engines, (b) any items leased by Lessee from a
third party (other than Lessor) and (c) cargo containers) which may from
time to time be incorporated or installed in or attached to the Airframe or
any Engine or so long as title thereto shall remain vested in Lessor in
accordance with Section 8 after removal therefrom.
"PASS THROUGH CERTIFICATES" means the pass through certificates to be
issued by the Pass Through Trustee in connection with the Overall
Transaction.
"PASS THROUGH TRUST 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
- 9 -
Trust Agreement, and each other person that may from time to time be acting
as successor trustee under any such Pass Through Trust Agreement.
"PAST DUE RATE" means (i) with respect to the portion of any payment
of Rent that may be required by the Trust Indenture to be paid by the
Indenture Trustee to the Loan Participants, or the holders of any
outstanding Secured Certificates, the "Past Due Rate" as defined in the
Trust Indenture and (ii) with respect to the remaining portion of any
payment of Rent (and the entire amount of any payment of Rent after the
satisfaction and discharge of the Trust Indenture), a rate per annum equal
to 1% over the Base Rate.
"PERMITTED LIEN" means any Lien referred to in clauses (i) through
(viii) of Section 6 hereof.
"PERMITTED SUBLESSEE" means any entity domiciled in a country listed
in EXHIBIT F hereto.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PREDECESSOR LEASE" means any lease entered into by Lessee with
respect to the Aircraft prior to the Delivery Date.
"PREPAID RENT" has the meaning assigned in Section 3(g) hereof.
"PURCHASE AGREEMENT" means the 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 the Purchase Agreement
Assignment [NW 1997 __], dated as of the date hereof, between Lessee and
Lessor, as the same may be amended, supplemented or modified from time to
time, with a form of Consent and Agreement to be executed by the
Manufacturer attached thereto.
"PURCHASERS" means the Pass Through Trustees under each Pass Through
Trust Agreement.
"REIMBURSEMENT AMOUNT" has the meaning set forth in Section 3(g)
hereof.
"RELATED INDEMNITEE GROUP" means, with respect to any Indemnitee, any
officer, director, servant, employee, agent or Affiliate thereof.
"RENEWAL TERM" means any Fixed Renewal Term or Fair Market Renewal
Term as those terms are defined in Section 19 hereof.
"RENT" means Basic Rent and Supplemental Rent, collectively.
"RESIDUAL AGREEMENT" means the Residual Value Agreement (N5__XJ),
dated as of the date hereof, among the Manufacturer, the Owner Participant
and the Owner Trustee.
"SECURED CERTIFICATES" has the meaning assigned to that term in the
Trust Indenture.
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"SPECIAL PURCHASE PRICE" shall mean the amount denominated as such in
EXHIBIT B to the Lease.
"STIPULATED LOSS VALUE" with respect to the Aircraft as of any date
through and including _________, 201_, means, but subject always to the
provisions of Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in EXHIBIT C
hereto opposite the Stipulated Loss Value Date with respect to which the
amount is determined (as such EXHIBIT C may be adjusted from time to time
as provided in Section 3(d) hereof and in Section 7 of the Tax Indemnity
Agreement). "Stipulated Loss Value" as of any date after _________, 201_
shall be the amount determined as provided in Section 19(a) hereof.
"STIPULATED LOSS VALUE DATE" means the 2nd calendar day of each
calendar month during the Basic Term and any Renewal Term.
"SUBLEASE" means any sublease permitted by the terms of Section
7(b)(x) hereof.
"SUBLESSEE" means any Person for so long, but only so long, as such
Person is in possession of the Airframe and/or any Engine pursuant to the
terms of a Sublease which is then in effect pursuant to Section 7(b)(x)
hereof.
"SUBORDINATION AGENT" means State Street Bank and Trust Company of
Connecticut, National Association, a national banking association, as
subordination agent under the Intercreditor Agreement, or any successor
thereto.
"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.
"TAX INDEMNITY AGREEMENT" means that certain Tax Indemnity Agreement
[NW 1997 __], dated as of the date hereof, between the Owner Participant
and
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Lessee, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"TAXES" means any and all fees (including, without limitation,
license, recording, documentation and registration fees), taxes (including,
without limitation, income, gross receipts, sales, rental, use, turnover,
value added, property (tangible and intangible), excise and stamp taxes),
license, levies, imposts, duties, charges, assessments or withholdings of
any nature whatsoever, together with any and all penalties, fines,
additions to tax and interest thereon (each, individually a "TAX").
"TERM" means the Basic Term and, if actually entered into, any Renewal
Term.
"TERMINATION DATE" has the meaning set forth in Section 9(a) hereof.
"TERMINATION VALUE" with respect to the Aircraft as of any date
through and including _________, 201_, means, but subject always to the
provisions of Section 3(d)(v) hereof, the amount determined by multiplying
Lessor's Cost for the Aircraft by the percentage specified in EXHIBIT D
hereto opposite the Termination Date with respect to which the amount is
determined (as such EXHIBIT D may be adjusted from time to time as provided
in Section 3(d) hereof and in Section 7 of the Tax Indemnity Agreement).
"TRANSACTION EXPENSES" means: all of the reasonable out-of-pocket
costs, fees and expenses incurred by the Owner Trustee, the 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) Xxxxxxx, Xxxx & Xxxxx LLP, special counsel for the Pass Through
Trustee and the Indenture Trustee, (B) Ray, Xxxxxxx & Xxxxxxx, special
counsel for the Owner Trustee, (C) Shearman & Sterling, special
counsel for the Underwriters, and (D) Xxxxx & Xxxxxxx, 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;
(5) underwriting fees and commissions;
(6) the fees and expenses with respect to the appraisals of
the Aircraft;
(7) the reasonable fees, expenses and disbursements of special
counsel to the Owner Participant, such fees not to exceed the amount
previously agreed to by the Owner Participant and Lessee;
- 12 -
(8) the fees, expenses and disbursements of Xxxxxxx Xxxxxxx &
Xxxxxxxx and Xxxxxxxxxx, Xxxxxxxxxx & Xxxx, 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, Xxxxxx & Xxxxxx, special counsel to the Liquidity Provider;
(11) the reasonable fees, expenses and disbursements of Vedder,
Price, Xxxxxxx & Kammholz, special counsel to the Manufacturer; and
(12) the equity placement fee and reasonable disbursements of
Xxxxxxx and Xxxxx Financial Corporation.
"TRUST AGREEMENT" means that certain Trust Agreement [NW 1997 __],
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 or as modified, amended or
supplemented pursuant to the applicable provisions thereof, including,
without limitation, supplementation thereof by one or more Trust
Supplements entered into pursuant to the applicable provisions thereof.
"TRUST AGREEMENT AND INDENTURE SUPPLEMENT" OR "TRUST SUPPLEMENT" means
a supplement to the Trust Agreement and the Trust Indenture, substantially
in the form of EXHIBIT A to the Trust Indenture.
"TRUST ESTATE" means the Trust Estate as that term is defined in the
Trust Agreement.
"TRUST INDENTURE" means that certain Trust Indenture and Security
Agreement [NW 1997 __], 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 the provisions thereof.
"TRUST INDENTURE ESTATE" has the meaning assigned to that term in the
Trust Indenture.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement,
dated as of September 16, 1997, among Lessee, the Guarantor, and the
underwriters named therein.
"U.S. AIR CARRIER" means any Certificated Air Carrier as to which
there is in force an air carrier operating certificate issued pursuant to
Part 121 of the regulations under the Federal Aviation Act, or which may
operate as an air carrier by certification or otherwise under any successor
or substitute provisions therefor or in the absence thereof.
"WET LEASE" means any arrangement whereby the Lessee (or any
Sublessee) agrees to furnish the Airframe and Engines or engines installed
thereon to a third party pursuant to which such Airframe and Engines or
engines (i) shall be operated solely by regular employees of Lessee (or any
Sublessee) possessing all current certificates and licenses that would be
required under the Federal Aviation Act or, if the Aircraft is not
registered in the United States, all certificates and licenses required by
the laws of the jurisdiction of registry, for the
- 13 -
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.
SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Sections 4(a) and 5(a) of the
Participation Agreement) to accept the transfer of title from and simultaneously
to lease to Lessee hereunder, and Lessee hereby agrees (subject to satisfaction
of the conditions set forth in Sections 4(b) and 5(b) of the Participation
Agreement) to lease from Lessor hereunder, the Aircraft as evidenced by the
execution by Lessor and Lessee of a Lease Supplement leasing the Aircraft
hereunder. Lessee hereby agrees that such acceptance of the Aircraft by Lessor
shall, without further act, irrevocably constitute acceptance by Lessee of such
Aircraft for all purposes of this Lease.
SECTION 3. TERM AND RENT. (a) BASIC TERM. The Basic Term shall
commence on the Delivery Date and end on _________, 201_, or such earlier date
as this Lease may be terminated in accordance with the provisions hereof.
(b) [INTENTIONALLY OMITTED].
(c) BASIC RENT. Lessee shall pay Basic Rent with respect to each
Lease Period during the Basic Term on each Lease Period Date during the Basic
Term, in consecutive installments in the amounts as provided in the next
sentence, each such installment to cover the Lease Period specified in EXHIBIT
B. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the Delivery Date or applicable Lease Period
Date, as the case may be, specified in EXHIBIT B hereto.
(d) ADJUSTMENTS TO BASIC RENT.
(i) In the event that (A) the Delivery Date occurs other than on
___________, 199_, or (B) Transaction Expenses paid by Lessor pursuant
to Section 16(a) of the Participation Agreement are determined to be
other than ___% of Lessor's Cost, then in each case the Basic Rent
percentages set forth in EXHIBIT B and Stipulated Loss Value
percentages set forth in EXHIBIT C and the Termination Value
percentages set forth in EXHIBIT D shall be recalculated by the Owner
Participant, on or prior to ____________, 199_ using the same methods
and assumptions used to calculate original Basic Rent, Stipulated Loss
Value and Termination Value percentages, in order to: (1) maintain
the Owner Participant's Net Economic Return and (2) minimize the Net
Present Value of Rents to Lessee to the extent possible consistent
with clause (1) hereof. In such recalculation there will be no change
in the amortization of the Secured Certificates.
(ii) (A) In the event of a refinancing as contemplated by Section
17 of the Participation Agreement, then the Basic Rent percentages set
forth in EXHIBIT B and Stipulated Loss Value percentages set forth in
EXHIBIT C and the Termination
- 14 -
Value percentages set forth in EXHIBIT D shall be recalculated
(upwards or downwards) by the Owner Participant as contemplated by
such Section to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee and (B) in
the event that Lessee elects to satisfy any indemnity obligation under
the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax
Indemnity Agreement, then the Basic Rent percentages set forth in
EXHIBIT B and the Stipulated Loss Value percentages set forth in
EXHIBIT C and the Termination Value percentages set forth in EXHIBIT D
shall be recalculated (upwards or downwards) by Owner Participant,
using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss (as defined
in the Tax Indemnity Agreement) that is the subject of such
indemnification and any prior or contemporaneous Loss) used to
calculate the Basic Rent percentages, the Stipulated Loss Value
percentages and the Termination Value percentages on the Delivery
Date, in order to (1) maintain the Owner Participant's Net Economic
Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee.
(iii) Whenever Basic Rent is recalculated pursuant to this Section
3(d), the Owner Participant shall redetermine the Excess Amounts set
forth in EXHIBIT B in a manner consistent with such recalculation.
(iv) Any recalculation of Basic Rent, Excess Amounts and Stipulated
Loss Value and Termination Value percentages pursuant to this Section
3(d) shall be determined by the Owner Participant and shall be subject
to the verification procedures set forth in EXHIBIT E hereto. Such
recalculated Basic Rent, Excess Amounts and Stipulated Loss Value and
Termination Value percentages shall be set forth in a Lease Supplement
or an amendment to this Lease.
(v) Anything contained in the Participation Agreement or this Lease
to the contrary notwithstanding, each installment of Basic Rent
payable hereunder, whether or not adjusted in accordance with this
Section 3(d), shall, together with the amount of the Excess Amount in
respect of the date on which such installment is payable, and each
payment of Termination Value and Stipulated Loss Value, whether or not
adjusted in accordance with this Section 3(d), shall, together with
all other amounts (including an amount equal to the premium, if any,
payable by Lessor on the Secured Certificates) payable simultaneously
by Lessee pursuant to this Lease, in each case be, under any
circumstances and in any event, in an amount at least sufficient to
pay in full, on the date on which such amount of Rent is due, any
payments then required to be made on account of the principal of,
premium, if any, and interest on the Secured Certificates. It is
agreed that no installment of Basic Rent or payment of Termination
Value or Stipulated Loss Value shall be increased or adjusted by
reason of (i) any attachment or diversion of Rent on account of (A)
Lessor Liens or (B) any Loan Participant Lien or other Lien on or
against the Trust Estate, any part thereof or the Operative Documents
arising as a result of claims against the Indenture Trustee not
related to the
- 15 -
transactions contemplated by the Operative Documents, (ii) any
modification of the payment terms of the Secured Certificates made
without the prior written consent of Lessee or (iii) the acceleration
of any Secured Certificate or Secured Certificates due to the
occurrence of an "Event of Default" (as defined in the Trust
Indenture) which does not constitute an Event of Default hereunder.
(vi) All adjustments to Basic Rent under this Section 3(d) shall be
(A) in compliance with the tests of Sections 4.02(5) and 4.07 of Rev.
Proc. 75-28 and will not cause this Lease to constitute a
"disqualified leaseback or long-term agreement" within the meaning of
Section 467 of the Internal Revenue Code of 1986, as amended, as each
is in effect on the Delivery Date and (B) subject to verification
pursuant to EXHIBIT E.
(e) SUPPLEMENTAL RENT. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whomsoever shall be entitled thereto, any and all
Supplemental Rent constituting Stipulated Loss Value or Termination Value as the
same shall become due and owing and all other amounts of Supplemental Rent
within five days after demand or within such other relevant period as may be
provided in any Operative Document, and in the event of any failure on the part
of Lessee to pay any Supplemental Rent when due, Lessor shall have all rights,
powers and remedies provided for herein or in any other Operative Document or by
law or equity or otherwise in the case of nonpayment of Basic Rent. Lessee
shall pay as Supplemental Rent the Make-Whole Amount, if any, due pursuant to
Section 2.10(b) or Section 2.11 of the Trust Indenture in connection with a
prepayment of the Secured Certificates upon redemption of such Secured
Certificates in accordance with Section 2.10(b) or Section 2.11 of the Trust
Indenture. Lessee also will pay to Lessor, or to whomsoever shall be entitled
thereto, on demand, as Supplemental Rent, to the extent permitted by applicable
law, interest at the Past Due Rate on any part of any installment of Basic Rent
not paid when due for any period for which the same shall be overdue and on any
payment of Supplemental Rent not paid when due for the period until the same
shall be paid.
(f) PAYMENTS IN GENERAL. All payments of Rent shall be made
directly by Lessee (whether or not any Sublease shall be in effect) by wire
transfer of immediately available funds prior to 10:30 A.M., New York time, on
the date of payment, to Lessor at its account at First Security Bank, National
Association, 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, ABA No.
000-0000-00, Account No. 051-0000000, Attention: Corporate Trust Department,
Credit Northwest/NW 1997 __ (or such other account of Lessor in the continental
United States as Lessor shall direct in a notice to Lessee at least 10 Business
Days prior to the date such payment of Rent is due); PROVIDED that so long as
the Trust Indenture shall not have been fully discharged, Lessor hereby
irrevocably directs and Lessee agrees, that, unless the Indenture Trustee shall
otherwise direct, all Rent payable to Lessor and assigned to the Indenture
Trustee pursuant to the Trust Indenture shall be paid prior to 10:30 A.M., New
York time on the due date thereof in funds of the type specified in this Section
3(f) directly to the Indenture Trustee at its account at State Street Bank and
Trust Company, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, ABA No.
011-00-0028, Account No. 0000-000-0, Attention: Corporate Trust Department,
Reference: Northwest/NW 1997 __ (or such other account of the Indenture Trustee
in the continental United States as the Indenture Trustee shall direct in a
notice to Lessee at least
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10 Business Days prior to the date such payment of Rent is due). Lessor hereby
directs and Lessee agrees that all payments of Supplemental Rent owing to the
Indenture Trustee or to a Loan Participant or any other Certificate Holder
pursuant to the Participation Agreement shall be made in Dollars in immediately
available funds prior to 10:30 A.M., New York time, on the due date thereof at
the office of the Indenture Trustee or at such other office of such other
financial institution located in the continental United States as the party
entitled thereto may so direct at least 10 Business Days prior to the due date
thereof. All payments of Supplemental Rent payable to the Owner Participant, to
the extent that such amounts constitute Excluded Payments (as defined in the
Trust Indenture), shall be made in Dollars in immediately available funds prior
to 10:30 A.M., New York time, on the due date thereof, to the account of the
Owner Participant specified in Schedule I to the Participation Agreement (or to
such other account as may be specified in writing by the Owner Participant from
time to time).
Notwithstanding anything to the contrary contained herein, if any date
on which a payment of Rent becomes due and payable is not a Business Day, then
such payment shall not be made on such scheduled date but shall be made on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and (PROVIDED such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(g) PREPAYMENT OF CERTAIN RENT PAYMENTS. To the extent, if any,
that there shall not have been received by the Indenture Trustee to its account
and in funds of the type specified in Section 3(f) hereof by 10:30 A.M., New
York time, on any Lease Period Date from Lessor an amount equal to the Excess
Amount for such date, Lessee shall on the Delivery Date, prepay on such Lease
Period Date a portion of Basic Rent equal to the Excess Amount not so paid (the
amount of such Basic Rent to be prepaid by Lessee being herein called "PREPAID
RENT"); PROVIDED that Lessee will also pay to the Indenture Trustee, on demand,
as Supplemental Rent, to the extent permitted by applicable law, interest at the
Past Due Rate in effect from time to time on any part of any Prepaid Rent and on
the amount, if any, payable pursuant to the immediately preceding proviso not
paid when due for any period for which the same shall be overdue. Lessor agrees
to reimburse Lessee in the manner provided in the following sentence for (X) the
Prepaid Rent so paid by Lessee, plus (Y) any Supplemental Rent paid with respect
to Prepaid Rent by Lessee pursuant to this Section 3(g), plus (Z) accrued
interest on the unreimbursed portion thereof at a rate per annum equal to 5%
over the Base Rate from the date such amount is paid by Lessee to but not
including the date of each such reimbursement (such amounts to be reimbursed
being herein called the "REIMBURSEMENT AMOUNT"). Lessor shall pay to Lessee, in
funds of the type specified in Section 3(f) hereof, within five days after
Lessor, the Owner Participant and the Indenture Trustee shall have received
written notice from Lessee demanding payment, the Reimbursement Amount. In
addition, if, for any reason, Lessor shall fail to pay to Lessee the
Reimbursement Amount as above provided, Lessee shall be entitled to offsets
(without duplication) against each succeeding payment (other than as limited by
the PROVISO to this sentence) due from Lessee to Persons other than the Loan
Participants, the Indenture Trustee and the Owner Trustee in its individual
capacity (including, without limitation, Basic Rent, payments due under Section
9, 10, 15 and 19 hereof, payments due under the Tax Indemnity Agreement and
payments due to Persons other than the Loan Participants, the Indenture Trustee
and Lessor in its individual capacity under Section 7 of the Participation
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Agreement), until Lessee has been fully reimbursed for the Reimbursement Amount;
PROVIDED, HOWEVER, that in the case of any payment due from Lessee which is
distributable under the terms of the Trust Indenture, Lessee's right of offset
shall be limited to amounts distributable to Lessor thereunder. No such offset
or aggregate combined effect of separate offsets shall reduce the amount of any
installment of Basic Rent to an amount insufficient, together with the Excess
Amount and all other amounts payable simultaneously by Lessee, to pay in full
the payments then required to be made on account of the principal of and
interest on (and premium, if any, due with respect to) the Secured Certificates
then outstanding.
SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. LESSOR LEASES
AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS."
NEITHER LESSOR, THE INDENTURE TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR
SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that First
Security Bank, National Association, in its individual capacity, (i) represents
and warrants that on the Delivery Date, Lessor shall have received whatever
title to the Aircraft was conveyed to it by Lessee, (ii) represents and warrants
that on the Delivery Date the Aircraft shall be free of Lessor Liens (including
for this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens) attributable to it, (iii) covenants that it will
not, through its own actions or inactions, interfere in Lessee's quiet enjoyment
of the Aircraft during the Term, (iv) agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor Lien attributable
to it on or with respect to the Airframe or any Engine or any portion of the
Trust Estate and (v) represents and warrants that it is a Citizen of the United
States without making use of a voting trust, voting powers agreement or similar
arrangement, and agrees that if at any time it shall cease to be a Citizen of
the United States without making use of a voting trust, voting powers agreement
or similar arrangement it will promptly resign as Owner Trustee (if and so long
as such citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any material adverse effect on the Loan Participants, the
Owner Participant or Lessee), effective upon the appointment of a successor
Owner Trustee in accordance with Section 9.01 of the Trust Agreement. None of
the provisions of this Lease shall be deemed to amend, modify or otherwise
affect the representations, warranties or other obligations (express or implied)
of the Manufacturer, any subcontractor or supplier of the Manufacturer with
respect to the Airframe, the Engines or any Parts, or to release the
Manufacturer, or any such subcontractor or supplier, from any such
representation, warranty or obligation. Lessor covenants that during the Term
(so long as this Lease shall not have been declared in default pursuant to
Section 15 hereof) it will not,
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through its own actions or inactions interfere in the quiet enjoyment of the
Aircraft by Lessee or any Sublessee and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Lessor Lien attributable
to it on or with respect to the Airframe or any Engine.
SECTION 5. RETURN OF THE AIRCRAFT. (a) CONDITION UPON RETURN.
Unless purchased by Lessee pursuant to Section 19 hereof, upon the termination
of this Lease at the end of the Basic Term or any Renewal Term or pursuant to
Section 9(c) or 15, Lessee, at its own expense, will return the Airframe to
Lessor at a major airport in one of the forty-eight contiguous states of the
United States chosen by Lessee, and Lessee will give Lessor at least ten (10)
days' prior written notice of the place of such return; PROVIDED, HOWEVER, that
if Lessor shall have made the request for storage pursuant to Section 5(d)
hereof, Lessee shall return the Airframe to Lessor at the site of the storage at
the end of the storage period. At the time of such return, Lessee will, unless
otherwise requested by Lessor at least ninety (90) days prior to the return
hereunder, cause the Aircraft, if it is not then so registered, to be registered
under the laws of the United States with the Federal Aviation Administration in
the name of the Lessor or its designee, PROVIDED that Lessee shall be relieved
of its obligations under this sentence if (i) such registration is prohibited by
reason of the failure of Lessor or its designee to be eligible on such date to
own an aircraft registered with the Federal Aviation Administration or (ii) such
registration is otherwise prohibited by applicable law; the Airframe will be
fully equipped with the Engines (or other AlliedSignal LF507 type engines or
four engines of the same or another manufacturer of not less than equivalent
utility, value and remaining useful life, and suitable for installation and use
on the Airframe without impairing the value, utility or remaining useful life of
the Aircraft; PROVIDED that all engines shall be of the same make and model)
duly installed thereon. Also, at the time of such return, such Airframe and
Engines or engines (i) shall be certified (or, if not then registered under the
Federal Aviation Act, shall be eligible for certification) as an airworthy
aircraft by the Federal Aviation Administration, (ii) shall be free and clear of
all Liens (other than Lessor Liens (including for this purpose Liens which would
be Lessor Liens but for the proviso in the definition of Lessor Liens),
Indenture Trustee's Liens and Loan Participant Liens) and rights of third
parties under pooling, interchange, overhaul, repair or other similar agreements
or arrangements, (iii) shall be in as good an operating condition as when
delivered to Lessee hereunder, ordinary wear and tear excepted, or, in the case
of any such engines owned by Lessee, shall have a value, utility and remaining
useful life at least equal to, and shall be in as good an operating condition as
required by the terms hereof with respect to, Engines constituting part of the
Aircraft but not then installed on the Airframe, and (iv) shall be in compliance
with the return conditions, if any, set forth in (a) EXHIBIT G, in the event
such return occurs other than at the termination of this Lease on ____________,
201_, or (b) EXHIBIT H, in the event such return occurs at the termination of
this Lease on ____________, 201_; PROVIDED that if a Half-Life Adjustment is
required to be calculated pursuant to the terms of EXHIBIT H, if the Half-Life
Adjustment is a positive number Lessee shall pay Lessor the Half-Life Adjustment
and if the Half-Life Adjustment is a negative number Lessor shall pay Lessee the
Half-Life Adjustment.
During the last six (6) months of the Term (unless Lessee shall have
elected to purchase the Aircraft or renew this Lease in accordance with the
terms of this Lease), with reasonable notice, Lessee will cooperate, and cause
any Sublessee to cooperate, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect fully the Aircraft and the records
relating
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thereto, PROVIDED that such cooperation shall not interfere with the operation
or maintenance of the Aircraft by Lessee or any Sublessee.
(b) RETURN OF THE ENGINES. In the event that any engine not owned
by Lessor shall be delivered with the returned Airframe as set forth in
paragraph (a) of this Section 5, Lessee, concurrently with such delivery, will,
at no cost to Lessor, furnish, or cause to be furnished, to Lessor a full
warranty (as to title) xxxx of sale with respect to each such engine, in form
and substance satisfactory to Lessor (together with an opinion of counsel to the
effect that such full warranty xxxx of sale has been duly authorized and
delivered and is enforceable in accordance with its terms and that such engines
are free and clear of Liens other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Participant Liens and Indenture Trustee Liens), against
receipt from Lessor of a xxxx of sale or other instrument evidencing the
transfer, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens), by Lessor to Lessee or its designee
of all of Lessor's right, title and interest in and to any Engine constituting
part of the Aircraft but not installed on the Airframe at the time of the return
of the Airframe.
(c) FUEL; MANUALS. Upon the return of the Airframe upon any
termination of this Lease in accordance with paragraph (a) of this Section 5,
(i) Lessor shall pay Lessee, as compensation for any fuel or oil contained in
the fuel or oil tanks of such Airframe, the value of such fuel or oil at the
price paid by Lessee for such fuel or oil, as the case may be, and (ii) Lessee
shall deliver or cause to be delivered to Lessor all logs, manuals and data and
inspection, modification and overhaul records required to be maintained with
respect thereto under applicable rules and regulations of each country under the
laws of which the Aircraft has been registered during the period of operation
thereof, which logs, manuals, data and records, if not maintained in English,
shall be translated into English at Lessee's expense.
(d) STORAGE UPON RETURN. If, at least sixty (60) days prior to
termination of this Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 9(c), Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will provide Lessor,
or cause Lessor to be provided, with free parking facilities for the Aircraft
(maintenance costs and other out-of-pocket costs other than parking fees to be
for the account of Lessor) for a period not exceeding thirty (30) days
commencing on the date of such termination, at a location in the continental
United States selected by Lessee used as a location for the parking or storage
of aircraft. Lessee will maintain insurance for the Aircraft during such period
not exceeding thirty (30) days and be reimbursed by Lessor for the premiums
thereon.
SECTION 6. LIENS. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor as owner of the Aircraft and Lessee as herein
provided, the Lien of the Trust Indenture, and any other rights existing
pursuant to the Operative Documents, (ii) the rights of others under agreements
or arrangements to the extent permitted by the terms of Sections 7(b) and 8(b)
hereof, (iii) Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Loan
Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of Lessee
(or any
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Sublessee) either not yet due or being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of the Airframe or any Engine or any interest
therein, or, so long as any Secured Certificates shall be outstanding, adversely
affect the Lien of the Trust Indenture, (v) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like Liens arising in the ordinary
course of Lessee's (or, if a Sublease is then in effect, Sublessee's) business
(including those arising under maintenance agreements entered into in the
ordinary course of business) securing obligations that are not overdue for a
period of more than sixty (60) days or are being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any material
danger of the sale, forfeiture or loss of the Airframe or any Engine or any
interest therein or, so long as any Secured Certificates shall be outstanding,
adversely affect the Lien of the Trust Indenture, (vi) Liens arising out of any
judgment or award against Lessee (or any Sublessee), unless the judgment secured
shall not, within sixty (60) days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within sixty (60) days after the expiration
of such stay, (vii) any other Lien with respect to which Lessee (or any
Sublessee) shall have provided a bond, cash collateral or other security
adequate in the reasonable opinion of Lessor, and (viii) Liens approved in
writing by Lessor. Lessee will promptly, at its own expense, take (or cause to
be taken) such actions as may be necessary duly to discharge any such Lien not
excepted above if the same shall arise at any time.
SECTION 7. REGISTRATION, MAINTENANCE AND OPERATION; POSSESSION AND
SUBLEASES; INSIGNIA. (a)(I) REGISTRATION AND MAINTENANCE. Lessee, at its own
cost and expense, shall (or shall cause any Sublessee to): (i) forthwith upon
the delivery thereof hereunder, cause the Aircraft to be duly registered in the
name of Lessor, and, subject to the second paragraph of this Section 7(a) and
Section 8(f) of the Participation Agreement, to remain duly registered in the
name of Lessor under the Federal Aviation Act, PROVIDED that Lessor shall
execute and deliver all such documents as Lessee (or any Sublessee) may
reasonably request for the purpose of effecting and continuing such
registration, and shall not register the Aircraft or permit the Aircraft to be
registered under any laws other than the Federal Aviation Act at any time except
as provided in Section 8(f) of the Participation Agreement and shall cause the
Trust Indenture to be duly recorded and maintained of record as a first mortgage
on the Aircraft; (ii) maintain, service, repair and overhaul (or cause to be
maintained, serviced, repaired and overhauled) the Aircraft so as to keep the
Aircraft in as good an operating condition as delivered to Lessee hereunder,
ordinary wear and tear excepted, and as may be necessary to enable the
applicable airworthiness certification for the Aircraft to be maintained in good
standing at all times (other than during temporary periods of storage in
accordance with applicable regulations or during maintenance or modification
permitted hereunder) under the Federal Aviation Act, except when all British
Aerospace Avro 146-RJ85A aircraft powered by engines of the same type as those
with which the Airframe shall be equipped at the time of such grounding and
registered in the United States have been grounded by the FAA (although such
certification need actually be maintained only during such periods as the
Aircraft is registered in the United States), or the applicable laws of any
other jurisdiction in which the Aircraft may then be registered from time to
time in accordance with Section 8(f) of the Participation Agreement, utilizing,
except during any period that a Sublease is in effect, the same manner and
standard of maintenance, service, repair or
- 21 -
overhaul used by Lessee with respect to similar aircraft operated by Lessee in
similar circumstances and utilizing, during any period that a Sublease is in
effect, the same manner and standard of maintenance, service, repair or overhaul
used by the Sublessee with respect to similar aircraft operated by the Sublessee
in similar circumstances; PROVIDED, HOWEVER, that in all circumstances the
Aircraft shall be maintained by Lessee (or any Sublessee) in accordance with
maintenance standards required by, or substantially equivalent to those required
by, the FAA or the central civil aviation authority of Canada, France, Germany,
Japan, the Netherlands or the United Kingdom; (iii) maintain or cause to be
maintained all records, logs and other materials required to be maintained in
respect of the Aircraft by the FAA or the applicable regulatory agency or body
of any other jurisdiction in which the Aircraft may then be registered; and
(iv) promptly furnish or cause to be furnished to Lessor and the Owner
Participant such information as may be required to enable Lessor to file any
reports required to be filed by Lessor or the Owner Participant with any
governmental authority because of Lessor's ownership of the Aircraft. (II)
OPERATION. Lessee will not maintain, use, service, repair, overhaul or operate
the Aircraft (or permit any Sublessee to maintain, use, service, repair,
overhaul or operate the Aircraft) in violation of any law or any rule,
regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except to the extent Lessee (or, if a Sublease is then in effect, any
Sublessee) is contesting in good faith the validity or application of any such
law, rule, regulation or order in any reasonable manner which does not
materially adversely affect Lessor or, so long as any Secured Certificates shall
be outstanding, the first priority Lien of the Trust Indenture and does not
involve any material risk of sale, forfeiture or loss of the Aircraft. Lessee
will not operate the Aircraft, or permit any Sublessee to operate the Aircraft,
in any area excluded from coverage by any insurance required by the terms of
Section 11; PROVIDED, HOWEVER, that the failure of Lessee to comply with the
provisions of this sentence shall not give rise to an Event of Default hereunder
where such failure is attributable to causes beyond the reasonable control of
Lessee (or any Sublessee) or to extraordinary circumstances involving an
isolated occurrence or series of incidents not in the ordinary course of the
regular operations of Lessee (or any Sublessee) and in each such case Lessee (or
such Sublessee, as the case may be) is taking all reasonable steps to remedy
such failure as soon as is reasonably practicable.
At any time after the Depreciation Period, Lessor, upon compliance
with all of the terms of Section 8(f) of the Participation Agreement, shall, at
the request and sole expense of Lessee, cooperate with Lessee to take all
actions required to change the registration of the Aircraft to another country.
(b) POSSESSION AND SUBLEASES. Lessee will not, without the prior
written consent of Lessor, sublease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install or permit any
Engine to be installed on any airframe other than the Airframe or enter into any
Wet Lease; PROVIDED that, so long as no Default of the type referred to in
Section 14(a) or 14(e) or Event of Default shall have occurred and be continuing
at the time of such sublease, delivery, transfer or relinquishment of possession
or installation or such Wet Lease, and so long as the action to be taken shall
not deprive the Indenture Trustee of the perfected first priority Lien of the
Trust Indenture on the Airframe or (subject to the further proviso (B) to clause
(i) of this Section 7(b)) any Engine, and so long as
- 22 -
Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and
11 hereof, Lessee (or, except with respect to clause (x) below, any Sublessee)
may, without the prior written consent of Lessor:
(i) subject the Airframe and the Engines or engines then installed
thereon to normal interchange agreements or any Engine to normal
pooling or similar arrangements, in each case customary in the airline
industry and entered into by Lessee (or, if a Sublease is then in
effect, by Sublessee) in the ordinary course of its business; PROVIDED
that (A) no such agreement or arrangement contemplates or requires the
transfer of title to the Airframe, (B) if Lessor's title to any Engine
shall be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss with respect to
such Engine and Lessee shall (or shall cause Sublessee to) comply with
Section 10(b) hereof in respect thereof, and (C) any interchange
agreement to which the Airframe may be subject shall be with a U.S.
Air Carrier or a Foreign Air Carrier;
(ii) deliver possession of the Airframe or any Engine to the
manufacturer thereof (or for delivery thereto) or to any organization
(or for delivery thereto) for testing, service, repair, maintenance or
overhaul work on the Airframe or Engine or any part of any thereof or
for alterations or modifications in or additions to such Airframe or
Engine to the extent required or permitted by the terms of Section
8(c) hereof;
(iii) install an Engine on an airframe owned by Lessee (or any
Sublessee) free and clear of all Liens, except: (A) Permitted Liens
and those which apply only to the engines (other than Engines),
appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety), (B) the rights of
third parties under interchange agreements which would be permitted
under clause (i) above, PROVIDED that Lessor's title to such Engine
and, if any Secured Certificates shall be outstanding, the first
priority Lien of the Trust Indenture shall not be divested or impaired
as a result thereof and (C) mortgage liens or other security
interests, PROVIDED that (as regards this clause (C)) such mortgage
liens or other security interests effectively provide that such Engine
shall not become subject to the lien of such mortgage or security
interest, notwithstanding the installation thereof on such airframe;
(iv) install an Engine on an airframe leased to Lessee (or any
Sublessee) or purchased by Lessee (or any Sublessee) subject to a
conditional sale or other security agreement, PROVIDED that (x) such
airframe is free and clear of all Liens, except: (A) the rights of the
parties to the lease or conditional sale or other security agreement
covering such airframe, or their assignees, and (B) Liens of the type
permitted by subparagraph (iii) of this paragraph (b) and (y) such
lease, conditional sale or other security agreement effectively
provides that such Engine shall not become subject to the lien of such
lease, conditional sale or other security agreement, notwithstanding
the installation thereof on such airframe;
- 23 -
(v) install an Engine on an airframe owned by Lessee (or any
Sublessee), leased to Lessee (or any Sublessee) or purchased by Lessee
(or any Sublessee) subject to a conditional sale or other security
agreement under circumstances where neither subparagraph (iii) nor
subparagraph (iv) of this paragraph (b) is applicable, PROVIDED that
such installation shall be deemed an Event of Loss with respect to
such Engine and Lessee shall (or shall cause any Sublessee to) comply
with Section 10(b) hereof in respect thereof, Lessor not intending
hereby to waive any right or interest it may have to or in such Engine
under applicable law until compliance by Lessee with such Section
10(b);
(vi) to the extent permitted by Section 8(b) hereof, subject any
appliances, Parts or other equipment owned by Lessor and removed from
the Airframe or any Engine to any pooling arrangement referred to in
Section 8(b) hereof;
(vii) subject (or permit any Sublessee to subject) the Airframe or
any Engine to the Civil Reserve Air Fleet Program and transfer (or
permit any Sublessee to transfer) possession of the Airframe or any
Engine to the United States of America or any instrumentality or
agency thereof pursuant to the Civil Reserve Air Fleet Program, so
long as Lessee (or any Sublessee) shall (A) promptly notify Lessor
upon subjecting the Airframe or any Engine to the Civil Reserve Air
Fleet Program in any contract year and provide Lessor with the name
and address of the Contracting Office Representative for the Air
Mobility Command of the United States Air Force to whom notice must be
given pursuant to Section 15 hereof, and (B) promptly notify Lessor
upon transferring possession of the Airframe or any Engine to the
United States of America or any agency or instrumentality thereof
pursuant to such program;
(viii) for a period not to extend beyond the end of the Term, enter
into a Wet Lease for the Airframe and Engines or engines then
installed thereon with any third party; PROVIDED that if Lessee (or
any Sublessee) shall enter into any Wet Lease for a period of more
than one year (including renewal options) Lessee shall provide Lessor
written notice of such Wet Lease (such notice to be given prior to
entering into such Wet Lease, if practicable, but in any event
promptly after entering into such Wet Lease);
(ix) for a period not to extend beyond the end of the Term, transfer
possession of the Airframe or any Engine to the United States of
America or any instrumentality or agency thereof pursuant to a
contract, a copy of which shall be provided to Lessor; or
(x) Lessee may, at any time, enter into any sublease with (1) a
U.S. Air Carrier, (2) any Person approved in writing by Lessor, which
approval shall not be unreasonably withheld or (3) after the
Depreciation Period, any Permitted Sublessee if (A) in any such case,
the Sublessee under such sublease is not subject to a proceeding or
final order under applicable bankruptcy, insolvency or reorganization
laws on the date such sublease is entered into, (B) in the event that
- 24 -
the Sublessee under such sublease is a foreign air carrier (other than
a foreign air carrier principally based in Taiwan), the United States
maintains diplomatic relations with the country in which such proposed
Sublessee is principally based at the time such sublease is entered
into (or, in the case of a sublease to a proposed Sublessee
principally based in Taiwan, maintains diplomatic relations at least
as good as those in effect on the Delivery Date) and (C) in the event
that the Sublessee under such sublease is a foreign air carrier,
Lessor and the Indenture Trustee shall have received an opinion of
counsel to Lessee to the effect that (I) the terms of the proposed
sublease will be legal, valid, binding and (subject to customary
exceptions in foreign opinions generally) enforceable against the
proposed Sublessee in the country in which the proposed Sublessee is
principally based, (II) there exist no possessory rights in favor of
the Sublessee under such Sublease under the laws of such Sublessee's
country of domicile that would, upon bankruptcy or insolvency of or
other default by Lessee and assuming at such time such Sublessee is
not insolvent or bankrupt, prevent the return or repossession of the
Aircraft in accordance with the terms of this Lease, (III) the laws of
such Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely convertible
into Dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, and (IV) the laws of such
Sublessee's country of domicile would give recognition to Lessor's
title to the Aircraft, to the registry of the Aircraft in the name of
the Lessor (or Lessee, as "lessee", or the proposed Sublessee, as
"sublessee", as appropriate) and to the Lien of the Trustee Indenture,
PROVIDED, HOWEVER, that no sublease entered into pursuant to this
clause (x) shall extend beyond the expiration of the Basic Term or any
Renewal Term then in effect unless Lessee shall have irrevocably
committed to purchase the Aircraft.
The rights of any Sublessee or other transferee who receives
possession by reason of a transfer permitted by this paragraph (b) (other than
the transfer of an Engine which is deemed an Event of Loss) shall be effectively
subject and subordinate to, and any Sublease permitted by this paragraph (b)
shall be expressly subject and subordinate to, all the terms of this Lease and
to the Lien of the Trust Indenture, including, without limitation, the covenants
contained in Section 7(a) hereof and Lessor's rights to repossession pursuant to
Section 15 hereof and to avoid such Sublease upon such repossession, and Lessee
shall remain primarily liable hereunder for the performance of all of the terms
of this Lease to the same extent as if such Sublease or transfer had not
occurred, and, except as otherwise provided herein, the terms of any such
Sublease shall not permit any Sublessee to take any action not permitted to be
taken by Lessee in this Lease with respect to the Aircraft. No pooling
agreement, sublease or other relinquishment of possession of the Airframe or any
Engine or Wet Lease shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or constitute a waiver of Lessor's rights or
remedies hereunder. Any sublease permitted under this Section 7(b) shall
expressly prohibit any further sub-sublease by the Sublessee. Lessor agrees,
for the benefit of Lessee (and any Sublessee) and for the benefit of any
mortgagee or other holder of a security interest in any engine (other than an
Engine) owned by Lessee (or any Sublessee), any lessor of any engine (other than
an Engine) leased to Lessee (or any Sublessee) and any conditional vendor
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of any engine (other than an Engine) purchased by Lessee (or any Sublessee)
subject to a conditional sale agreement or any other security agreement, that no
interest shall be created hereunder in any engine so owned, leased or purchased
and that none of Lessor, its successors or assigns will acquire or claim, as
against Lessee (or any Sublessee) or any such mortgagee, lessor or conditional
vendor or other holder of a security interest or any successor or assignee of
any thereof, any right, title or interest in such engine as the result of such
engine being installed on the Airframe; PROVIDED, HOWEVER, that such agreement
of Lessor shall not be for the benefit of any lessor or secured party of any
airframe (other than the Airframe) leased to Lessee (or any Sublessee) or
purchased by Lessee (or any Sublessee) subject to a conditional sale or other
security agreement or for the benefit of any mortgagee of or any other holder of
a security interest in an airframe owned by Lessee (or any Sublessee), unless
such lessor, conditional vendor, other secured party or mortgagee has expressly
agreed (which agreement may be contained in such lease, conditional sale or
other security agreement or mortgage) that neither it nor its successors or
assigns will acquire, as against Lessor, any right, title or interest in an
Engine as a result of such Engine being installed on such airframe. Lessee
shall provide to the Owner Participant and the Indenture Trustee (i) written
notice of any Sublease hereunder (such notice to be given not later than five
days prior to entering into such Sublease, if practicable, but in any event
promptly after entering into any such Sublease) and (ii) a copy of each Sublease
which has a term of more than three months.
(c) INSIGNIA. On or prior to the Delivery Date, or as soon as
practicable thereafter, Lessee agrees to affix and maintain (or cause to be
affixed and maintained), at its expense, in the cockpit of the Airframe adjacent
to the airworthiness certificate therein and on each Engine a nameplate bearing
the inscription:
Leased From
First Security Bank, National Association, AS OWNER TRUSTEE,
LESSOR
and, for so long as the Airframe and each Engine shall be subject to the Lien of
the Trust Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company,
AS INDENTURE TRUSTEE
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Indenture Trustee, in each case as
permitted under the Operative Documents). Except as above provided, Lessee will
not allow the name of any Person to be placed on the Airframe or on any Engine
as a designation that might be interpreted as a claim of ownership; PROVIDED
that nothing herein contained shall prohibit Lessee (or any Sublessee) from
placing its customary colors and insignia on the Airframe or any Engine.
SECTION 8. REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS AND ADDITIONS. (a) REPLACEMENT OF PARTS. Lessee, at its own
cost and expense, will promptly replace or cause to be replaced all Parts which
may from time to time be incorporated or installed
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in or attached to the Airframe or any Engine and which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in paragraph (c) of this Section 8 or if the Airframe or
an Engine to which a Part relates has suffered an Event of Loss. In addition,
Lessee (or any Sublessee) may, at its own cost and expense, remove in the
ordinary course of maintenance, service, repair, overhaul or testing, any Parts,
whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use, PROVIDED that Lessee (or
any Sublessee), except as otherwise provided in paragraph (c) of this Section 8,
will, at its own cost and expense, replace such Parts as promptly as
practicable. All replacement Parts shall be free and clear of all Liens (except
for Permitted Liens and pooling arrangements to the extent permitted by
paragraph (b) of this Section 8 and except in the case of replacement property
temporarily installed on an emergency basis) and shall be in as good operating
condition as, and shall have a value and utility at least equal to, the Parts
replaced assuming such replaced Parts were in the condition and repair required
to be maintained by the terms hereof. Except as otherwise provided in paragraph
(c) of this Section 8, all Parts at any time removed from the Airframe or any
Engine shall remain the property of Lessor, no matter where located, until such
time as such Parts shall be replaced by Parts which have been incorporated or
installed in or attached to the Airframe or such Engine and which meet the
requirements for replacement Parts specified above. Immediately upon any
replacement part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided, without further act (subject only to
Permitted Liens and any pooling arrangement to the extent permitted by paragraph
(b) of this Section 8 and except in the case of replacement property temporarily
installed on an emergency basis), (i) title to such replacement Part shall
thereupon vest in Lessor, (ii) such replacement Part shall become subject to
this Lease and be deemed part of the Airframe or such Engine for all purposes
hereof to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine, and (iii) title to the replaced Part
shall thereupon vest in Lessee (or, if a Sublease is then in effect, any
Sublessee), free and clear of all rights of Lessor, and shall no longer be
deemed a Part hereunder.
(b) POOLING OF PARTS. Any Part removed from the Airframe or any
Engine as provided in paragraph (a) of this Section 8 may be subjected by Lessee
(or any Sublessee) to a normal pooling arrangement customary in the airline
industry of which Lessee (or, if a Sublease is then in effect, any Sublessee) is
a party entered into in the ordinary course of Lessee's (or any Sublessee's)
business; PROVIDED that the Part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with such paragraph (a) as promptly as practicable after the removal
of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with such
paragraph (a) may be owned by any third party subject to such a normal pooling
arrangement, PROVIDED that Lessee (or any Sublessee), at its expense, as
promptly thereafter as practicable, either (i) causes title to such replacement
Part to vest in Lessor in accordance with such paragraph (a) by Lessee (or any
Sublessee) acquiring title thereto for the benefit of, and transferring such
title to, Lessor free and clear of all Liens except Permitted Liens (other than
pooling arrangements) or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or Engine a further replacement Part
owned by Lessee (or any Sublessee) free and clear of all Liens except Permitted
Liens (other than pooling arrangements)
- 27 -
and by causing title to such further replacement Part to vest in Lessor in
accordance with such paragraph (a).
(c) ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee, at its own
expense, will make (or cause to be made) such alterations and modifications in
and additions to the Airframe and Engines as may be required from time to time
to meet the applicable standards of the FAA or any applicable regulatory agency
or body of any other jurisdiction in which the Aircraft may then be registered
as permitted by Section 8(f) of the Participation Agreement; PROVIDED, HOWEVER,
that Lessee (or, if a Sublease is then in effect, any Sublessee) may, in good
faith, contest the validity or application of any such law, rule, regulation or
order in any reasonable manner which does not adversely affect Lessor or, so
long as any Secured Certificates are outstanding, the Indenture Trustee. In
addition, Lessee (or any Sublessee), at its own expense, may from time to time
add further parts or accessories and make such alterations and modifications in
and additions to the Airframe or any Engine as Lessee (or any Sublessee) may
deem desirable in the proper conduct of its business, including, without
limitation, removal of Parts which Lessee (or any Sublessee) has determined in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or such Engine (such parts, "OBSOLETE PARTS"); PROVIDED that
no such alteration, modification or addition shall materially diminish the
value, utility or remaining useful life of the Airframe or such Engine below
the value, utility or remaining useful life thereof immediately prior to such
alteration, modification or addition, assuming the Airframe or such Engine was
then in the condition required to be maintained by the terms of this Lease,
except that the value (but not the utility or remaining useful life) of the
Airframe or any Engine may be reduced by the value of Obsolete Parts which shall
have been removed so long as the aggregate value of all Obsolete Parts which
shall have been removed and not replaced shall not exceed $200,000. Title to
all Parts incorporated or installed in or attached or added to the Airframe or
an Engine as the result of such alteration, modification or addition (the
"ADDITIONAL PARTS") shall, without further act, vest in Lessor. Notwithstanding
the foregoing sentence, Lessee (or any Sublessee) may remove or suffer to be
removed any Additional Part, PROVIDED that such Additional Part (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or any Engine at the
time of delivery thereof hereunder or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or any Engine pursuant to the
terms of Section 7 hereof or the first sentence of this paragraph (c) and (iii)
can be removed from the Airframe or such Engine without diminishing or impairing
the value, utility or remaining useful life which the Airframe or such Engine
would have had at the time of removal had such alteration, modification or
addition not occurred, assuming that such Airframe or Engine was in the
condition and repair required to be maintained by the terms hereof. Upon the
removal by Lessee (or Sublessee) of any Part as provided above, title thereto
shall, without further act, vest in Lessee (or any Sublessee, as the case may
be) and such Part shall no longer be deemed part of the Airframe or Engine from
which it was removed. Any Part not removed by Lessee (or any Sublessee) as
above provided prior to the return of the Airframe or Engine to Lessor hereunder
shall remain the property of Lessor.
SECTION 9. VOLUNTARY TERMINATION. (a) TERMINATION EVENT. (1)
[Intentionally Omitted].
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(2) Lessee shall have the right to elect to terminate this Lease on
any Lease Period Date occurring on or after the fifth anniversary of the
Delivery Date if Lessee shall have made the good faith determination, which
shall be evidenced by a resolution duly adopted by its Board of Directors (or
the Executive Committee thereof), that the Aircraft is obsolete or surplus to
its needs.
(3) Lessee shall give to Lessor at least one hundred twenty (120)
days' revocable advance written notice of Lessee's intention to so terminate
this Lease (any such notice, a "TERMINATION NOTICE") specifying (i) the Lease
Period Date on which Lessee intends to terminate this Lease in accordance with
this Section 9 (such specified date, a "TERMINATION DATE") and (ii) that Lessee
has determined that the Aircraft is obsolete or surplus to its needs. Any
Termination Notice shall become irrevocable fifteen (15) days prior to the
Termination Date.
(b) [Intentionally Omitted].
(c) OPTIONAL SALE OF THE AIRCRAFT. In the event that Lessee shall
have exercised its right to terminate this Lease under Section 9(a)(2), then
during the period from the giving of the notice referred to in Section 9(a)(3)
until the proposed Termination Date (unless Lessee shall have revoked the
Termination Notice specifying such proposed Termination Date), Lessee, as agent
for Lessor and at no expense to Lessor, shall use commercially reasonable
efforts to obtain bids in the worldwide market for the purchase of the Aircraft
and, in the event it receives any bid, Lessee shall, within five Business Days
after receipt thereof and at least ten Business Days prior to the proposed
Termination Date, certify to Lessor in writing the amount and terms of such bid,
and the name and address of the party or parties (who shall not be Lessee or any
Affiliate of Lessee or any Person with whom Lessee or any such Affiliate has an
arrangement or understanding regarding the future use of the Aircraft by Lessee
or any such Affiliate but who may be the Owner Participant, any Affiliate
thereof or any Person contacted by the Owner Participant) submitting such bid.
After Lessee shall have certified to Lessor all bids received, the Owner
Participant, any Affiliate thereof or any Person contacted by the Owner
Participant may submit a further bid or bids to Lessee not later than five
Business Days prior to the Termination Date proposed by Lessee (unless Lessee
shall have revoked the Termination Notice specifying such proposed Termination
Date). Subject to the next succeeding sentence, on or before the Termination
Date, subject to the release of all mortgage and security interests with respect
to the Aircraft under the Trust Indenture: (1) Lessee shall deliver the
Aircraft, or cause the Aircraft to be delivered, to the bidder(s), if any, which
shall have submitted the highest bid therefor at least ten (or, in the case of
the Owner Participant, any Affiliate thereof, or Person contacted by the Owner
Participant, five) Business Days prior to such Termination Date, in the same
manner and in the same condition and otherwise in accordance with all the terms
of this Lease as if delivery were made to Lessor pursuant to Section 5, and
shall duly transfer to Lessor title to any engines not owned by Lessor all in
accordance with the terms of Section 5, (2) Lessor shall comply with the terms
of the Trust Indenture and shall, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens which would be Lessor
Liens but for the proviso in the definition of Lessor Liens), subject to prior
or concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total sales price realized at such
sale to be
- 29 -
retained by Lessor, and (3) Lessee shall simultaneously pay or cause to be paid
to Lessor in funds of the type specified in Section 3(f) hereof, an amount equal
to the sum of (A) the excess, if any, of (i) the Termination Value for the
Aircraft, computed as of the Termination Date, over (ii) the sales price of the
Aircraft sold by Lessor after deducting the reasonable expenses incurred by
Lessor in connection with such sale, (B) all unpaid Basic Rent with respect to
the Aircraft due prior to such Termination Date and, if such Basic Rent is
payable in arrears on such Termination Date as indicated on EXHIBIT B, on such
Termination Date, and all unpaid Supplemental Rent due on or prior to the
Termination Date with respect to the Aircraft, and (C) the Make-Whole Amount, if
any, due on the Secured Certificates, and upon such payment Lessor
simultaneously will transfer to Lessee, without recourse or warranty (except as
to the absence of Lessor Liens, including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to any Engines constituting part of
the Aircraft which were not sold with the Aircraft. Notwithstanding the
preceding sentence, Lessor may, if Lessee has not revoked the Termination
Notice, elect to retain title to the Aircraft. If Lessor so elects, Lessor
shall give to Lessee written notice of such election at least five Business Days
prior to the Termination Date accompanied by an irrevocable undertaking by the
Owner Participant to make available to the Lessor for payment to the Indenture
Trustee on the Termination Date the amount required to pay in full the unpaid
principal amount of the Secured Certificates outstanding on the Termination Date
plus interest accrued thereon through the Termination Date together with the
Make-Whole Amount, if any, due on the Secured Certificates, if the same is not
otherwise paid. Upon receipt of notice of such an election by Lessor and the
accompanying undertaking by the Owner Participant, Lessee shall cease its
efforts to obtain bids as provided above and shall reject all bids theretofore
or thereafter received. On the Termination Date, Lessor shall (subject to the
payment by Lessee of all Rent due on or prior to such date as set forth below)
pay in full the unpaid principal amount of the Secured Certificates outstanding
on the Termination Date plus interest accrued thereon through the Termination
Date together with all Make-Whole Amount, if any, due on the Secured
Certificates and, so long as the Secured Certificates are paid as aforesaid,
Lessee shall deliver the Airframe and Engines or engines to Lessor in accordance
with Section 5 and shall pay all Basic Rent due prior to the Termination Date
and, if such Basic Rent is payable in arrears on such Termination Date as
indicated on EXHIBIT B, on such Termination Date, and all Supplemental Rent
(other than Make-Whole Amount or Termination Value) due on or prior to the
Termination Date. If no sale shall have occurred on the Termination Date and
Lessor has not made the payment contemplated by the preceding sentence and
thereby caused this Lease to terminate, or if Lessee revokes its Termination
Notice, this Lease shall continue in full force and effect as to the Aircraft,
Lessee shall pay the reasonable costs and expenses incurred by the Owner
Participant and Lessor (unless such failure to terminate the Lease is a
consequence of the failure of Lessor or the Owner Participant without due cause
to make, or cause to be made, the payment referred to in the immediately
preceding sentence), if any, in connection with preparation for such sale and
Lessee may give one or more additional Termination Notices in accordance with
Section 9(a)(2), subject to the last sentence of this Section 9(c). In the
event of any such sale or such retention of the Aircraft by Lessor and upon
compliance by Lessee with the provisions of this paragraph, the obligation of
Lessee to pay Basic Rent or any other amounts hereunder shall cease to accrue
and this Lease shall terminate. Lessor may, but shall be under no duty to,
solicit bids, inquire into the efforts of Lessee to obtain bids or otherwise
take any action in connection with any such sale
- 30 -
other than to transfer (in accordance with the foregoing provisions) to the
purchaser named in the highest bid certified by Lessee to Lessor all of Lessor's
right, title and interest in the Aircraft, against receipt of the payments
provided herein. Lessee may revoke a Termination Notice given pursuant to
Section 9(a)(2) no more than two times during the Term.
(d) TERMINATION AS TO ENGINES. So long as no Event of Default
shall have occurred and be continuing, Lessee shall have the right at its option
at any time during the Term, on at least thirty (30) days' prior written notice,
to terminate this Lease with respect to any Engine. In such event, and prior to
the date of such termination, Lessee shall replace such Engine hereunder by
complying with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect to such Engine, and Lessor shall transfer such
right, title and interest as it may have to the replaced Engine as provided in
Section 5(b). No termination of this Lease with respect to any Engine as
contemplated by this Section 9(d) shall result in any reduction of Basic Rent.
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) EVENT OF LOSS
WITH RESPECT TO THE AIRCRAFT. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines and/or engines then
installed thereon, Lessee shall forthwith (and in any event, within fifteen (15)
days after such occurrence) give Lessor written notice of such Event of Loss,
and within forty-five (45) days after such Event of Loss Lessee shall give
Lessor written notice of its election to perform one of the following options
(it being agreed that if Lessee shall not have given such notice of election
within such period, Lessee shall be deemed to have elected the option set forth
in clause (i) below). Lessee may elect either to:
(i) make the payments specified in this clause (i), in which event
not later than the earlier of (x) the Business Day next succeeding the
120th day following the occurrence of such Event of Loss or (y) an
earlier Business Day irrevocably specified fifteen (15) days in
advance by notice from Lessee to Lessor and the Indenture Trustee (the
"LOSS PAYMENT DATE"), Lessee shall pay or cause to be paid to Lessor
in funds of the type specified in Section 3(f) hereof, an amount equal
to the Stipulated Loss Value of the Aircraft corresponding to the
Stipulated Loss Value Date occurring on or immediately following the
Loss Payment Date; PROVIDED, HOWEVER, that if a Lease Period Date
shall occur prior to the Loss Payment Date with respect to which
Stipulated Loss Value is determined, Lessee shall pay on such Lease
Period Date an amount equal to the Basic Rent that would have been due
on such Lease Period Date if such Event of Loss had not occurred, or
(ii) substitute an aircraft or an airframe or an airframe and one or
more engines, as the case may be;
PROVIDED that, if Lessee does not perform its obligation to effect such
substitution in accordance with this Section 10(a), during the period of time
provided herein, then Lessee shall pay or cause to be paid to Lessor on the
Business Day next succeeding the 120th day following the occurrence of such
Event of Loss the amount specified in clause (i) above.
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At such time as Lessor shall have received the amounts specified in
subparagraph (i) above, together with all other amounts that then may be due
hereunder (including, without limitation, all Basic Rent due before the date of
such payment and all Supplemental Rent), under the Participation Agreement and
under the Tax Indemnity Agreement, (1) the obligation of Lessee to pay the
installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
Termination Value or any other amount shall cease to accrue, (2) this Lease
shall terminate, (3) Lessor will comply with the terms of the Trust Indenture
and transfer to or at the direction of Lessee, without recourse or warranty
(except as to the absence of Lessor Liens, including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens), all of Lessor's right, title and interest in and to the Airframe and any
Engines subject to such Event of Loss, as well as any Engines not subject to
such Event of Loss, and furnish to or at the direction of Lessee a xxxx of sale
in form and substance reasonably satisfactory to Lessee (or any Sublessee),
evidencing such transfer, and (4) Lessee will be subrogated to all claims of
Lessor, if any, against third parties, for damage to or loss of the Airframe and
any Engines which were subject to such Event of Loss to the extent of the then
insured value of the Aircraft.
In the event Lessee shall elect to substitute an aircraft (or an
airframe or an airframe and one or more engines, as the case may be) Lessee
shall, at its sole expense, not later than the Business Day next succeeding the
120th day following the occurrence of such Event of Loss, (A) convey or cause to
be conveyed to Lessor and to be leased by Lessee hereunder, an aircraft (or an
airframe or an airframe and one or more engines which, together with the Engines
constituting a part of the Aircraft but not installed thereon at the time of
such Event of Loss constitute the Aircraft) free and clear of all Liens (other
than Permitted Liens) and having a value, utility and remaining useful life at
least equal to the Aircraft subject to such Event of Loss assuming that the
Aircraft had been maintained in accordance with this Lease; PROVIDED that any
aircraft, airframe or engine so substituted hereunder shall be of the same or
improved model as those initially leased hereunder and (B) prior to or at the
time of any such substitution, Lessee (or any Sublessee), at its own expense,
will (1) furnish Lessor with a full warranty xxxx of sale and a Federal Aviation
Administration xxxx of sale, in form and substance reasonably satisfactory to
Lessor, evidencing such transfer of title, (2) cause a Lease Supplement and a
Trust Supplement to be duly executed by Lessee and filed for recording pursuant
to the Federal Aviation Act, or the applicable laws, rules and regulations of
any other jurisdiction in which the Airframe may then be registered as permitted
by Section 8(f) of the Participation Agreement, (3) cause a financing statement
or statements with respect to such substituted property to be filed in such
place or places as are deemed necessary or desirable by Lessor to perfect its
and the Indenture Trustee's interest therein and herein, (4) furnish Lessor with
such evidence of compliance with the insurance provisions of Section 11 with
respect to such substituted property as Lessor may reasonably request, (5)
furnish Lessor with copies of the documentation required to be provided by
Lessee pursuant to Section 5.06 of the Trust Indenture, and Lessor
simultaneously will comply with the terms of the Trust Indenture and transfer to
or at the direction of Lessee, without recourse or warranty (except as to the
absence of Lessor Liens, including for this purpose Liens which would be Lessor
Liens but for the proviso in the definition of Lessor Liens), all of Lessor's
right, title and interest, if any, in and to the Aircraft or the Airframe and
one or more Engines, as the case may be, with respect to which such Event of
Loss occurred and furnish to or at the direction of Lessee a xxxx of sale in
form and substance reasonably satisfactory to Lessee (or any
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Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of
counsel (which shall be Cadwalader, Xxxxxxxxxx & Xxxx and, if not, other counsel
chosen by Lessee and reasonably acceptable to Lessor) reasonably satisfactory to
Lessor to the effect that Lessor and the Indenture Trustee as assignee of Lessor
will be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code
with respect to the substitute aircraft, PROVIDED that such opinion need not be
delivered to the extent that immediately prior to such substitution the benefits
of Section 1110 of the U.S. Bankruptcy Code were not, solely by reason of a
change in law or governmental interpretation thereof, available to Lessor and,
so long as any Secured Certificates are outstanding, the Indenture Trustee as
assignee of Lessor's rights under the Lease with respect to the Aircraft, and
(7) Lessee will be subrogated to all claims of Lessor, if any, against third
parties for damage to or loss of the Airframe and any Engine which were subject
to such Event of Loss to the extent of the then insured value of the Aircraft.
For all purposes hereof, the property so substituted shall after such transfer
be deemed part of the property leased hereunder and shall be deemed an
"Aircraft", "Airframe" and "Engine", as the case may be, as defined herein. No
Event of Loss with respect to the Airframe or the Airframe and the Engines or
engines then installed thereon for which substitution has been elected pursuant
to Section 10(a)(ii) hereof shall result in any reduction in Basic Rent.
(b) EVENT OF LOSS WITH RESPECT TO AN ENGINE. Upon the occurrence
of an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, Lessee shall
forthwith (and in any event, within fifteen days after such occurrence) give
Lessor written notice thereof and shall, within sixty (60) days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
replacement for the Engine with respect to which such Event of Loss occurred,
title to another AlliedSignal LF507 type engine (or engine of the same or
another manufacturer of the same, an equivalent or an improved model and
suitable for installation and use on the Airframe without impairing the value,
utility or remaining useful life of the Aircraft; PROVIDED that all Engines
shall be of the same make and model) free and clear of all Liens (other than
Permitted Liens, which engine may upon its transfer to Lessor become subject to
any and all Permitted Liens) and having a value, utility and remaining useful
life at least equal to the Engine subject to such Event of Loss assuming that
such Engine had been maintained in accordance with this Lease. Prior to or at
the time of any such conveyance, Lessee, at its own expense, will (i) furnish
Lessor with a warranty (as to title) xxxx of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such replacement engine, (ii)
cause a Lease Supplement and Trust Supplement to be duly executed by Lessee and
to be filed for recording pursuant to the Federal Aviation Act, or the
applicable laws, rules and regulations of any other jurisdiction in which the
Airframe may then be registered as permitted by Section 8(f) of the
Participation Agreement, (iii) furnish Lessor with such evidence of compliance
with the insurance provisions of Section 11 hereof with respect to such
replacement engine as Lessor may reasonably request and furnish Lessor with
copies of the documentation required to be provided by Lessee pursuant to
Section 5.06 of the Trust Indenture, and Lessor will comply with the terms of
the Trust Indenture and transfer to or at the direction of Lessee without
recourse or warranty (except as to absence of Lessor Liens, including for this
purpose Liens which would be Lessor Liens but for the proviso in the definition
of Lessor Liens) all of Lessor's right, title and interest, if any, in and to
(A) the Engine with respect to which such Event of Loss occurred and furnish to
or at the direction of Lessee a
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xxxx of sale in form and substance reasonably satisfactory to Lessee, evidencing
such transfer and (B) all claims, if any, against third parties, for damage to
or loss of the Engine subject to such Event of Loss, and such Engine shall
thereupon cease to be the Engine leased hereunder. For all purposes hereof,
each such replacement engine shall, after such conveyance, be deemed part of the
property leased hereunder, and shall be deemed an "ENGINE". No Event of Loss
with respect to an Engine under the circumstances contemplated by the terms of
this paragraph (b) shall result in any reduction in Basic Rent.
(c) APPLICATION OF PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR
REQUISITION OF TITLE, ETC. Any payments (other than insurance proceeds the
application of which is provided for in Section 11) received at any time by
Lessor or by Lessee from any governmental authority or other Person with respect
to an Event of Loss will be applied as follows:
(i) if payments are received with respect to the Airframe (or the
Airframe and any Engine or engines then installed thereon), (A) unless
the same are replaced pursuant to the last paragraph of Section 10(a),
after reimbursement of Lessor (as provided in Section 7.01 of the
Trust Agreement) for reasonable costs and expenses, so much of such
payments remaining as shall not exceed the Stipulated Loss Value
required to be paid by Lessee pursuant to Section 10(a), shall be
applied in reduction of Lessee's obligation to pay Stipulated Loss
Value, if not already paid by Lessee, or, if already paid by Lessee,
shall be applied to reimburse Lessee for its payment of Stipulated
Loss Value, and following the foregoing application, the balance, if
any, of such payments will be paid over to, or retained by Lessee,
PROVIDED that Lessor shall be entitled to so much of the excess, if
any, of such payment over the greater of (x) the Stipulated Loss Value
and (y) the fair market value of the Aircraft as Lessor shall
demonstrate to Lessee's reasonable satisfaction is attributable to
compensation for loss of Lessor's interest in the Aircraft as
distinguished from the loss of use of the Aircraft; or (B) if such
property is replaced pursuant to the last paragraph of Section 10(a),
such payments shall be paid over to, or retained by, Lessee; PROVIDED
that Lessee shall have fully performed or, concurrently therewith,
will fully perform the terms of the last paragraph of Section 10(a)
with respect to the Event of Loss for which such payments are made;
and
(ii) if such payments are received with respect to an Engine under
circumstances contemplated by Section 10(b) hereof, so much of such
payments remaining after reimbursement of Lessor (as provided for in
Section 7.01 of the Trust Agreement) for reasonable costs and expenses
shall be paid over to, or retained by, Lessee, PROVIDED that Lessee
shall have fully performed, or concurrently therewith will perform,
the terms of Section 10(b) with respect to the Event of Loss for which
such payments are made.
(d) REQUISITION FOR USE OF THE AIRCRAFT BY THE UNITED STATES
GOVERNMENT OR THE GOVERNMENT OF REGISTRY OF THE AIRCRAFT. In the event of the
requisition for use of the Airframe and the Engines or engines installed on the
Airframe during the Term by the United States Government or any other government
of registry of the Aircraft or any instrumentality or agency
- 34 -
of any thereof, Lessee shall promptly notify Lessor of such requisition, and all
of Lessee's obligations under this Lease Agreement with respect to the Aircraft
shall continue to the same extent as if such requisition had not occurred,
PROVIDED that if such Airframe and Engines or engines installed thereon are not
returned by such government prior to the end of the Term, Lessee shall be
obligated to return the Airframe and such Engines or engines to Lessor pursuant
to, and in all other respects in compliance with the provisions of, Section 5
promptly on the date of such return by such government. If, in the event of any
such requisition, Lessee shall fail to return the Aircraft on or before the
thirtieth day beyond the end of the Term, such failure shall constitute an Event
of Loss which shall be deemed to have occurred on the last day of the Term and
in such event Lessee shall make the payment contemplated by Section 10(a)(i) in
respect of such Event of Loss; PROVIDED, HOWEVER, that Lessor may notify Lessee
in writing on or before the twentieth day prior to the last day of the Term
that, in the event Lessee shall fail by reason of such requisition to return the
Airframe and such Engines or engines on or before the thirtieth day beyond the
end of the Term, such failure shall not be deemed an Event of Loss. Upon the
giving of such notice and such failure to return by the thirtieth day beyond the
end of the Term, Lessee shall be relieved of all of its obligations pursuant to
the provisions of Section 5 (including EXHIBITS G and H) but not under any other
Section, except that if any engine not owned by Lessor shall then be installed
on the Airframe, Lessee will, at no cost to Lessor, furnish, or cause to be
furnished, to Lessor a full warranty (as to title) xxxx of sale with respect to
each such engine, in form and substance reasonably satisfactory to Lessor
(together with an opinion of counsel to the effect that such full warranty xxxx
of sale has been duly authorized and delivered and is enforceable in accordance
with its terms and that such engines are free and clear of Liens other than
Lessor Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), Loan Participant Liens and
Indenture Trustee Liens), against receipt from Lessor of a xxxx of sale
evidencing the transfer, without recourse or warranty (except as to the absence
of Lessor Liens, including for this purpose Liens which would be Lessor Liens
but for the proviso in the definition of Lessor Liens), by Lessor to Lessee or
its designee of all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft but not then installed on the Airframe. All
payments received by Lessor or Lessee from such government for the use of such
Airframe and Engines or engines during the Term shall be paid over to, or
retained by, Lessee (or, if directed by Lessee, any Sublessee); and all payments
received by Lessor or Lessee from such government for the use of such Airframe
and Engines or engines after the end of the Term shall be paid over to, or
retained by, Lessor unless Lessee shall have exercised its purchase option
hereunder, in which case such payments shall be made to Lessee.
(e) REQUISITION FOR USE OF AN ENGINE BY THE UNITED STATES
GOVERNMENT OR THE GOVERNMENT OF REGISTRY OF THE AIRCRAFT. In the event of the
requisition for use of an Engine by the United States Government or any other
government of registry of the Aircraft or any agency or instrumentality of any
thereof (other than in the circumstances contemplated by subsection (d)), Lessee
shall replace such Engine hereunder by complying (or causing any Sublessee to
comply) with the terms of Section 10(b) to the same extent as if an Event of
Loss had occurred with respect thereto, and, upon compliance with Section 10(b)
hereof, any payments received by Lessor or Lessee from such government with
respect to such requisition shall be paid over to, or retained by, Lessee.
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(f) APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF DEFAULT.
Any amount referred to in this Section 10 which is payable to or retainable by
Lessee (or any Sublessee) shall not be paid to or retained by Lessee (or such
Sublessee) if at the time of such payment or retention an Event of Default shall
have occurred and be continuing, but shall be held by or paid over to Lessor as
security for the obligations of Lessee (or such Sublessee) under this Lease and,
if Lessor declares this Lease to be in default pursuant to Section 15 hereof,
applied against Lessee's obligations hereunder as and when due. At such time as
there shall not be continuing any such Event of Default, such amount shall be
paid to Lessee (or such Sublessee) to the extent not previously applied in
accordance with the preceding sentence.
SECTION 11. INSURANCE. (a) PUBLIC LIABILITY AND PROPERTY DAMAGE
INSURANCE. (I) Except as provided in clause (II) of this Section 11(a), Lessee
will carry or cause to be carried at its or any Sublessee's expense (i)
aircraft public liability (including, without limitation, passenger legal
liability) (and including aircraft war risk and hijacking insurance, if and to
the extent the same is maintained by Lessee (or, if a Sublease is then in
effect, if and to the extent maintained by Sublessee) with respect to other
aircraft owned or leased, and operated by Lessee (or such Sublessee) on the same
routes) insurance and property damage insurance (exclusive of manufacturer's
product liability insurance) with respect to the Aircraft, in an amount not less
than the greater of (x) the amount of public liability and property damage
insurance from time to time applicable to aircraft owned or operated by Lessee
(or, if a Sublease is then in effect, by Sublessee) of the same type as the
Aircraft and (y) such amount per occurrence as may have been agreed to on the
Delivery Date by the Owner Participant (which shall not be less than
$150,000,000 per occurrence) and (ii) cargo liability insurance, in the case of
both clause (i) and clause (ii), (A) of the type and covering the same risks as
from time to time applicable to aircraft operated by Lessee (or, if a Sublease
is then in effect, by Sublessee) of the same type as the Aircraft and (B) which
is maintained in effect with insurers of recognized responsibility. Any
policies of insurance carried in accordance with this paragraph (a) and any
policies taken out in substitution or replacement for any of such policies (A)
shall be amended to name Lessor, in its individual capacity and as owner
trustee, the Indenture Trustee and the Owner Participant (but without imposing
on any such parties liability to pay the premiums for such insurance) (and, if
any Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) as additional insureds as their respective interests may appear, (B)
shall provide that in respect of the respective interests of Lessor, the
Indenture Trustee and the Owner Participant (and, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease) in such policies
the insurance shall not be invalidated by any action or inaction of Lessee (or,
if any Sublease is then in effect, any Sublessee) or any other Person and shall
insure Lessor, the Indenture Trustee and the Owner Participant (and, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by Lessee (or, if any Sublease is then in
effect, any Sublessee), (C) may provide for self-insurance to the extent
permitted by Section 11(d) and (D) shall provide that if the insurers cancel
such insurance for any reason whatever or if any material change is made in such
insurance which adversely affects the interest of Lessor, the Indenture Trustee
or the Owner Participant (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), or such insurance shall lapse for
non-payment of premium, such cancellation, lapse or change shall not be
effective as to Lessor, the Indenture
- 36 -
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease) for thirty (30) days (seven (7)
days in the case of war risk and allied perils coverage) after issuance to
Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease),
respectively, of written notice by such insurers of such cancellation, lapse or
change; PROVIDED, HOWEVER, that if any notice period specified above is not
reasonably obtainable, such policies shall provide for as long a period of prior
notice as shall then be reasonably obtainable. Each liability policy (1) shall
be primary without right of contribution from any other insurance which is
carried by Lessor, the Indenture Trustee or the Owner Participant (or, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease), (2) shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if there
were a separate policy covering each insured, and (3) shall waive any right of
the insurers to any set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of Lessor or the Indenture
Trustee or the Owner Participant (or, if any Sublease shall be in effect, Lessee
in its capacity as sublessor under the Sublease) to the extent of any moneys due
to Lessor, the Indenture Trustee or the Owner Participant (or, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease).
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that (A) the amounts of coverage shall not be required
to exceed the amounts of public liability and property damage insurance from
time to time applicable to aircraft owned or operated by Lessee (or, if a
Sublease is then in effect, by Sublessee) of the same type as the Aircraft which
are on the ground and not in operation; and (B) the scope of the risks covered
and the type of insurance shall be the same as from time to time shall be
applicable to aircraft owned or operated by Lessee (or, if a Sublease is then in
effect, by Sublessee) of the same type which are on the ground and not in
operation.
(b) INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT. (I) Except
as provided in clause (II) of this Section 11(b), Lessee shall maintain or cause
to be maintained in effect, at its or any Sublessee's expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance
covering the Aircraft and all-risk ground and flight coverage of Engines and
Parts while temporarily removed from the Aircraft and not replaced by similar
components (including, without limitation, war risk and governmental
confiscation and expropriation (other than by the government of registry of the
Aircraft) and hijacking insurance, if and to the extent the same is maintained
by Lessee (or, if a Sublease is then in effect, by Sublessee) with respect to
other aircraft owned or operated by Lessee (or such Sublessee) on the same
routes, except that Lessee (or such Sublessee) shall maintain war risk and
governmental confiscation and expropriation (other than by the government of
registry of the Aircraft) and hijacking insurance if the Aircraft is operated on
routes where the custom is for major international air carriers flying
comparable routes to carry such insurance) which is of the type as from time to
time applicable to aircraft owned or operated by Lessee (or, if a Sublease is
then in effect, by Sublessee) of the same type as the Aircraft; PROVIDED that
such insurance shall at all times while the Aircraft is subject to this Lease be
for an amount (subject to self-insurance to the extent permitted by Section
11(d)) not less than the Stipulated Loss Value for the Aircraft. Any policies
carried in accordance with
- 37 -
this paragraph (b) covering the Aircraft and any policies taken out in
substitution or replacement for any such policies (i) shall name Lessor, as
owner trustee, the Indenture Trustee and the Owner Participant (and, if any
Sublease shall be in effect, Lessee in its capacity as sublessor under the
Sublease) as additional insureds, as their respective interests may appear (but
without imposing on any such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent permitted in
Section 11(d), (iii) shall provide that (A) in the event of a loss involving
proceeds in excess of $3,500,000 (or, if the Aircraft is then under a Sublease,
in excess of $2,000,000), the proceeds in respect of such loss up to an amount
equal to the Stipulated Loss Value for the Aircraft shall be payable to Lessor
(or, so long as the Trust Indenture shall not have been discharged, the
Indenture Trustee) (except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case Lessee (or any
Sublessee) shall arrange for any payment of insurance proceeds in respect of
such loss to be held for the account of Lessor (or, so long as the Trust
Indenture shall not have been discharged, the Indenture Trustee) whether such
payment is made to Lessee (or any Sublessee) or any third party), it being
understood and agreed that in the case of any payment to Lessor (or the
Indenture Trustee) otherwise than in respect of an Event of Loss, Lessor (or the
Indenture Trustee) shall, upon receipt of evidence satisfactory to it that the
damage giving rise to such payment shall have been repaired or that such payment
shall then be required to pay for repairs then being made, pay the amount of
such payment to Lessee or its order, and (B) the entire amount of any loss
involving proceeds of $3,500,000 (or, if the Aircraft is then under a Sublease,
of $2,000,000) or less or the amount of any proceeds of any loss in excess of
the Stipulated Loss Value for the Aircraft shall be paid to Lessee or its order
unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by Lessor or the Indenture Trustee, (iv)
shall provide that if the insurers cancel such insurance for any reason
whatever, or such insurance lapses for non-payment of premium or if any material
change is made in the insurance which adversely affects the interest of Lessor,
the Indenture Trustee or the Owner Participant, such cancellation, lapse or
change shall not be effective as to Lessor, the Indenture Trustee or the Owner
Participant (or, if any Sublease shall be in effect, Lessee in its capacity as
sublessor under the Sublease) for thirty (30) days (seven (7) days in the case
of hull war risk and allied perils coverage) after issuance to Lessor, the
Indenture Trustee or the Owner Participant (or, if any Sublease shall be in
effect, Lessee in its capacity as sublessor under the Sublease), respectively,
of written notice by such insurers of such cancellation, lapse or change,
PROVIDED, HOWEVER, that if any notice period specified above is not reasonably
obtainable, such policies shall provide for as long a period of prior notice as
shall then be reasonably obtainable, (v) shall provide that in respect of the
respective interests of Lessor, the Indenture Trustee and the Owner Participant
(and, if any Sublease shall be in effect, Lessee in its capacity as sublessor
under the Sublease) in such policies the insurance shall not be invalidated by
any action or inaction of Lessee (or, if a Sublease is then in effect, any
Sublessee) or any other Person and shall insure the respective interests of
Lessor, the Indenture Trustee and the Owner Participant (and, if any Sublease
shall be in effect, Lessee in its capacity as sublessor under the Sublease), as
they appear, regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by Lessee (or, if a Sublease is then in
effect, any Sublessee), (vi) shall be primary without any right of contribution
from any other insurance which is carried by Lessor, the Owner Participant or
the Indenture Trustee (or, if any Sublease shall be in effect, Lessee in its
capacity as sublessor under the Sublease), (vii) shall waive any right of
subrogation of the insurers against Lessor, the Owner
- 38 -
Participant and the Indenture Trustee (and, if any Sublease shall be in effect,
Lessee in its capacity as sublessor under the Sublease), and (viii) shall waive
any right of the insurers to set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of Lessor, the
Indenture Trustee, the Owner Participant or Lessee (or any Sublessee) to the
extent of any moneys due to Lessor, the Indenture Trustee or the Owner
Participant. In the case of a loss with respect to an engine (other than an
Engine) installed on the Airframe, Lessor shall hold any payment to it of any
insurance proceeds in respect of such loss for the account of Lessee or any
other third party that is entitled to receive such proceeds.
As between Lessor and Lessee, it is agreed that all insurance payments
received as the result of the occurrence of an Event of Loss will be applied as
follows:
(x) if such payments are received with respect to the Airframe (or
the Airframe and the Engines installed thereon), (i) unless such
property is replaced pursuant to the last paragraph of Section 10(a),
so much of such payments remaining, after reimbursement of Lessor (as
provided in Section 7.01 of the Trust Agreement) for reasonable costs
and expenses, as shall not exceed the Stipulated Loss Value required
to be paid by Lessee pursuant to Section 10(a) hereof shall be applied
in reduction of Lessee's obligation to pay such Stipulated Loss Value,
if not already paid by Lessee, or, if already paid by Lessee, shall be
applied to reimburse Lessee for its payment of such Stipulated Loss
Value, and the balance, if any, of such payments remaining thereafter
will be paid over to, or retained by, Lessee (or if directed by
Lessee, any Sublessee); or (ii) if such property is replaced pursuant
to the last paragraph of Section 10(a), such payments shall be paid
over to, or retained by, Lessee (or if directed by Lessee, any
Sublessee), PROVIDED that Lessee shall have fully performed, or
concurrently therewith will fully perform, the terms of the last
paragraph of Section 10(a) with respect to the Event of Loss for which
such payments are made; and
(y) if such payments are received with respect to an Engine under
the circumstances contemplated by Section 10(b) hereof, so much of
such payments remaining, after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) for reasonable costs and
expenses, shall be paid over to, or retained by, Lessee (or if
directed by Lessee, any Sublessee), PROVIDED that Lessee shall have
fully performed, or concurrently therewith will fully perform, the
terms of Section 10(b) with respect to the Event of Loss for which
such payments are made.
As between Lessor and Lessee, the insurance payments for any property
damage loss to the Airframe or any engine not constituting an Event of Loss with
respect thereto will be applied in payment for repairs or for replacement
property in accordance with the terms of Sections 7 and 8, if not already paid
for by Lessee (or any Sublessee), and any balance (or if already paid for by
Lessee (or any Sublessee), all such insurance proceeds) remaining after
compliance with such Sections with respect to such loss shall be paid to Lessee
(or any Sublessee if directed by Lessee).
- 39 -
(II) During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by clause (I) above, insurance otherwise conforming with the provisions
of said clause (I) except that the scope of the risks and the type of insurance
shall be the same as from time to time applicable to aircraft owned or operated
by Lessee (or, if a Sublease is then in effect, by Sublessee) of the same type
similarly on the ground and not in operation, PROVIDED that Lessee shall
maintain insurance against risk of loss or damage to the Aircraft in an amount
equal to the Stipulated Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in operation.
(c) REPORTS, ETC. Lessee will furnish, or cause to be furnished,
to Lessor, the Indenture Trustee and the Owner Participant, on or before the
Delivery Date and on or before July 1 in each year thereafter during the Term
commencing July, 1998, a report, signed by Aon Risk Services, Inc., Aon Risk
Services of Minnesota, Inc. or any other independent firm of insurance brokers
reasonably acceptable to Lessor (the "INSURANCE BROKERS"), describing in
reasonable detail the insurance and reinsurance then carried and maintained with
respect to the Aircraft and stating the opinion of such firm that the insurance
then carried and maintained with respect to the Aircraft complies with the terms
hereof; PROVIDED, HOWEVER, that all information contained in the foregoing
report shall not be made available by Lessor, the Indenture Trustee, the Loan
Participants or the Owner Participant to anyone except (A) to permitted
transferees of Lessor's, the Loan Participants', the Owner Participant's or the
Indenture Trustee's interest who agree to hold such information confidential,
(B) to Lessor's, the Loan Participants', the Owner Participant's or the
Indenture Trustee's counsel or independent certified public accountants or
independent insurance advisors who agree to hold such information confidential
or (C) as may be required by any statute, court or administrative order or
decree or governmental ruling or regulation. Lessee will cause such Insurance
Brokers to agree to advise Lessor, the Indenture Trustee and the Owner
Participant in writing of any default in the payment of any premium and of any
other act or omission on the part of Lessee of which it has knowledge and which
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. To the extent such agreement is reasonably obtainable, Lessee
will also cause such Insurance Brokers to agree to advise Lessor, the Indenture
Trustee and the Owner Participant in writing at least thirty (30) days (seven
(7) days in the case of war risk and allied perils coverage), prior to the
expiration or termination date of any insurance carried and maintained on the
Aircraft pursuant to this Section 11. In addition, Lessee will also cause such
Insurance Brokers to deliver to Lessor, the Indenture Trustee and the Owner
Participant, on or prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new certificate
of insurance, substantially in the same form as delivered by Lessee to such
parties on the Delivery Date. In the event that Lessee or any Sublessee shall
fail to maintain or cause to be maintained insurance as herein provided, Lessor
or the Indenture Trustee may at its sole option provide such insurance and, in
such event, Lessee shall, upon demand, reimburse Lessor or the Indenture
Trustee, as Supplemental Rent, for the cost thereof to Lessor or the Indenture
Trustee, as the case may be, without waiver of any other rights Lessor or the
Indenture Trustee may have; PROVIDED, HOWEVER, that no exercise by Lessor or the
Indenture Trustee, as the case may be, of said option shall affect the
provisions of this Lease, including the provisions of Section 14(g) hereof.
- 40 -
(d) SELF-INSURANCE. Lessee may self-insure by way of deductible,
premium adjustment or franchise provisions or otherwise (including, with respect
to insurance maintained pursuant to Section 11(b), insuring for a maximum amount
which is less than the Stipulated Loss Value of the Aircraft) in the insurance
covering the risks required to be insured against pursuant to this Section 11
under a program applicable to all aircraft in Lessee's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 11(a) and
Section 11(b) exceed during any policy year, with respect to all of the aircraft
in Lessee's fleet (including, without limitation, the Aircraft), the lesser of
(a) 50% of the largest replacement value of any single aircraft in Lessee's
fleet or (b) 1-1/2% of the average aggregate insurable value (during the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee carries insurance. In addition, Lessee (and any
Sublessee) may self-insure to the extent of any applicable mandatory minimum per
aircraft (or, if applicable, per annum or other period) hull or liability
insurance deductible imposed by the aircraft hull or liability insurers.
(e) ADDITIONAL INSURANCE BY LESSOR AND LESSEE. Lessee (and any
Sublessee) may at its own expense carry insurance with respect to its interest
in the Aircraft in amounts in excess of that required to be maintained by this
Section 11; the Owner Participant either directly or through Lessor may carry
for its own account at its sole cost and expense insurance with respect to its
interest in the Aircraft, PROVIDED that such insurance does not prevent Lessee
(or any Sublessee) from carrying the insurance required or permitted by this
Section 11 or adversely affect such insurance or the cost thereof.
Notwithstanding any other provision of this Lease, all proceeds of insurance
carried by Lessor shall be paid to Lessor.
(f) INDEMNIFICATION BY GOVERNMENT IN LIEU OF
INSURANCE. Notwithstanding any provisions of this Section 11 requiring
insurance, Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft, indemnification from, or insurance provided by, the
United States Government or any agency or instrumentality thereof or, upon the
written consent of Lessor, other government of registry of the Aircraft or any
agency or instrumentality thereof, against such risk in an amount which, when
added to the amount of insurance against such risk maintained by Lessee (or any
Sublessee) with respect to the Aircraft (including permitted self-insurance)
shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 11.
(g) APPLICATION OF PAYMENTS DURING EXISTENCE OF AN EVENT OF
DEFAULT. Any amount referred to in paragraph (b) of this Section 11 which is
payable to or retainable by Lessee (or any Sublessee) shall not be paid to or
retained by Lessee (or any Sublessee) if at the time of such payment or
retention an Event of Default shall have occurred and be continuing, but shall
be held by or paid over to Lessor as security for the obligations of Lessee (or
any Sublessee) under this Lease and, if Lessor declares this Lease to be in
default pursuant to Section 15 hereof, applied against Lessee's obligations
hereunder as and when due. At such time as there shall not be continuing any
such Event of Default, such amount shall be paid to Lessee (or such Sublessee)
to the extent not previously applied in accordance with the preceding sentence.
SECTION 12. INSPECTION. At all reasonable times and upon at least 15
days' prior written notice to Lessee, Lessor, the Owner Participant or the
Indenture Trustee or their respective authorized representatives may (not more
than once every calendar year (unless an
- 41 -
Event of Default has occurred and is continuing when such inspection right shall
not be so limited)) inspect the Aircraft and inspect and make copies (at
Lessor's, the Owner Participant's or the Indenture Trustee's expense, as the
case may be) of the books and records of Lessee relating to the maintenance of
the Aircraft; any such inspection of the Aircraft shall be limited to a visual,
walk-around inspection and shall not include opening any panels, bays or the
like without the express consent of Lessee; PROVIDED that no exercise of such
inspection right shall interfere with the operation or maintenance of the
Aircraft by, or the business of, Lessee (or any Sublessee). Upon receipt by
Lessee of a written request from the Owner Participant specifying that the Owner
Participant desires to have an authorized representative observe the next
scheduled major overhaul to be performed on the Aircraft, Lessee shall cooperate
with the Owner Participant to enable the Owner Participant's authorized
representative to observe the next scheduled major overhaul to be performed on
the Aircraft; PROVIDED that Lessee shall be required to so cooperate only to the
extent necessary to enable the Owner Participant's authorized representative to
observe one scheduled major overhaul during each three year period of the Term
and (notwithstanding the foregoing but only if a major overhaul is scheduled
during the last year of the Term) one scheduled major overhaul during the last
year of the Term; provided that the Owner Participant's authorized
representative shall merely observe such major overhaul, shall not interfere
with or extend in any manner the conduct or duration of the major overhaul and
shall not be entitled to direct any of the work performed in connection with
such overhaul. None of Lessor, the Owner Participant or the Indenture Trustee
shall have any duty to make any such inspection nor shall any of them incur any
liability or obligation by reason of not making such inspection.
SECTION 13. ASSIGNMENT. Except as otherwise provided herein, Lessee
will not, without prior written consent of Lessor, assign in whole or in part
any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. EVENTS OF DEFAULT. Each of the following events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) and each such Event of
Default shall continue so long as, but only as long as, it shall not have been
remedied:
(a) Lessee shall not have made a payment of Basic Rent or
Stipulated Loss Value within ten (10) Business Days after the same shall
have become due; or
(b) Lessee shall have failed to make a payment of Supplemental Rent
(other than Stipulated Loss Value) after the same shall have become due and
such failure shall continue for ten (10) Business Days after Lessee's
receipt of written demand therefor by the party entitled thereto (PROVIDED
that any failure to pay any
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amount owed by Lessee under the Tax Indemnity Agreement or any failure of
Lessee to pay to Lessor or the Owner Participant when due any Excluded
Payments (as defined in the Trust Indenture) shall not constitute an Event
of Default unless notice is given by the Owner Participant to Lessee and
the Indenture Trustee that such failure shall constitute an Event of
Default); or
(c) Lessee shall have failed to perform or observe (or caused to be
performed and observed) in any material respect any covenant or agreement
(except the covenants set forth in the Tax Indemnity Agreement, in clauses
(i)(B) and (ii) of the first sentence of second paragraph of EXHIBIT G and
in the proviso contained in the last sentence of the first paragraph of
Section 5(a)) to be performed or observed by it under any Operative
Document, and such failure shall continue unremedied for a period of thirty
(30) days after receipt by Lessee of written notice thereof from Lessor or
the Indenture Trustee; PROVIDED, HOWEVER, that if Lessee shall have
undertaken to cure any such failure which arises under clause (ii) or
clause (iii) of the first sentence of Section 7(a), or under the second
sentence of Section 7(a) as it relates to maintenance, service, repair or
overhaul or under Section 8 and, notwithstanding the diligence of Lessee in
attempting to cure such failure, such failure is not cured within said
thirty day period but is curable with future due diligence, there shall
exist no Event of Default under this Section 14 so long as Lessee is
proceeding with due diligence to cure such failure and such failure is
remedied not later than two hundred seventy (270) days after receipt by
Lessee of such written notice; or
(d) any representation or warranty made by Lessee herein or in the
Participation Agreement or any document or certificate furnished by Lessee
in connection herewith or therewith or pursuant hereto or thereto (except
the representations and warranties set forth in Section 3 of the Tax
Indemnity Agreement and such documents or certificates as are furnished to
the Owner Participant solely in connection with matters dealt with in the
Tax Indemnity Agreement and for no other purpose and except for
representations or warranties contained in the Pass Through Trust Agreement
or the Underwriting Agreement (as defined in the Participation Agreement)
or any document or instrument furnished pursuant to either thereof) shall
prove to have been incorrect in any material respect at the time made and
such incorrectness shall not have been cured (to the extent of the adverse
impact of such incorrectness on the interests of the Owner Participant,
Lessor or the Certificate Holders) within thirty (30) days after the
receipt by Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(e) the commencement of an involuntary case or other proceeding in
respect of Lessee in an involuntary case under the federal bankruptcy laws,
as now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United States or seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Lessee or for all or substantially
all of its property, or seeking the winding-up
- 43 -
or liquidation of its affairs and the continuation of any such case or
other proceeding undismissed and unstayed for a period of ninety (90)
consecutive days or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Lessee, a receiver, trustee or liquidator of Lessee, or of any
substantial part of its property, or sequestering any substantial part of
the property of Lessee and any such order, judgment or decree or
appointment or sequestration shall be final or shall remain in force
undismissed, unstayed or unvacated for a period of ninety (90) days after
the date of entry thereof; or
(f) the commencement by Lessee of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar
law in the United States, or the consent by Lessee to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Lessee or for all or
substantially all of its property, or the making by Lessee of any
assignment for the benefit of creditors, or Lessee shall take any corporate
action to authorize any of the foregoing; or
(g) Lessee shall fail to carry and maintain on or with respect to
the Aircraft (or cause to be carried and maintained) insurance required to
be maintained in accordance with the provisions of Section 11 hereof;
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee to perform or observe any covenant,
condition, agreement or any error in a representation or warranty shall not
constitute an Event of Default if such failure or error is caused solely by
reason of an event that constitutes an Event of Loss so long as Lessee is
continuing to comply with all of the terms of Section 10 hereof.
SECTION 15. REMEDIES. Upon the occurrence of any Event of Default and
at any time thereafter so long as the same shall be continuing, Lessor may, at
its option, declare by written notice to Lessee this Lease Agreement to be in
default; and at any time thereafter, so long as any such outstanding Events of
Default shall not have been remedied, Lessor may do one or more of the following
with respect to all or any part of the Airframe and any or all of the Engines as
Lessor in its sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirements of, applicable law then in
effect; PROVIDED, HOWEVER, that during any period the Aircraft is subject to the
Civil Reserve Air Fleet Program in accordance with the provisions of Section
7(b) hereof and in possession of the United States government or an agency or
instrumentality of the United States, Lessor shall not, on account of any Event
of Default, be entitled to do any of the following in such manner as to limit
Lessee's control under this Lease (or any Sublessee's control under any
Sublease) of any Airframe or any Engines installed thereon, unless at least
sixty (60) days' (or such lesser period as may then be applicable under the Air
Mobility Command program of the United States Government) written notice of
default hereunder shall have been given by Lessor by registered or certified
mail to Lessee (and any Sublessee) with a copy addressed to the Contracting
Office Representative for the Air
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Mobility Command of the United States Air Force under any contract with Lessee
(or any Sublessee) relating to the Aircraft:
(a) upon the written demand of Lessor and at Lessee's expense,
cause Lessee to return promptly, and Lessee shall return promptly, the
Airframe or any Engine as Lessor may so demand to Lessor or its order
in the manner and condition required by, and otherwise in accordance
with all the provisions of, Section 5 as if such Airframe or Engine
were being returned at the end of the Term, or Lessor, at its option,
may enter upon the premises where all or any part of the Airframe or
any Engine is located and take immediate possession of and remove the
same by summary proceedings or otherwise (and/or, at Lessor's option,
store the same at Lessee's premises until disposal thereof by Lessor),
all without liability accruing to Lessor for or by reason of such
entry or taking of possession or removing whether for the restoration
of damage to property caused by such action or otherwise;
(b) sell the Airframe and/or any Engine at public or private
sale, as Lessor may determine, or otherwise dispose of, hold, use,
operate, lease to others or keep idle the Aircraft as Lessor, in its
sole discretion, may determine, all free and clear of any rights of
Lessee, except as hereinafter set forth in this Section 15;
(c) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a)
or paragraph (b) above with respect to the Airframe and/or any Engine,
Lessor, by written notice to Lessee specifying a payment date which
shall be the Lease Period Date not earlier than ten days from the date
of such notice, may demand that Lessee pay to Lessor, and Lessee shall
pay Lessor, on the payment date so specified, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the
installments of Basic Rent for the Aircraft due for Lease Periods
commencing on or after the Delivery Date or the Lease Period Date
specified as the payment date in such notice), any unpaid Basic Rent
due on Lease Period Dates prior to the payment date so specified
(including, without limitation, any adjustments to Basic Rent payable
pursuant to Section 3(d)) PLUS whichever of the following amounts
Lessor, in its sole discretion, shall specify in such notice (together
with interest, if any, on such amount at the Past Due Rate from such
specified payment date until the date of actual payment of such
amount): (i) an amount equal to the excess, if any, of the
Stipulated Loss Value for the Aircraft, computed as of the Lease
Period Date specified as the payment date in such notice, over the
aggregate fair market rental value (computed as hereafter in this
Section 15 provided) of such Aircraft for the remainder of the Term,
after discounting such aggregate fair market rental value to present
value as of the Lease Period Date specified as the payment date in
such notice at an annual rate equal to the Base Rate plus 1%; or
(ii) an amount equal to the excess, if any, of the Stipulated Loss
Value for such Aircraft, computed as of the Lease Period Date
specified as the payment date in such notice over the fair market
sales value of such Aircraft (computed as
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hereafter in this Section provided) as of the Lease Period Date
specified as the payment date in such notice;
(d) in the event Lessor, pursuant to paragraph (b) above,
shall have sold the Airframe and/or any Engine, Lessor, in lieu of
exercising its rights under paragraph (c) above with respect to such
Aircraft, may, if it shall so elect, demand that Lessee pay Lessor,
and Lessee shall pay to Lessor, on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in lieu
of the installments of Basic Rent for the Aircraft due on or after
such date), any unpaid Basic Rent with respect to the Aircraft due
prior to such date (including, without limitation, any adjustments to
Basic Rent payable pursuant to Section 3(d)) PLUS the amount of any
deficiency between the net proceeds of such sale (after deduction of
all reasonable costs of sale) and the Stipulated Loss Value of such
Aircraft, computed as of the Stipulated Loss Value Date on or
immediately following the date of such sale together with interest, if
any, on the amount of such deficiency, at the Past Due Rate, from the
date of such sale to the date of actual payment of such amount; and/or
(e) Lessor may rescind this Lease Agreement as to the
Aircraft, and/or may exercise any other right or remedy which may be
available to it under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for breach
hereof.
For the purposes of paragraph (c) above, the "fair market rental
value" or the "fair market sales value" of the Aircraft shall be the rental
value or sales value, as the case may be, which would be obtained in an
arm's-length transaction between an informed and willing lessee or purchaser, as
the case may be, under no compulsion to lease or purchase, as the case may be,
and an informed and willing lessor or seller in possession under no compulsion
to sell, as the case may be, in each case based upon the actual condition and
location of the Aircraft, which value shall be determined by mutual agreement
or, in the absence of mutual written agreement, pursuant to an appraisal
prepared and delivered by a nationally recognized firm of independent aircraft
appraisers nominated by Lessor, and Lessor shall immediately notify Lessee of
such nomination. Unless Lessee shall have objected in writing within ten days
after its receipt of Lessor's notice, Lessor's nomination shall be conclusive
and binding. If Lessee shall object, however, Lessor and Lessee shall endeavor,
within ten days after such objection is made, to select a mutually acceptable
appraiser; PROVIDED that, if Lessee shall not so endeavor to make such
selection, Lessor's nomination referred to in the preceding sentence hereof
shall be conclusive and binding. If Lessor and Lessee fail to reach agreement
(except for the reason referred to in the proviso in the preceding sentence), or
if any appraiser selected fails to act for any reason, then the question shall
be determined by an appraisal (applying the definitions of "fair market rental
value" and "fair market sales value" as set forth above based upon the actual
condition of the Aircraft) mutually agreed to by two recognized independent
aircraft appraisers, one of which appraisers shall be chosen by Lessor and one
by Lessee within five Business Days after Lessor or Lessee shall have received
written notice from the other party of a demand that such an appraisal be made,
which notice shall specify the appraiser chosen by the party giving the notice
or, if such appraisers cannot agree on the amount of such appraisal within
twenty Business
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Days after the end of such five-day period, each shall render its own appraisal
and shall by mutual consent choose another appraiser within five Business Days
after the end of such twenty-day period. If, within such five-day period, such
two appraisers fail to appoint a third appraiser, then either Lessor or Lessee,
on behalf of both, may request such appointment by the then President of the
Association of the Bar of the City of New York (or any successor organization
thereto) or, in his absence, failure, refusal or inability to act, then either
Lessor or Lessee may apply to the American Arbitration Association (or any
successor organization thereto) in New York, New York for the appointment of
such third appraiser. The decision of the third appraiser so appointed shall be
given within twenty Business Days after the appointment of such third appraiser.
As soon as the third appraiser has delivered his appraisal, that appraisal shall
be compared with the appraisals given by the other two appraisers. If the
determination of one appraiser is more disparate from the average of all three
determinations than each of the other two determinations, then the determination
of such appraiser shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon the parties hereto.
If no determination is more disparate from the average of all three
determinations than each of the other determinations, then such average shall be
final and binding upon the parties thereto. The cost of such appraisal or
appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other costs and
expenses (including fees of the appraisers hereinabove referred to) incurred by
Lessor, the Indenture Trustee, the Loan Participants and the Owner Participant
in connection with the return of the Airframe or any Engine in accordance with
the terms of Section 5 or in placing such Airframe or Engine in the condition
and airworthiness required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or the Indenture Trustee, any Loan Participant or the Owner
Participant) or Lessee may bid for and purchase such property. Lessor agrees to
give Lessee at least fifteen (15) days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale
and any such public sale shall be conducted in general so as to afford Lessee
(and any Sublessee) a reasonable opportunity to bid. Except as otherwise
expressly provided above, no remedy referred to in this Section 15 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lessor at law or in equity;
and the exercise or beginning of exercise by Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Lessor of any
or all of such other remedies. No waiver by Lessor of any Event of Default
shall in any way be, or be construed to be, a waiver of any future or subsequent
Event of Default.
SECTION 16. LESSEE'S COOPERATION CONCERNING CERTAIN MATTERS.
Forthwith upon the execution and delivery of each Lease Supplement and Trust
Supplement from time to time required by the terms hereof and upon the execution
and delivery of any amendment to this Lease, to the Trust Indenture or to the
Trust Agreement, Lessee will cause such Lease Supplement, Trust Supplement (and,
in the case of the initial Lease Supplement and Trust
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Supplement, this Lease, the Trust Agreement and the Trust Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in accordance
with the applicable laws of the government of registry of the Aircraft. In
addition, Lessee will promptly and duly execute and deliver to Lessor such
further documents and take such further action as Lessor or the Indenture
Trustee may from time to time reasonably request in order more effectively to
carry out the intent and purpose of this Lease and to establish and protect the
rights and remedies created or intended to be created in favor of Lessor and the
Indenture Trustee hereunder, including, without limitation, if requested by
Lessor or the Indenture Trustee, at the expense of Lessee, the execution and
delivery of supplements or amendments hereto or to the Trust Indenture, each in
recordable form, subjecting to this Lease and the Trust Indenture, any airframe
or engine substituted for the Airframe or any Engine pursuant to the terms
thereof and the recording or filing of counterparts thereof, in accordance with
the laws of such jurisdictions as Lessor or the Indenture Trustee may from time
to time deem advisable. Lessee agrees to furnish to Lessor and the Indenture
Trustee promptly after execution and delivery of any supplement and amendment
hereto and promptly after the execution and delivery of any supplement and
amendment to the Trust Indenture (except for any such supplement or amendment
which does not require or receive the approval of Lessee pursuant to the
Operative Documents and is not required pursuant to the terms of the Operative
Documents), an opinion of counsel reasonably satisfactory to Lessor and the
Indenture Trustee as to the due recording or filing of such supplement or
amendment. Commencing in 1998, on or before April 30 of each year during the
Term, Lessee will deliver to Lessor and the Indenture Trustee a certificate of
Lessee, signed by the President, a Vice President or the Chief Financial Officer
of Lessee to the effect that the signer is familiar with or has reviewed the
relevant terms of this Lease and the signer does not have actual knowledge of
the existence, as of the date of such certificate, of any condition or event
which constitutes a Default or an Event of Default. Lessee agrees that if the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
Treasurer or an Assistant Treasurer of Lessee has actual knowledge of the
existence of a Default, then Lessee shall promptly give to Lessor, the Owner
Participant and the Indenture Trustee notice thereof and such other information
relating thereto as Lessor, the Owner Participant or the Indenture Trustee may
reasonably request. Lessee agrees that if an officer of Lessee has knowledge of
the existence of an Event of Default, Lessee shall promptly give to Lessor and
the Indenture Trustee notice thereof and such other information relating thereto
as Lessor or the Indenture Trustee may reasonably request. Lessee will deliver
to Lessor, the Owner Participant and the Indenture Trustee (i) within sixty (60)
days after the end of each of the first three quarterly periods of each fiscal
year of the Guarantor, the publicly filed Form 10-Q report of the Guarantor; and
(ii) within one hundred twenty (120) days after the close of such fiscal year,
the publicly filed annual report and Form 10-K report of the Guarantor.
SECTION 17. NOTICES. All notices required under the terms and
provisions hereof shall be by telecopier or other telecommunication means (with
such telecopy or other telecommunication means to be confirmed in writing), or
if such notice is impracticable, by registered, first-class airmail, with
postage prepaid, or by personal delivery of written notice and any such notice
shall become effective when received, addressed:
(i) if to Lessee, for U.S. MAIL at 0000 Xxxxxxxxx Xxxxx (X0000),
Xx. Xxxx, Xxxxxxxxx 00000-0000, and for OVERNIGHT COURIER at 0000 Xxxx
Xxx Xxxxxxx (X0000), Xxxxx, Xxxxxxxxx 00000, Attention: Senior Vice
President-Finance and
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Treasurer (Telecopy No. (000) 000-0000), or to such other address or
telecopy number as Lessee shall from time to time designate in writing
to Lessor,
(ii) if to Lessor, at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000, Attention: Corporate Trust Department (Telecopy No.
(000) 000-0000), or to such other address or telecopy number as Lessor
shall from time to time designate in writing to Lessee, and
(iii) if to a Loan Participant, the Indenture Trustee or the Owner
Participant, addressed to such Loan Participant, the Indenture Trustee
or the Owner Participant at such address or telecopy number as such
Loan Participant, the Indenture Trustee or the Owner Participant shall
have furnished by notice to Lessor and to Lessee, and, until an
address is so furnished, addressed to such Loan Participant, the
Indenture Trustee or the Owner Participant at its address or telecopy
number set forth in Schedule I to the Participation Agreement.
SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(f). Except as
provided in Section 3(g) hereof, Lessee's obligation to pay all Rent payable
hereunder shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which Lessee may have against Lessor, in its
individual capacity or as Owner Trustee under the Trust Agreement, the Indenture
Trustee (in its individual capacity or as Indenture Trustee), any Loan
Participant, the Owner Participant, or anyone else for any reason whatsoever
(whether in connection with the transactions contemplated hereby or any other
transactions), including, without limitation, any breach by Lessor or the Owner
Participant of their respective warranties, agreements or covenants contained in
any of the Operative Documents, (ii) any defect in the title, registration,
airworthiness, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interruption or
cessation in or prohibition of the use or possession thereof by Lessee (or any
Sublessee) for any reason whatsoever, including, without limitation, any such
interruption, cessation or prohibition resulting from the act of any government
authority, (iii) any insolvency, bankruptcy, reorganization or similar case or
proceedings by or against Lessee (or any Sublessee) or any other person, or (iv)
any other circumstance, happening, or event whatsoever, whether or not
unforeseen or similar to any of the foregoing. If for any reason whatsoever
this Lease shall be terminated in whole or in part by operation of law or
otherwise except as specifically provided herein, Lessee nonetheless agrees
without limitation of the other rights or remedies of Lessor hereunder, subject
to the rights of Lessee to setoff under Section 3(g) hereof, to pay to Lessor an
amount equal to each Rent payment at the time such payment would have become due
and payable in accordance with the terms hereof had this Lease not been
terminated in whole or in part. Lessee hereby waives, to the extent permitted
by applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Lease except in accordance with the express terms
hereof.
SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION.
(a) RENEWAL OPTIONS. (1) FIXED RENEWAL TERM. Lessee shall have the right to
renew this Lease for up to
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_____ consecutive one year renewal terms the first of which shall commence only
upon the expiration of the Basic Term (any such renewal term, a "FIXED RENEWAL
TERM") by delivery to Lessor at least ninety (90) days before the end of the
Basic Term, the first Fixed Renewal Term or the second Fixed Renewal Term, as
the case may be, a written notice irrevocably electing to renew this Lease for a
Fixed Renewal Term. Basic Rent during any Fixed Renewal Term shall be payable
in an amount and at the times specified in Section 19(a)(4).
(2) FAIR MARKET RENEWAL TERM. Not less than ninety (90) days
before the end of the third Fixed Renewal Term, the first Fair Market Renewal
Term or the second Fair Market Renewal Term for the Aircraft, Lessee shall have
the right to renew this Lease by delivery to Lessor of a written notice
irrevocably electing to renew this Lease for a renewal term of not less than one
year and not more than two years for a Basic Rent equal to the "fair market
rental value" of the Aircraft for such period (any such renewal term, a "FAIR
MARKET RENEWAL TERM"); PROVIDED that Lessee shall not be entitled to renew this
Lease pursuant to this Section 19(a)(2) more than _____ times.
(3) If no written notice is delivered by Lessee to Lessor pursuant
to Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee has
elected to renew this Lease as aforesaid, and PROVIDED that there shall not then
have occurred and be continuing a Default of the type referred to in Section
14(a), 14(b) or 14(e) or an Event of Default and that all necessary governmental
authorizations and approvals shall have been received and that Basic Rent for
the Renewal Term has already been determined as above provided and a Lease
Supplement evidencing such renewal has been executed and filed for recordation
with the Federal Aviation Administration, this Lease shall continue in full
force and effect during the Renewal Term, except that (x) Lessee shall pay
Lessor Basic Rent for the Aircraft during the Renewal Term in an amount equal to
the "fair market rental value" thereof determined in accordance with Section
19(c), but not to exceed in the case of a Fixed Renewal Term one-half of the
average Basic Rent during the Basic Term (such average being determined as the
total of all payments of Basic Rent during the Basic Term added together and
divided by the number of payments of Basic Rent during the Basic Term), which
Basic Rent shall be payable in semi-annual installments in arrears unless in the
case of a Fixed Renewal Term, any portion of Basic Rent during the Basic Term is
payable in advance, in which case the same proportion of Basic Rent during such
Fixed Renewal Term shall also be payable in advance, each such installment being
due and payable on each Lease Period Date occurring during the Renewal Term,
commencing with the Lease Period Date immediately following the commencement of
the Renewal Term, and (y) the Stipulated Loss Values applicable during the
Renewal Term shall be determined separately for each Renewal Term by the Owner
Participant in good faith to reflect Stipulated Loss Values determined in
accordance with the following sentence. Stipulated Loss Values during a Renewal
Term shall on the date on which such Renewal Term begins be equal to the fair
market sales value of the Aircraft as of such date, determined in accordance
with the provisions of this Section 19(a)(4) and Section 19(c) hereof, and shall
decline ratably on a monthly basis to the fair market sales value of the
Aircraft as of the last day of such Renewal
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Term, determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c) hereof.
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
(b) PURCHASE OPTIONS. Lessee shall have the option, upon at least
ninety (90) days' irrevocable prior written notice to Lessor, to purchase the
Aircraft on the last Business Day of the Basic Term or any Renewal Term for a
purchase price equal to the lesser of the fair market sales value of the
Aircraft and __% of Lessor's Cost. Upon payment to Lessor in immediately
available funds of the full amount of the purchase price and payment of any
other amounts then due hereunder (including all Rent and all costs or expenses
of the Owner Participant in connection with such purchase), Lessor will transfer
to Lessee, without recourse or warranty (except as to the absence of Lessor
Liens, including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens), all of Lessor's right, title and
interest in and to the Aircraft.
(c) VALUATION. At any time not earlier than three hundred
sixty-five (365) days prior to the date on which Lessee may purchase the
Aircraft pursuant to Section 19(b) hereof or renew this Lease pursuant to
Section 19(a)(1) or Section 19(a)(2) hereof, Lessee may deliver to Lessor a
revocable notice of its intent to exercise its renewal option or purchase
option. For all purposes of this Section 19, including the appraisal referred
to in this Section 19(c), in determining "fair market rental value" or "fair
market sales value", the Aircraft shall be valued (i) as if in the condition and
otherwise in compliance with the terms of Section 5 upon a return of the
Aircraft to the United States and as if it had been maintained at all times as
required in accordance with Section 7(a)(I) during periods when no Sublease was
in effect, (ii) on the basis of the value which would obtain in an arm's-length
transaction between an informed and willing buyer-user or lessee (other than a
lessee or an Affiliate of a lessee currently in possession or a used equipment
scrap dealer) under no compulsion to buy or lease and an informed and willing
seller or lessor unaffiliated with such buyer-user or lessee and under no
compulsion to sell or lease and disregarding the purchase and renewal options of
the lessee provided in this Lease, and (iii) in the case of such valuation for
determining "fair market rental value", assuming such lessee would have
substantially the same obligations during the Fair Market Renewal Term as
provided hereunder including without limitation the obligations of Lessee to
carry and maintain the insurance required by Section 11 hereof and to make
certain payments with reference to Stipulated Loss Value during the applicable
Fair Market Renewal Term. Upon receipt of such notice Lessor and Lessee shall
confer in good faith with a view to reaching agreement on the "fair market
rental value" or "fair market sales value" of the Aircraft. If the parties have
not so agreed by two hundred seventy (270) days prior to the end of the Basic
Term or the Renewal Term in question, then the question shall be determined by
an appraisal mutually agreed to by two recognized independent aircraft
appraisers, one of which appraisers shall be chosen by Lessor and one by Lessee
within five Business Days after Lessor or Lessee shall have received written
notice from the other party of a demand that such an appraisal be made, which
notice shall specify the appraiser chosen by the party giving the notice or, if
such appraisers cannot agree on the amount of such appraisal within twenty
Business Days after the end of such five-day period,
- 51 -
each shall render its own appraisal and shall by mutual consent choose another
appraiser within five Business Days after the end of such twenty-day period.
If, within such five-day period, such two appraisers fail to appoint a third
appraiser, then either Lessor or Lessee, on behalf of both, may request such
appointment by the then President of the Association of the Bar of the City of
New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business Days after
the appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is
more disparate from the average of all three determinations than each of the
other two determinations, then the determination of such appraiser shall be
excluded, the remaining two determinations shall be averaged and such average
shall be final and binding upon the parties hereto. If no determination is more
disparate from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) SPECIAL PURCHASE OPTION. On ___________, 20__ (or, if
___________, 20__ is not a Business Day, the Business Day immediately succeeding
_____________, 20__), Lessee shall have the option, upon at least ninety (90)
days' irrevocable prior notice to Lessor and, if any Secured Certificates are
then outstanding, the Indenture Trustee, to purchase the Aircraft on such date
for a purchase price equal to the Special Purchase Price. In addition, if on
such date there shall be any Secured Certificates outstanding, Lessee shall have
the option to assume, pursuant to Section 8(x) of the Participation Agreement
and Section 2.13 of the Trust Indenture, all of the obligations of Lessor under
the Trust Indenture. If such assumption is made, Lessee shall pay Lessor a
purchase price equal to (I) the Special Purchase Price minus (II) an amount
equal to principal of, and accrued but unpaid interest on, any Secured
Certificates that are outstanding on such date. Upon such payment in full and
payment of any other amounts then due hereunder (including costs or expenses of
the Owner Participant in connection with such purchase, any installments of
Basic Rent due prior to such date and, if Basic Rent is payable in arrears on
such date as indicated on EXHIBIT B, on such date (but not any installment of
Basic Rent due on such date if Basic Rent is payable in advance on such date),
and all unpaid Supplemental Rent due on or prior to such date), Lessor will
transfer to Lessee, without recourse or warranty (except as to the absence of
Lessor Liens, including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens), all of Lessor's right, title
and interest in and to the Aircraft and under the Trust Indenture and, unless
there shall be any Secured Certificates outstanding after such payment, exercise
such rights as it has to cause the Aircraft to be released from the Lien of the
Trust Indenture.
SECTION 20. SECURITY FOR LESSOR'S OBLIGATION TO HOLDERS OF SECURED
CERTIFICATES. In order to secure the indebtedness evidenced by the Secured
Certificates, Lessor has agreed in the Trust Indenture, among other things, to
assign to the Indenture Trustee this Lease, the Lease Supplements and any
amendments to this Lease and to mortgage its interest in the Aircraft in favor
of the Indenture Trustee, subject to the reservations and conditions therein
- 52 -
set forth. To the extent, if any, that this Lease, the Lease Supplements and
any amendments to this Lease constitute chattel paper (as such term is defined
in the Uniform Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease, the Lease Supplements and any amendments to
this Lease may be created through the transfer or possession of any counterpart
other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page thereof. Lessee hereby accepts and consents to the
assignment of all Lessor's right, title and interest in and to this Lease
pursuant to the terms of the Trust Indenture. Subject to Section 3(f) hereof,
Lessee agrees to pay directly to the Indenture Trustee (or, after receipt by
Lessee of notice from the Indenture Trustee of the discharge of the Trust
Indenture, to Lessor), all amounts of Rent due or to become due hereunder and
assigned to the Indenture Trustee and Lessee agrees that the Indenture Trustee's
right to such payments hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, the
circumstances set forth in clauses (i) through (iv) of Section 18 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessor to Lessee to perform the terms and conditions of this Lease shall remain
in full force and effect.
SECTION 21. LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to
make any payment of Rent required to be made by it hereunder or fails to perform
or comply with any of its agreements contained herein, then (but in each case,
except in the case of failure to pay Rent or in the case of failure to maintain
insurance as required hereunder, no earlier than the fifteenth day after the
occurrence of such failure, whether or not it shall yet constitute an Event of
Default hereunder) Lessor may itself make such payment or perform or comply with
such agreement but shall not be obligated hereunder to do so, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand.
SECTION 22. INVESTMENT OF SECURITY FUNDS; LIABILITY OF LESSOR LIMITED.
(a) INVESTMENT OF SECURITY FUNDS. Any moneys held by Lessor as security
hereunder for future payments to Lessee at a time when there is not continuing
an Event of Default shall, until paid to Lessee, be invested by Lessor or, if
the Trust Indenture shall not have been discharged, by the Indenture Trustee, as
the case may be, as Lessee may from time to time direct in writing (and in
absence of a written direction by Lessee, there shall be no obligation to invest
such moneys) in (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of
ninety (90) days or less from date of purchase thereof; (ii) certificates of
deposit issued by, bankers' acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of the
United States of America or one of the states thereof having combined capital
and surplus and retained earnings as of its last report of condition of at least
$500,000,000 and having a rating of Aa or better by Xxxxx'x Investors Service,
Inc. ("MOODY'S") or AA or better by Standard & Poor's Corporation ("S&P") and
having a final maturity of ninety (90) days or less from date of purchase
thereof; and (iii) commercial paper of any holding company of a bank, trust
company or national banking association described in (ii) and commercial paper
of any corporation or finance company incorporated or doing business under the
laws of the United States of America or any state
- 53 -
thereof having a rating assigned to such commercial paper of A1 by S&P or P1 by
Moody's and having a final maturity of ninety (90) days or less from the date of
purchase thereof; PROVIDED, HOWEVER, that the aggregate amount at any one time
so invested in certificates of deposit issued by any one bank shall not be in
excess of 5% of such bank's capital and surplus. There shall be promptly
remitted to Lessee or its order (but no more frequently than monthly) any gain
(including interest received) realized as a result of any such investment (net
of any fees, commissions and other expenses, if any, incurred in connection with
such investment) unless an Event of Default shall have occurred and be
continuing. Lessee shall be responsible for any net loss realized as a result
of any such investment and shall reimburse Lessor (or the Indenture Trustee, as
the case may be) therefor on demand.
(b) LIABILITY OF LESSOR LIMITED. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its gross negligence or
willful misconduct or for breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
SECTION 23. SERVICE OF PROCESS. Lessor and Lessee each hereby
irrevocably submits itself to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, the Indenture Trustee, the Loan
Participants or the Owner Participant or their successors or assigns.
SECTION 24. MISCELLANEOUS. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and
nothing contained herein shall be construed as conveying to Lessee any right,
title or interest in the Aircraft except as a lessee only. Neither Lessee nor
any affiliate of Lessee will file any tax returns in a manner inconsistent with
the foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
- 54 -
SECTION 25. SUCCESSOR TRUSTEE. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 10 of the Participation Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. COVENANT OF QUIET ENJOYMENT. So long as no Event of
Default shall have occurred and be continuing and notwithstanding any default by
Lessor, the Owner Participant or the Indenture Trustee under the Participation
Agreement, the Trust Agreement or the Trust Indenture, Lessor shall not
interfere with Lessee's (or any Sublessee's) continued possession, use and
operation of, and quiet enjoyment of, the Aircraft or Lessee's rights, benefits
and obligations pursuant to the Overall Transaction during the Term of this
Lease, and this Lease shall not be terminated except as expressly provided
herein.
- 55 -
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY,
EXCEPT AS EXPRESSLY PROVIDED
HEREIN, BUT SOLELY AS OWNER
TRUSTEE,
LESSOR
BY:
-----------------------------------
Title:
NORTHWEST AIRLINES, INC.,
LESSEE
BY:
-----------------------------------
Title:
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged on the _____ day of _________________, 199_.
STATE STREET BANK AND
TRUST COMPANY,
INDENTURE TRUSTEE
BY:
-----------------------------------
Title:
- SIGNATURE PAGE -
EXHIBIT A
TO
LEASE AGREEMENT
[NW 1997 __]
LEASE SUPPLEMENT NO.
[NW 1997 __]
LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement [NW 1997 __], dated as of September
__, 1997, as amended and restated as of __________ __, 19__ between
__________________________, as Owner Participant, and such Owner Trustee (such
Owner Trustee, in its capacity as such Owner Trustee, being herein called
"LESSOR"), and NORTHWEST AIRLINES, INC. ("LESSEE").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement [NW 1997 __], dated as of _________ __, 199_, relating to one British
Aerospace Avro 146-RJ85A aircraft (herein called the "LEASE," and the defined
terms therein being hereinafter used with the same meanings). The Lease
provides for the execution and delivery from time to time of Lease Supplements
for the purpose of leasing the Airframe and Engines under the Lease as and when
delivered by Lessor to Lessee in accordance with the terms thereof.
(1)The Lease relates to the Airframe and Engines described below, and
a counterpart of the Lease is attached hereto, and made a part hereof, and this
Lease Supplement, together with such attachment, is being filed for recordation
on the date hereof with the Federal Aviation Administration as one document.
(2)The Lease Agreement relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated _______________, 19__ to the Lease Agreement, has
been recorded by the Federal Aviation Administration on ________________, 19__,
as one document and assigned Conveyance No. __.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease the following
described British Aerospace Avro 146-RJ85A aircraft (the "AIRCRAFT"), which
Aircraft as of the date hereof consists of the following components:
(i) Airframe: FAA Registration No. ______; manufacturer's serial no.
_____; and
______________________
(1) This language for Lease Supplements No. 1.
(2) This language for other Lease Supplements.
(ii) Engines: four (4) AlliedSignal LF507 type engines bearing,
respectively, manufacturer's serial nos. LFO______, LFO______,
LFO______ and LFO______ (each of which engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower).
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on ____________, 201_.
3. Lessee hereby confirms its agreement to pay Lessor Basic Rent for
the Aircraft throughout the Term therefor in accordance with Section 3 of the
Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; PROVIDED, HOWEVER, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against British
Aerospace (Operations) Limited, or any subcontractor or supplier of British
Aerospace (Operations) Limited, under the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by the Indenture Trustee on the signature page
hereof.
EXHIBIT A - PAGE 2
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
but Solely as Owner Trustee,
LESSOR
By
------------------------------
Title:
NORTHWEST AIRLINES, INC.,
LESSEE
By
------------------------------
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _______________, 19__.
STATE STREET BANK AND
TRUST COMPANY,
INDENTURE TRUSTEE
By
------------------------------
Title:
________________________
(3) This language contained in the original counterpart only.
EXHIBIT A - PAGE 3
EXHIBIT B
TO
LEASE AGREEMENT
[NW 1997 __]
BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
-------------------------------------------------
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent and Excess Amount:
Excess Amount Basic Rent
Delivery (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
Excess Amount Basic Rent
Delivery (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
* Denotes payment in arrears from preceding Lease Period Date (or Delivery
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
-------------------------------------------------
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Excess Amount Basic Rent
Lease Period (Percentage of (Percentage of
Date Lessor's Cost) Lessor's Cost)
------------------ ------------------------ --------------------
* Denotes payment in arrears from preceding Lease Period Date (or Delivery
Date in the case of the first Lease Period) to specified Lease Period Date.
** Denotes payment in advance from specified Lease Period Date to succeeding
Lease Period Date.
EXHIBIT B - PAGE 2
BASIC RENT, EXCESS AMOUNT,
LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE
-------------------------------------------------
Lessor's Cost for the Aircraft: $______________
Special Purchase Price: ___________% of Lessor's Cost.
EXHIBIT B - PAGE 3
EXHIBIT C
TO
LEASE AGREEMENT
[NW 1997 __]
STIPULATED LOSS VALUE SCHEDULE
------------------------------
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 2
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 3
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 4
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 5
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 6
STIPULATED LOSS VALUE SCHEDULE
------------------------------
Stipulated Stipulated Loss
Loss Value Date Value Percentage
------------------- --------------------
EXHIBIT C - PAGE 7
EXHIBIT D
TO
LEASE AGREEMENT
[NW 1997 __]
TERMINATION VALUE SCHEDULE
--------------------------
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination
Termination Value
Date Percentage
----------------- -----------------
EXHIBIT E
TO
LEASE AGREEMENT
[NW 1997 __]
RENT RECALCULATION AND
INDEMNIFICATION VERIFICATION
----------------------------
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
1. Any recalculation of Basic Rent, Excess Amounts, Stipulated Loss
Value percentages and Termination Value percentages pursuant to the Lease shall
be determined by the Owner Participant, and shall maintain the Owner
Participant's Net Economic Return except as assumptions have been modified
pursuant to Section 3 of the Lease or pursuant to the Tax Indemnity Agreement or
the Participation Agreement, as the case may be; PROVIDED, HOWEVER, that Lessee
may request (A) Lessee's independent public accountants to verify such
calculations but without any requirement that the Owner Participant disclose to
such persons the methodology and assumptions and (B) if Lessee believes that
such calculations by the Owner Participant are in error then a nationally
recognized firm of accountants selected by Lessee and reasonably acceptable to
the Owner Participant shall be permitted to verify such calculations and the
Owner Participant will make available to such firm (subject to the execution by
such firm of a confidentiality agreement reasonably acceptable to the Owner
Participant) the methodology and assumptions and any changes made therein
pursuant to Section 3 of the Lease. In the event of a verification under clause
(B) of the first sentence of this paragraph 1 the determination by such firm of
accountants shall be final. Lessee will pay the reasonable costs and expenses
of the verification under clause (B) of the first sentence of this paragraph 1
unless an error adverse to Lessee is established by such firm, and if as a
result of such verification process the Basic Rent is adjusted and such
adjustment causes the Net Present Value of Rents to decline by __ or more basis
points (in which event the Owner Participant shall pay the reasonable costs and
expenses of such verification process). Such recalculated Basic Rent, Excess
Amounts, Stipulated Loss Value percentages and Termination Value percentages
shall be set forth in a Lease Supplement or an amendment to the Lease.
2. "NET ECONOMIC RETURN" means the Owner Participant's net after-tax
yield and aggregate after-tax cash flow utilizing the multiple investment
sinking fund method of analysis, computed on the basis of the same methodology
and assumptions as were utilized by the Owner Participant in determining Basic
Rent, Special Purchase Price, Stipulated Loss Value and Termination Value
percentages as of the Delivery Date.
EXHIBIT F
TO
LEASE AGREEMENT
[NW 1997 __]
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
---------------------------------------------
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
_______________________________
* So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those in
effect on the Delivery Date.
EXHIBIT __
TO
LEASE AGREEMENT
[NW 1997 __]
RETURN CONDITIONS
-----------------
The portion of this Exhibit appearing below this text is intentionally
deleted from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Unless purchased by Lessee pursuant to Section 19 of the Lease, at the
time of return of the Airframe upon the termination of the Lease at the end of
any Renewal Term or pursuant to Section 9(c) or 15 of the Lease: (i) in the
event that Lessee (or any Sublessee then in possession of the Aircraft) shall
not then be using a continuous maintenance program with respect to the Airframe,
Lessee agrees that during the period of operation of the Aircraft immediately
prior to such return (A) Lessee or such Sublessee, as the case may be, shall
have been using a block overhaul program with respect to the Airframe which
shall have been approved by all necessary governmental approvals of the country
under the laws of which the Aircraft shall then have been registered and (B) the
Airframe shall have remaining until the next scheduled block overhaul at least
25% of the allowable hours between block overhauls permitted under the block
overhaul program then used by Lessee or such Sublessee, (ii) in the event that
Lessee (or any Sublessee then in possession of the Aircraft) during the period
of operation of the Aircraft immediately prior to such return shall not have
been using an on-condition maintenance program with respect to the Engines or
engines, Lessee agrees that the average number of hours or cycles of operation
(whichever shall be applicable under the maintenance program then in use with
respect to such Engines or engines) on such Engines or engines remaining until
the next scheduled engine refurbishment shall be at least 25% of the hours or
cycles (whichever shall be applicable) between engine refurbishment allowed
under the maintenance program then in use with respect to such Engines or
engines which shall have been approved by all necessary governmental approvals
of the country under the laws of which the Aircraft shall have then been
registered, (iii) shall have all Lessee's and any Sublessee's exterior markings
removed or painted over and the areas where such markings were removed or
painted over refurbished as necessary to blend with adjacent areas, (iv) shall
have no outstanding airworthiness directives issued by the FAA requiring
terminating action by the date of return, and (v) shall be in Lessee's or such
Sublessee's passenger configuration and the interior of the Airframe shall be
clean in accordance with Lessee's customary standards for a "between flights"
cleaning. In the event the FAA shall issue any directive which would require
improvements to the Aircraft in order for the airworthiness certificate of the
Aircraft to be maintained in good standing, Lessee shall not apply for an
extension of the date of compliance with the directive as to the Aircraft to a
date after the date of return of the Aircraft pursuant to Section 5 of the
Lease, unless it shall previously or concurrently have applied for such an
extension with respect to all British Aerospace Avro 146-RJ85A aircraft in its
fleet affected by such directive. In addition, if at the time of return the
Aircraft is not being maintained on a continuous maintenance program, the
landing gear, APU
and hard time component on the Airframe will have at least 25% life remaining to
the next scheduled maintenance visit.
If clause (i)(B) of the first sentence of the preceding paragraph
shall be applicable but the Airframe does not meet the conditions specified in
said clause (i)(B), Lessee shall pay or cause to be paid to Lessor a Dollar
amount computed by multiplying (I) 120% of the average direct cost to Lessee
(based upon the actual direct cost to Lessee for similar aircraft in the fleet
of Lessee) during the preceding 12 months of performing an airframe block
overhaul of the type referred to in such clause (i) by (II) a fraction of which
(x) the numerator shall be the excess of 25% of hours of operation allowable
between such block overhauls over the actual number of hours of operation
remaining on the Airframe to the next such block overhaul and (y) the
denominator shall be the number of hours of operation allowable between such
block overhauls in accordance with such block overhaul program.
If clause (ii) of the first sentence of the second preceding paragraph
shall be applicable but the Engines or engines do not meet the conditions
specified in said clause (ii), Lessee shall pay or cause to be paid to Lessor a
Dollar amount computed by multiplying (aa) four by (bb) 120% of the average
direct cost to Lessee (based upon the actual direct cost to Lessee for similar
aircraft in the fleet of Lessee) during the preceding 12 months of performing
for an engine of the same model as the Engines the scheduled engine
refurbishment under the maintenance program then used by Lessee or any Sublessee
for engines of the same model as the Engines by (cc) a fraction of which (x) the
numerator shall be the excess of 25% of the hours or cycles of operation
(whichever is applicable) between engine refurbishment allowable for an engine
under the maintenance program then in use with respect to such Engines or
engines over the actual average number of hours or cycles of operation on such
Engines or engines remaining until the next such scheduled engine refurbishment
and (y) the denominator shall be the number of hours or cycles allowable between
such scheduled engine refurbishment.
EXHIBIT G - PAGE 2
EXHIBIT H
TO
LEASE AGREEMENT
[NW 1997 __]
RETURN CONDITIONS (EBT)
-----------------------
The portion of this Exhibit appearing below this text is intentionally
deleted from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Unless purchased by Lessee pursuant to Section 19 of the Lease, the
following return conditions apply to a return of the Airframe upon the
termination of the Lease on ___________, 201_:
1. DEFINITIONS. Capitalized terms used in this EXHIBIT H without
other definition have the respective meanings ascribed thereto in the Lease
Agreement [NW 1997 __], dated as of _________ __, 199_, as amended from time to
time (the "LEASE"), between First Security Bank, National Association, not in
its individual capacity but solely as Owner Trustee, and Northwest Airlines,
Inc. In addition, the following capitalized terms shall have the respective
meanings set forth below:
"AIRCRAFT DOCUMENTATION" means all logs, manuals, certificates, data
and inspection, modification, repair, and overhaul records which are required to
be maintained with respect to the Aircraft under the Maintenance Program or by
the Relevant Aviation Authority.
"APU" means the Sundstrand Model APIC 10000 auxiliary power unit
originally installed on the Aircraft on the Delivery Date or any auxiliary power
unit of a comparable or improved model substituted for such originally installed
auxiliary power unit.
"BFE" means the equipment described in Annex II to the Residual
Agreement, or any equivalent replacement equipment that may from time to time be
substituted for any such BFE.
"COUNTRY OF REGISTRATION" means the country in which the Aircraft is
registered on the date the Aircraft is returned under the Lease at the end of
the Basic Term, which shall be one of the United States, the United Kingdom,
Japan, Canada or the Netherlands.
"HSI" means with respect to an Engine or the APU a hot section
inspection of such Engine or APU in accordance with the Maintenance Program.
"MAINTENANCE PLANNING DOCUMENT" means the Manufacturer's maintenance
planning document for Avro 146-RJ85 aircraft as in effect on the date the
Aircraft is returned under the Lease.
"MAINTENANCE PROGRAM" means the maintenance program for the Aircraft
required to be maintained pursuant to Section 7(a)(I) of the Lease, as in effect
on the date the Aircraft is returned under the Lease at the end of the Basic
Term.
"MANUFACTURER" means, with respect to the Airframe, British Aerospace
(Operations) Limited, and its successors and assigns, and, with respect to the
Engines, AlliedSignal Engines, a division of AlliedSignal.
"MRB" means the Maintenance Review Board for British Aerospace Avro
146-RJ85 aircraft.
"OPERATOR" means the operator of the Aircraft immediately prior to the
date the Aircraft is returned under the Lease.
"RELEVANT AVIATION AUTHORITY" means the civil aviation authority of
the Country of Registration.
"STRUCTURAL REPAIR MANUAL" means the Manufacturer's structural repair
manual for Avro 146-RJ85 aircraft as in effect on the date the Aircraft is
returned under the Lease.
2. AIRCRAFT RETURN CONDITIONS AT ____________ __, 201_.
(a) GENERAL CONDITIONS. On the date the Aircraft is returned under
the Lease, the Aircraft shall be in compliance with the conditions set forth
below, ordinary wear and tear excepted:
(i) The Aircraft shall be registered in a Country of
Registration.
(ii) The Aircraft shall be airworthy, possess a currently valid
standard certificate of airworthiness, transport category, issued by the
Relevant Aviation Authority and be eligible for commercial passenger
transportation in the Country of Registration.
(iii) The Aircraft shall be fully equipped with four Engines and
the APU.
(iv) All maintenance required by the Maintenance Program to
have been performed on or prior to the date the Aircraft is returned under
the Lease shall have been accomplished. The Airframe, each Engine, the APU
and the landing gear shall be serviceable and free from all known defects
and discrepancies outside the limits of the Maintenance Program other than
fair wear and tear not affecting airworthiness. All major dents and
abrasions, scab patches and loose or pulled rivets shall be within the
prescribed limits referred to in the Structural Repair Manual or the
Maintenance Program.
(v) All mandatory modifications to the Aircraft required to be
made on or prior to the date the Aircraft is returned under the Lease by
the Relevant Aviation Authority shall have been made, PROVIDED that if an
inspection program is permitted as an alternative to a mandatory
modification and the Aircraft is in compliance with such inspection
program, then such mandatory modification shall not be required. All
Manufacturer's Mandatory Service Bulletins and Airworthiness Directives
issued by the
EXHIBIT H - PAGE 2
Relevant Aviation Authority and, in either case, applicable to the
Aircraft, which are in force on the date the Aircraft is returned under the
Lease and which require termination within six months of the date the
Aircraft is returned under the Lease shall have been accomplished on the
Aircraft.
(vi) Brakes and tires shall be serviceable and in good
condition. The landing gear and wheel xxxxx shall be clean, free of leaks
and in good repair as required to be serviceable in accordance with the
Maintenance Program. The fuel system shall be in compliance with the
Maintenance Program. Except for BFE, the cockpit, all calendar lifed
emergency equipment, toilets and galley areas and the interior shall be in
serviceable condition and shall meet applicable fire resistance regulations
issued by the Relevant Aviation Authority in effect on the date the
Aircraft is returned under the Lease.
(vii) The Aircraft shall be clean by the Operator's normal
operating conditions. The Aircraft shall have all of the Operator's
exterior logos removed.
(b) LIFE REMAINING. On the date the Aircraft is returned under the
Lease at the end of the Basic Term, the Aircraft shall comply with the following
additional requirements:
(i) The Engines shall have on average a minimum of one-half
HSI period remaining in accordance with MRB limits current on the date the
Aircraft is returned under the Lease, PROVIDED that in the event the
Engines do not have an average of at least one-half HSI period remaining in
accordance with such MRB limits, an Engine HSI Half-Life Adjustment under
clause (c)(i) shall be made in lieu of meeting such condition, PROVIDED,
HOWEVER, that in no event shall any Engine have less than one-quarter HSI
period remaining in accordance with such MRB limits or have any defects or
discrepancies outside of the limits set forth in the Maintenance Planning
Document.
(ii) Engine life limited parts shall have on average at least
half-life remaining to their respective scheduled replacement in accordance
with the Engine Manufacturer's published life limited part replacement
schedule current on the date the Aircraft is returned under the Lease,
PROVIDED that in the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, an Engine life limited part Half-Life Adjustment under clause
(c)(ii) shall be made in lieu of meeting such condition, PROVIDED, HOWEVER,
that in no event shall any Engine life limited part have less than
one-quarter life remaining to its scheduled replacement in accordance with
the Engine Manufacturer's published life limited part replacement schedule
current on the date the Aircraft is returned under the Lease.
(iii) The APU shall have remaining at least half of any
applicable HSI period remaining on the date the Aircraft is returned under
the Lease in accordance with the then current MRB standards, PROVIDED that
in the event the APU does not have at least half of any applicable HSI
period remaining, an APU Half-Life Adjustment under clause (c)(iii) shall
be made in lieu of meeting such condition.
(iv) The landing gear shall have at least half-life remaining
to the next landing gear overhaul according to MRB requirements current on
the date the Aircraft is returned under the Lease, PROVIDED that in the
event the landing gear does not have at
EXHIBIT H - PAGE 3
least half-life remaining to such next landing gear overhaul, a landing
gear Half-Life Adjustment under clause (c)(iv) shall be made in lieu of
meeting such condition.
(v) The Aircraft's next sequential block C check (which C
check shall include full fault rectification) shall have been completed
immediately prior to the date the Aircraft is returned under the Lease,
PROVIDED that in the event the Aircraft has at least 25% of the time
remaining until its next scheduled sequential block C check, a C check
Half-Life Adjustment under clause (c)(v) shall be made in lieu of such
block C check. If the Maintenance Program permits a block C check to be
performed in phases, all phases of such block C check shall have been
performed in order to align such block C check with the BAe/Avro "block
type" Maintenance Planning Document schedule.
(vi) The Airframe shall have a minimum of half-time remaining
until its next scheduled major structural inspections, PROVIDED that in the
event the Aircraft has at least 25% of the time remaining until its next
scheduled major structural inspection, but less than half-time, a
structural inspection Half-Life Adjustment under the first sentence of
clause (c)(vi) shall be made in lieu of meeting such condition and in the
event the Aircraft has more than 75% of the time remaining until its next
scheduled major structural inspection, a structural inspection Half-Life
Adjustment under the second sentence of clause (c)(vi) shall be made.
For purposes of determining whether the foregoing requirements have been
satisfied:
(x) to the extent the Maintenance Program provides that a part
or component (for purposes of this clause (x) and clause (y) below, the
term "part or component" may include the entire Airframe, an entire Engine,
the APU or the landing gear) is maintained on a continuous or on condition
maintenance program with no fixed overhaul or major repair required in
accordance with the Manufacturer's requirements, such part or component
shall be deemed to have half-life or half-time (as the case may be)
remaining; and
(y) in the event that a part or component is subject to a
power by the hour program, or the equivalent, on terms and conditions
acceptable to Lessor, and provided that such program is fully assignable
with no material buy-in fees and for a sufficient term remaining to provide
the equivalent of half-life remaining on the affected part or component,
such part or component shall be deemed to have half-life remaining.
(c) HALF-LIFE ADJUSTMENT. The Half-Life Adjustment shall equal the
sum of the Engine HSI Half-Life Adjustment, the Engine life limited parts
Half-Life Adjustment, the APU Half-Life Adjustment, the landing gear Half-Life
Adjustment, the C check Half-Life Adjustment and the structural inspection
Half-Life Adjustment (which shall be added if calculated pursuant to the first
sentence of clause (vi) below and subtracted if calculated pursuant to the
second sentence of clause (vi) below), each as calculated as set forth below:
(i) In the event that the Engines do not have an average of at
least a half HSI period remaining in accordance with MRB limits current on
the date the Aircraft is returned under the Lease, the Engine HSI Half-Life
Adjustment shall be an amount computed by multiplying (A) four by (B) the
cost (as evidenced by industry norms) of performing an HSI for engines of
the same type as the Engines by (C) a fraction, of which (x) the numerator
shall be the excess of 50% of the HSI period in
EXHIBIT H - PAGE 4
accordance with such MRB limits over the actual average amount of the HSI
period remaining and (y) the denominator shall be the HSI period.
(ii) In the event the Engine life limited parts do not have an
average of at least half-life remaining to their respective scheduled
replacement, the Engine life limited parts Half-Life Adjustment shall be an
amount computed by multiplying (A) four by (B) the average cost (as
evidenced by industry norms) of scheduled replacements of life limited
parts for engines of the same type as the Engines by (C) a fraction, of
which (x) the numerator shall be the excess of 50% of the life remaining to
scheduled replacement over the actual average remaining life to scheduled
replacement and (y) the denominator shall be the life between scheduled
replacements of Engine life limited parts.
(iii) In the event the APU does not have at least half of any
applicable HSI period remaining, the APU Half-Life Adjustment shall be an
amount computed by multiplying (A) the average cost (as evidenced by
industry norms) of an HSI for auxiliary power units of the same type as the
APU by (B) a fraction, of which (x) the numerator shall be the excess of
50% of the HSI period over the actual amount of the HSI period remaining
and (y) the denominator shall be the entire HSI period.
(iv) In the event the landing gear does not have at least
half-life remaining to such next scheduled landing gear overhaul, the
landing gear Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
landing gear overhaul for landing gear of the same type as the landing gear
installed on the Aircraft by (B) a fraction, of which (x) the numerator
shall be the excess of 50% of the period between landing gear overhauls
over the actual period remaining to the next scheduled landing gear
overhaul and (y) the denominator shall be the period between scheduled
landing gear overhauls.
(v) In the event the Aircraft's next sequential block C check
(which C check shall include the full fault rectification) shall not have
been completed immediately prior to the date the Aircraft is returned under
the Lease, the C check Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
block C check (including full fault rectification) for aircraft of the same
type as the Aircraft by (B) a fraction, of which (x) the numerator shall be
the excess of period between sequential block C checks over the actual
period remaining to the sequential block C check and (y) the denominator
shall be the period between sequential block C checks.
(vi) In the event the Aircraft has less than half-time
remaining until its next scheduled major structural inspection, the
structural inspection Half-Life Adjustment shall be an amount computed by
multiplying (A) the average cost (as evidenced by industry norms) of a
scheduled major structural inspection for aircraft of the same type as the
Aircraft by (B) a fraction, of which (x) the numerator shall be the excess
of 50% of the period between scheduled major structural inspections over
the actual period remaining to the next scheduled major structural
inspection and (y) the denominator shall be the period between scheduled
major structural inspections. In the event the Aircraft has more than 75%
of the time remaining until its next scheduled major structural inspection,
the structural inspection Half-Life Adjustment shall be an amount computed
by multiplying (A) the average cost (as evidenced by industry norms)
EXHIBIT H - PAGE 5
of a scheduled major structural inspection for aircraft of the same type as
the Aircraft by (B) a fraction, of which (x) the numerator shall be the
excess of the actual period remaining to the next scheduled structural
inspection over 75% of the period between scheduled major structural
inspection and (y) the denominator shall be the period between scheduled
major structural inspections.
(d) AIRCRAFT DOCUMENTATION. On _____________, 20__, the Aircraft
shall be returned with all Aircraft Documentation. The Aircraft Documentation
shall be current as of the date the Aircraft is returned under the Lease and in
full compliance with the requirements of the Relevant Aviation Authority. In
the event that the Maintenance Program deviates from the Maintenance Planning
Document, the Aircraft Documentation shall include a document which shall
cross-reference all deviations. The Aircraft Documentation shall document all
repairs to the Aircraft with appropriate references to the Structural Repair
Manual and a repair scheme approved by the Manufacturer or the Relevant Aviation
Authority.
EXHIBIT H - PAGE 6
EXHIBIT B
TO
PARTICIPATION AGREEMENT [NW 1997 _]
_______
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 __]
DATED AS OF _________ __, 199_
BETWEEN
NORTHWEST AIRLINES, INC.,
ASSIGNOR
AND
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
ASSIGNEE
_______________
ONE BRITISH AEROSPACE AVRO 146-RJ85A AIRCRAFT
U.S. REGISTRATION NO. N5___XJ
MANUFACTURER'S SERIAL NO. E_____
__________
PURCHASE AGREEMENT ASSIGNMENT
[NW 1997 __]
This PURCHASE AGREEMENT ASSIGNMENT [NW 1997 __], dated as of
___________ __, 199_ between NORTHWEST AIRLINES, INC., a Minnesota corporation
("ASSIGNOR"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee ("ASSIGNEE");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Manufacturer has
agreed to sell and Assignor has agreed to purchase several British Aerospace
Avro 146-RJ85A aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has agreed
to sell, and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement [NW
1997 __], dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "LEASE"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Consent and Agreement of the Manufacturer attached hereto, desires to assign to
Assignee certain of Assignor's rights and interests in and under the Purchase
Agreement relating to the Aircraft, and Assignee desires to accept such
assignment, as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. ASSIGNMENT; RIGHTS RESERVED. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in and to the Contract Rights, as and to the extent that the
same relate to the Aircraft.
2. ACCEPTANCE OF ASSIGNMENT. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. RIGHTS OF ASSIGNOR IN ABSENCE OF EVENT OF DEFAULT.
(a) Notwithstanding the foregoing, if and so long as (A) the Aircraft
shall be subject to the Lease and (B) the Manufacturer shall not have received
notice from the Indenture Trustee or the Owner Trustee that an Event of Default
under the Lease has occurred and is continuing, (1) Assignee authorizes
Assignor, on behalf of but to the exclusion of Assignee, to exercise in
Assignor's own name such rights and claims as Assignee may have with respect to
the
Contract Rights as and to the extent the same relate to the Aircraft and,
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Contract Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by the Manufacturer of written notice
from the Indenture Trustee or the Owner Trustee that an Event of Default under
the Lease has occurred and is continuing and thereafter until the Manufacturer
shall have received written notice from the Indenture Trustee or the Owner
Trustee that such Event of Default has been cured or waived: (i) at Assignee's
option, the authorization given to Assignor under paragraph 3(a) hereof to
enforce such rights and claims shall henceforth cease to be effective and
Assignee and its successors and assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or assigns and at Assignor's expense, cooperate with and take such
action as reasonably necessary to enable Assignee and its successors and assigns
to enforce such rights and claims, and Assignee, if it shall elect to enforce
such rights or claims, shall use its best efforts to assert and enforce such
rights and claims, and (ii) Assignor will be deemed to have irrevocably
constituted Assignee and its successors and permitted assigns Assignor's true
and lawful attorney (it being acknowledged that such appointment is coupled with
an interest, namely Assignee's rights acquired and to be acquired hereunder)
with full power (in the name of Assignor or otherwise) to ask, require, demand,
receive, settle, compromise, compound and give acquittance for any and all
monies and claims for monies due and to become due under, or arising out of, the
Contract Rights as and to the extent the same relate to the Aircraft, to the
extent that the same have been assigned by this Assignment, and for such period
as Assignee may exercise rights with respect thereto under this clause (ii), to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith which Assignee may deem to be necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that the Manufacturer is obligated to pay to Assignor
pursuant to the Contract Rights as and to the extent the same relate to the
Aircraft (a "MANUFACTURER PAYMENT"), will be payable and applicable as follows:
so long as the Aircraft is subject to the Lease, all the Manufacturer Payments
shall be paid to Assignor unless and until the Manufacturer shall have received
written notice from the Indenture Trustee or the Owner Trustee that an Event of
Default under the Lease has occurred and is continuing, whereupon the
Manufacturer will, until the Manufacturer shall have received written notice
from the Indenture Trustee or the Owner Trustee that such Event of Default under
the Lease have been cured or waived, make any and all such payments directly to
the Indenture Trustee or (if written notice has been given to the Manufacturer
by the Assignee that the Trust Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Secured Certificates
have been paid in full) Assignee. Any amounts received by Assignee pursuant to
the immediately preceding sentence shall, to the extent not theretofore applied
in satisfaction of sums owing to Assignee in accordance with the terms of the
Lease, be returned to Assignor promptly after all Events of Default under the
Lease have been cured or waived.
- 2 -
(d) For all purposes of this Assignment, the Manufacturer shall not
be deemed to have received written notice from the Indenture Trustee or the
Owner Trustee that an Event of Default under the Lease has occurred and is
continuing or that all Events of Default have been cured or waived unless such
notice shall be in writing, shall be signed by an authorized officer of the
Owner Trustee or the Indenture Trustee, shall have been addressed to the
Manufacturer at Aero International (Regional), 0, Xxxxx Xxxxxx Xxxxx, 00000
Xxxxxxx Xxxxx, Xxxxxx, Attn.: SVP Commercial (telecopy 011 33 5 6221 6321) with
a copy to Aero International (Regional) Marketing Inc., 00000 XxXxxxxx Xxxx,
Xxxxxxx, Xxxxxxxx 00000, Attn.: Contracts Director (telecopy (000) 000-0000)
and three Business Days shall have elapsed from the date of actual receipt by
the Manufacturer and, in acting in accordance with the terms and conditions of
the Purchase Agreement and this Assignment, the Manufacturer may rely
conclusively upon any such notice.
4. CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTIES.
(a) Anything herein contained to the contrary notwithstanding:
(i) Assignor shall at all times remain liable to the Manufacturer under the
Purchase Agreement in respect of the Aircraft to perform all of the duties and
obligations of "Buyer" thereunder to the same extent as if this Assignment had
not been executed; (ii) the exercise by Assignee of any of the rights assigned
hereunder shall not release Assignor from any of its duties or obligations to
the Manufacturer under the Purchase Agreement in respect of the Aircraft except
to the extent that such exercise by Assignee shall constitute performance of
such duties and obligations; and (iii) except as provided in paragraph 4(b)
hereof, Assignee shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of Assignor under the Purchase
Agreement or to make any payment or make any inquiry as to the sufficiency of
any payment received by it or to present or to file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Contract Rights, the terms and
conditions of the Purchase Agreement (including, without limitation, the
warranty disclaimer and indemnity provisions in the Manufacturer Support
Agreement which is part of the Purchase Agreement) shall apply to, and be
binding upon, Assignee to the same extent as Assignor. Assignee hereby confirms
that it shall be deemed for all purposes to have read and be familiar with the
Purchase Agreement (insofar as it relates to the Aircraft) and to understand
thoroughly the terms and conditions thereof.
(c) Nothing contained herein shall (i) subject the Manufacturer to
any liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any respect the Manufacturer's contract rights
thereunder, except as provided in the Consent and Agreement attached hereto.
- 3 -
(d) The parties hereto, and the Manufacturer by its execution and
delivery of the Consent and Agreement, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
PROVIDED, HOWEVER, that this Section 4(d) shall not be construed to prohibit any
action or proceeding against First Security Bank, National Association, for its
own willful misconduct or grossly negligent conduct for which it would otherwise
be liable; and PROVIDED, FURTHER, that nothing contained in this Section 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. FURTHER ASSURANCES. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, PROVIDED, HOWEVER, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. ASSIGNOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Assignor
does hereby represent and warrant that Assignor has not assigned or pledged, and
hereby covenants that it will not assign or pledge, so long as this Assignment
shall remain in effect, the whole or any part of the rights hereby assigned to
anyone other than Assignee and, on a subordinate basis, to any Sublessee.
7. NO AMENDMENT OF PURCHASE AGREEMENT. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Manufacturer Support Agreement in respect of the Contract
Rights, as and to the extent the same relate to the Aircraft, without the prior
written consent of Assignor.
8. EXECUTION OF ASSIGNMENT. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
9. BINDING EFFECT. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
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10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. DEFINITIONS. Unless the context otherwise require, the following
terms shall have the following meanings for all purposes of this Assignment and
shall be equally applicable to both the singular and the plural forms of the
terms herein defined:
"AIRCRAFT" means the British Aerospace Avro 146-RJ85A aircraft
specified in the Lease Supplement, together with the four Engines.
"CONTRACT RIGHTS" means all of Assignor's right, title and
interest in and to 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
Assignor to compel performance of the terms of Part H and Part J of
the Manufacturer Support Agreement in support thereof.
"ENGINE" means each of the four AlliedSignal LF507 type engines
listed by manufacturer's serial number in the Lease Supplement.
"LEASE" means the Lease Agreement [NW 1997 __], dated as of
__________ ___, 199__, between Assignor and Assignee.
"LEASE SUPPLEMENT" means a Lease Supplement substantially in the
form of Exhibit A to the Lease, entered into between Assignor and
Assignee on the date the Aircraft is leased by Assignee to Assignor
and accepted by Assignor under the Lease.
"MANUFACTURER" means British Aerospace (Operations) Limited, a
limited company incorporated under the laws of England and Wales, and
its successors and assigns.
"MANUFACTURER SUPPORT AGREEMENT" means the Manufacturer Support
Agreement, dated February 5, 1997, between the Manufacturer and
Assignor.
"OPERATIVE DOCUMENTS" shall have the meaning specified in the
Lease.
"PURCHASE AGREEMENT" means the Sale and Purchase Agreement, dated
as of February 5, 1997, between the Manufacturer and Assignor relating
to the
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purchase by Assignor of the Aircraft (including the Manufacturer
Support Agreement), as originally executed or as modified, amended or
supplemented in accordance with the terms thereof, but only insofar as
the foregoing relates to the Aircraft.
"SUBLESSEE" shall have the meaning specified in the Lease,
12. NOTICE. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. COUNTERPARTS. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
NORTHWEST AIRLINES, INC.,
as Assignor
By:
------------------------------
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By:
------------------------------
Title:
The undersigned, not in its individual capacity but solely as
Indenture Trustee for the benefit of the holders of Secured Certificates and as
assignee of, and holder of a security interest in and to the foregoing Purchase
Agreement Assignment and the Purchase Agreement pursuant to such Purchase
Agreement Assignment, agrees to the terms of the foregoing Purchase Agreement
Assignment and agrees that its rights and remedies under such Purchase Agreement
Assignment shall be subject to the terms and conditions thereof, and of the
Purchase Agreement.
STATE STREET BANK AND
TRUST COMPANY,
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------
Title:
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CONSENT AND AGREEMENT
[NW 1997 _]
The undersigned, AERO INTERNATIONAL (REGIONAL), a Societe par Actions
Simplifee, whose registered office is situated at 0, Xxxxx Xxxxxx Xxxxx, 00000
Xxxxxxx Xxxxx, Xxxxxx, acting as agent for and on behalf of British Aerospace
(Operations) Limited, a limited company incorporated under the laws of England
and Wales, hereby acknowledges notice of, and consents to all of the terms of,
the foregoing Purchase Agreement Assignment [NW 1997 _] dated as of __________
___, 199__ between Northwest Airlines, Inc. (the "ASSIGNOR"), and First Security
Bank, National Association, not in its individual capacity but solely as Owner
Trustee (the "ASSIGNEE") (herein called the "PURCHASE AGREEMENT ASSIGNMENT," the
defined terms therein or by reference therein being hereinafter used with the
same meaning) and hereby confirms to the Assignor and the Assignee, and agrees,
that: (i) all representations, warranties, indemnities and agreements of the
Manufacturer under the Purchase Agreement with respect to the Contract Rights,
to the extent assigned by the Assignor to the Assignee, shall inure to the
benefit of the Assignee to the same extent as if originally named the "Buyer"
therein, subject to the terms and conditions of the Purchase Agreement
Assignment; (ii) the Assignee shall not be liable for any of the obligations or
duties of the Assignor under the Purchase Agreement, nor shall the Purchase
Agreement Assignment give rise to any duties or obligations whatsoever on the
part of the Assignee owing to the Manufacturer, except for the Assignee's
agreement in the Purchase Agreement Assignment to the effect that in exercising
any rights under the Purchase Agreement or in making any claim with respect to
the Contract Rights, the terms and conditions of the Purchase Agreement relating
to the Aircraft shall apply to, and be binding upon, the Assignee to the same
extent as the Assignor, and with respect to such agreement the Manufacturer
agrees that, anything contained in the Purchase Agreement and the Purchase
Agreement Assignment to the contrary notwithstanding, so long as the
Manufacturer shall not have received written notice that an Event of Default has
occurred and is continuing, the Assignee shall not have any responsibility to
the Manufacturer for failure to comply with any of the terms of the Purchase
Agreement with respect to the Contract Rights as and to the extent the same
relate to the Aircraft while under lease to the Assignor; PROVIDED that no
person other than the Manufacturer shall have any rights against the Assignee
with respect to the undertaking and agreement set forth in this clause (ii);
(iii) the Manufacturer acknowledges the lease of the Aircraft by the Assignee to
the Assignor under the Lease and acknowledges advance notice of the Purchase
Agreement Assignment pursuant to Clause 24.1 of the Purchase Agreement; and (iv)
so long as the Aircraft is subject to the Lease, the Manufacturer will continue
to pay to the Assignor all payments which the Manufacturer may be required to
make in respect of the Aircraft under the Purchase Agreement unless and until
the Manufacturer shall have received written notice from the Indenture Trustee
or the Assignee by facsimile addressed to Aero International (Regional), 0,
Xxxxx Xxxxxx Xxxxx, 00000 Xxxxxxx Xxxxx, Xxxxxx, Attn: SVP Commercial (telecopy
011 33 5 6221 6321) with a copy to Aero International (Regional) Marketing Inc.,
00000 XxXxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000, Attn.: Contracts Director
(telecopy (000) 000-0000) and three Business Days shall have elapsed from the
date of actual receipt by the Manufacturer, that an Event of Default under the
Lease has occurred and is continuing,
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whereupon the Manufacturer will not be required to make further inquiry into the
content of such notice and thereafter (until the Manufacturer shall have
received notice in writing from the Assignee or the Indenture Trustee sent or
addressed as aforesaid that no Event of Default under the Lease exists or that
such Event of Default under the Lease has been cured or waived) Manufacturer
shall make any and all payments which it may be required to make in respect of
the Aircraft under the Purchase Agreement (to the extent that the right to
receive such payments has been assigned under the Purchase Agreement
Assignment) directly to the Indenture Trustee at the account of the Indenture
Trustee at State Street Bank and Trust Company, 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, ABA No. 011-00-0028, Account No. 0000-000-0 Northwest/NW
1997 __, Attention: Corporate Trust Department, Reference: Northwest/NW 1997
__, or (if written notice has been given to the Manufacturer by the Assignee in
the manner aforesaid that the Trust Indenture is no longer in effect in
accordance with its terms and all amounts due and payable under the Secured
Certificates have been paid in full) to the Assignee at the account of the
Assignee at First Security Bank, National Association, 00 Xxxxx Xxxx Xxxxxx,
Xxxx Xxxx Xxxx, Xxxx 00000, ABA No. 000-0000-00, Account No. 051-0000000,
Attention: Corporate Trust Department, Credit Northwest/NW 1997 __.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a limited company incorporated under the Companies Act of 1985
duly organized and validly existing under the laws of England and Wales, (B) the
execution, delivery and performance of the Purchase Agreement and this Consent
and Agreement have been duly authorized by all necessary corporate action on the
part of the Manufacturer, do not require any approval of the stockholders of the
Manufacturer, trustee or holders of any indebtedness or obligations of the
Manufacturer (other than any such approval or consent as has been obtained) and
neither the execution and delivery of the Purchase Agreement or this Consent and
Agreement by the Manufacturer, nor the performance by the Manufacturer of its
obligations under the Purchase Agreement or the Consent and Agreement
contravenes any law, governmental rule or regulation applicable to the
Manufacturer, and (C) neither the execution and delivery by the Manufacturer of
the Purchase Agreement or the Consent and Agreement, nor the performance by the
Manufacturer of its obligations thereunder, requires the consent or approval of,
or the giving of notice to, or the registration with, or the taking of any other
action in respect of, any federal or state governmental authority in the United
States (other than those which have been obtained).
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Dated as of __________ ___, 199__
AERO INTERNATIONAL (REGIONAL) SAS,
as agent for and on behalf of British
Aerospace (Operations) Limited
By
------------------------------
Title:
- 10 -
